CBA approved to finance Cultural and Civic Space loan

A 30 year loan to finance the Cultural and Civic Space project will be sourced from the Commonwealth Bank. Photo: Coffs Harbour City Council.

 

THE source of the financial loan borrowing for construction of the controversial $81m Cultural and Civic Space project has finally been resolved, with Coffs Harbour City councillors agreeing to a 30 year loan offered by the Commonwealth Bank.

Council had previously resolved on 22 July 2021 to enter into a fixed interest rate loan agreement to borrow $50.265 million over 30 years with Westpac Bank for the Cultural and Civic Space project, however Westpac later decided it was only able to offer the loan over a 20 year period.

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Cr Keith Rhoades stated at Council’s recent meeting on Thursday 26 August that Council had been “rejected” by Westpac Bank for the loan borrowing.

“We’ve been rejected by one of the big four, being Westpac,” Cr Rhoades stated.

“What if we are rejected on our application with the Commonwealth, where do we go from there, do we go to the third one, do we go to the fourth one?

“What happens if all four reject what we’re applying for?”

Mayor Denise Knight interjected and stated “we actually were not rejected Cr Rhoades”.

Cr George Cecato reaffirmed that the Council did not get “rejected” by Westpac for a loan for the Cultural and Civic Space project.

“We did not get rejected, they changed their mind,” Cr Cecato said.

“It wasn’t our doing that Westpac changed internal parameters.

“Here we have an offer by the biggest bank in Australia, we got a certainty that they are going to honour the 30 years, we got a long term commitment at a very, very low rate.

“It’s exactly what we’ve been looking for.”

Cr Rhoades, however, described what Council was doing as a “farce”.

“We have gone about it completely the wrong way,” he stressed.

“Here we are, we’ve started a project, we’ve dug a hole, we’ve got bills to pay and we still don’t have our finances in place.

“Council has done it completely the wrong way, it was rushed, rushed, rushed from the start to get this thing started, on the go, contracts signed and no finance in place.

“I cannot support this and I hope the other councillors realise that this process is flawed.”

Cr Sally Townley stressed that going ahead with the project was the resolved position of Council and had been for some time.

“There was never any doubt of Council being able to source the funding, it’s always been a matter of where, and we’re in the lucky position that we actually have had a lot of options,” Cr Townley said.

“We are 100 percent certain and we always have been of securing funding for this project.

“Now we’ve got a proposal to go forward and there is no reason why we shouldn’t go to the next logical step, which is to make formal arrangements for the finance.”

Cr Tegan Swan, who has previously opposed the Cultural and Civic Space project, supported going ahead with the loan borrowing.

“I do have concerns obviously, but in this instance we are committed to this project and we do need to do it,” Cr Swan affirmed.

“I do believe that this loan is an effective option for us to be able to achieve that.

“I can’t see any reason to be opposed to it just on principle because I haven’t been supportive of the project.”

Cr Tegan Swan questioned what the ongoing annual interest costs were with the loan borrowing Council was considering, as well as the maintenance and running costs for the project over the length of the loan.

“The interest cost in year one is $1.27 million and then over the total life of the loan the total interest cost would be $21.8 million dollars,” Council’s Group Leader Financial Services and Logistics Mark Griffioen said.

Council’s General Manager Steve McGrath said savings would be seen from combining Council services into one new building.

“The long term financial plan assumes some savings on those maintenance and other costs associated with the current (Council) buildings that are part of the funding model for the project,” Mr McGrath said.

“You got to take efficiencies from having everyone in the one consolidated location.”

Details of the interest rate for the loan offered by the Commonwealth Bank for the project are ‘commercial in confidence’ between Council and the lender at present until the formal offer and acceptance is undertaken.

However, Mr McGrath stated that the interest rate was “very attractive”.

“The interest rates are very, very attractive and in line with the low interest rates we are generally seeing in the marketplace at the moment,” he confirmed.

Cr Arkan agreed it was a “good interest rate”, but opposed going ahead with the loan due to the current COVID induced climate.

“I speak against this simply because of the climate that we are all now living in,” Cr Arkan said.

“To commit this level of loan to a community that are unsure about what the future holds in a lot of ways, everything has changed drastically.

“The world has changed, do we really want to commit ourselves to this.”

Cr Arkan also opposed selling off Council’s current assets to fund the Cultural and Civic Space project.

“We are selling so many things off to secure this,” he stated.

“I strongly speak against selling our assets to build the centre as it is.”

Cr Paul Amos questioned whether a development application modification for the project had been approved yet.

Mr McGrath answered that the modifications to the new building were “minor” and he expected approval of these changes soon.

“The modification for some very minor changes, all information has been supplied to the Department of Planning, Industry and Environment and the last I heard was that they were working towards having their end of it completed within a very short timeframe,” Mr McGrath said.

“I envisage that it’s not going to be very far away at all.”

Mayor Denise Knight completed lengthy discussion on the loan borrowing by stating that the offer from the Commonwealth Bank “is a bargain and I think we should grab it with both hands”.

Councillors voted 5 votes to 3 for Council to enter into a fixed interest rate loan agreement to borrow $50.265 million over 30 years with the Commonwealth Bank of Australia, with Crs George Cecato, Michael Adendorff, Tegan Swan, Sally Townley and Denise Knight voting for the loan borrowing and Crs John Arkan, Paul Amos and Keith Rhoades voting against.

 

By Emma DARBIN

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