Note: This story has been amended to clarify the developer won lease, not the construction contract as well.
City of North Vancouver council is dipping into short-term loans to keep the beset Harry Jerome Community Recreation Centre rebuild on track to open in 2025.
Council voted unanimously Monday night (Jan. 31) to take out a $117-million loan from the Municipal Finance Authority of British Columbia after the collapse of a deal with developer Darwin Properties in late 2021. The MFA is a collective structure created in 1970 that pools the borrowing and investment needs of communities throughout B.C. that is governed by a board of regional appointees, operating independently of the provincial government.
For years, the plan had been to finance the $226.3-million project ($181 million for the community centre itself) with revenue that would come from the long-term lease of the adjacent city-owned Harry Jerome Neighbourhood Lands. In 2018, council voted to rezone the properties to include up to 800 new homes, plus commercial space in two highrises and a series of smaller buildings. Darwin won an open bid for the lease the neighbourhood lands.
The city already has $92 million in the bank for the project, $50 million of which is coming from a long-term lease of the first phase of the surrounding lands. But the city announced in November last year that it was terminating the contract with Darwin for Phase 2. At the time, the city contended the deal fell through because Darwin did not provide a required payment. Darwin president Oliver Webbe said he withheld the payment to pressure the city into keeping the current Harry Jerome open until the new one comes online.
The MFA loan, which must be paid off within five years, comes at a 0.99 per cent interest rate.
Under the plan approved by council Monday, the city will make another attempt to sell or lease the remaining Harry Jerome lands in 2025. Based on current market conditions, staff estimate that could bring $167 million (although even if they were off by 25 per cent, it would still be enough to pay off the loan).
Council will also borrow another $4.6 million from one of its own reserve funds with plans to pay it back with 2.7 per cent interest.
Before the vote, council members remarked that it was not an ideal situation for the municipality, but said it was the financially prudent thing to do.
Mayor Linda Buchanan said she stood by the current council’s decisions to scale back the facility and break up the disposition of the neighbourhood lands into phases.
“In 2014, a majority of council at that time bound the city to a financial arrangement that was too risky and did not put the interests of taxpayers upfront. That is why at the start of this term, we took immediate steps to mitigate these risks,” she said. “It is because of these steps that we can deliver what residents have been asking for and what no other council has achieved: getting the new centre built, starting this year and finishing in 2025, and we can do it without putting the burden on city taxpayers,” she said. “I think we've pretty much all said it. We are all forward facing.”