With the help of "a third party," town administrative staff are analyzing a proposal by Olds Institute (OI) to stretch out the repayment period for two loans totalling $14 million it received from the province via the Town of Olds.
Chief operating officer Doug Wagstaff confirmed the undertaking after OI chair Cody Becker appeared before council to ask for the repayment extension.
He did not say when that analysis will be completed, but said as soon as it is, administrative staff will bring it back to council for its decision. Wagstaff also did not identify the third party.
Becker noted council secured the loans from the Alberta Capital Finance Authority (ACFA). The loans were made to OI via the town to finance installation of fibre optic lines to homes and businesses throughout Olds to connect customers to O-NET.
O-NET is a community-owned firm that provides high-speed Internet as well as phone and TV service. Becker said the loans are still being used to finance those installations as more customers come on-stream and as more subdivisions are built.
Because it's expensive to install those lines - especially in older areas -- the principal has since been re-loaned back to OI to finance that work, Becker said.
Becker said in hindsight, OI and its technology committee were perhaps too optimistic about the time period they'd need to repay the loans to get the Olds Connected Community Network up (the fibre connections) and running and financially strong.
The two loans with a combined total of $14 million were approved by Olds council in 2011 and 2014. During an interview with the Albertan, Becker said currently, one is amortized (to be paid back) over 10 years, while the other is over 15 years. He's hoping to have the two loans consolidated into one and have that loan amortized over 25 years or so.
"We have made mistakes based on financial assumptions with no data history or comparables," Becker told council.
"And it took more time and has cost more than anticipated to install the conduit and fibre, build a service provider from the ground up and to establish trust with the citizens and businesses of Olds and bring them over to O-NET."
"We felt that a 10 to 15-year amortization (period) would be sufficient to pay off those loans," Becker said.
"This could have likened to getting married and buying a house with a 10-year mortgage. So you have two incomes and are excited to be debt-free in 10 years.
"And then, surprise - you have a child; maybe another - and your family income is cut in half. And your baby is like me and you have to feed it with a shovel," he said to mild laughter from a delegation in the council chambers gallery.
"The payments on that 10-year mortgage are just too big, and before long, you're back to the bank to refinance."
Coun. Rudy Durieux brought forward a motion calling for the analysis to be undertaken. He stressed it should not be seen as "punitive."
"This is an effort to make sure that, as Mr. Becker has outlined, that the Olds Connected Community Network, Olds Institute and Olds Fibre Ltd. are a progressive and stable organization in our community," Durieux said.
"That they need financing is understandable. They're just searching for a way to improve that financing; making sure that the community receives the support where technologically that they can.
"So we think that this is a very positive move and it will turn out to be very important for us in the community."
"You have two incomes and are excited to be debt-free in 10 years. And then, surprise - you have a child; maybe another - and your family income is cut in half. And your baby is like me and you have to feed it with a shovel."CODY BECKER CHAIR OLDS INSTITUTE
