Welland Hydro gets $2M from city

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Welland Hydro will receive a $2M loan from the City of Welland’s Canal Lands Trust Fund to finance two solar projects.

Two 500 kilowatt groundmounted solar panels will be installed at 950 East Main St., behind Welland Hydro, and 108 Thorold Rd. on lands near PenFinancial Credit Union Community Flatwater Centre.

Council passed a motion allowing the loan at its meeting Tuesday, despite an attempt to defer the report from city finance staff.

Hydro will pay 4.3 per cent interest on the 10-year loan — with an option for eight additional years - to the city at nearly $43,387.05 semiannually. The full $2M will be paid back at the end of the loan, councillors heard this past Tuesday.

Ward 2 Coun. David McLeod asked city treasurer Steve Zorbas how the 4.3 per cent rate was reached.

Zorbas said the city looked at what commercial banks were charging for loans and said it was able to offer a better rate. The rate, he said, would allow the city to get a better return on investment than if it were to take the same amount of money and invest it elsewhere.

McLeod asked why the principle was not part of the repayment plan.

“The principle will be repaid at the end of the time period of the loan … it’s a secure investment,” Zorbas said.

Ward 3 Coun. John Chiocchio asked if the loan would mean the city would be left with $11M in the Canal Lands Trust Fund, instead of the current $13.5M.

“What if we take that $2M and then find we need the full $13.5M?” Chiocchio asked.

Zorbas said the city will always have the full $13.5M available due to the way the funds have been invested.

In response to another question, he said he wouldn’t recommend loaning any other money from the fund.

Ward 4 Coun. Pat Chiocchio was in favour of the report and believed the money would be secure, as the city owns Welland Hydro.

“We’re getting a very good rate of return … it’s a financially sound decision,” he said.

Ward 1 Coun. Mary Ann Grimaldi asked if the interest earned from the loan would be used to expand operations on canal lands in the city.

Zorbas said if operations on the canal lands were to expand, the money collected from the interest would be used to keep the costs down and create less pressure on the city’s tax rate.

Mayor Frank Campion said the city was making a sound investment in a large corporation with a lot of assets and the ability to pay off the loan if needed.

“Hydro has to borrow from somewhere, why not borrow from us?” he asked.