HomeMy WebLinkAboutCSD-20-008 - Loan Deferral - Kitchener Rangers Hockey ClubREPORT TO:Special Council
DATE OF MEETING:November 2, 2020
SUBMITTED BY:Kim Kugler, Director Sport, 519-741-2200 x7544
PREPARED BY:Kim Kugler, Director Sport, 519-741-2200 x7544
WARD (S) INVOLVED:All
DATE OF REPORT:October 30, 2020
REPORT NO.:CSD-20-008
SUBJECT:Loan Deferral-Kitchener Rangers Hockey Club
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RECOMMENDATION:
That approval be granted to defer the Kitchener Rangers Hockey Club2020 and 2021
principal loan paymentsrelated to the 2012 Kitchener Memorial Auditorium Complex
expansion;and further,
That uponmaturity of the 2012 municipal debenture related to the Kitchener Memorial
Auditorium Complex expansion, the planned outstanding principal balance of $4,323,000
be issued as amunicipal debenture for a term not to exceed 10 years;and further,
That the Mayor and Clerk be authorized to sign an amendment to theloan agreement,
with said agreement to be to the satisfaction of the City Solicitor.
BACKGROUND:
In 2011, the Kitchener Rangers Hockey Club (KRHC) was granted approval to proceed with an
expansion to the Kitchener Memorial Auditorium Complex. At that time,they were issued a loan
through a municipal debenture repayable with principal and interest over a fifteen-yearperiod.
Aten-yearmunicipal debenture was issued in 2012 with another debenture to be issued in 2022.
All interest and principal payments since 2012 have been made in full and on time.
REPORT:
On October 23, 2020, the KRHC Chief Operating Officer, Joe Birch made a formal request in
writing to revisethe January 25, 2012 loan agreement with the City of Kitcheneras it relates to
the payment scheduleand 2022 debenture.
COVID-19 caused an abrupt endtothe 2019-2020 season with regular season games being
cancelled and no playoffs games played and now a delayed and shorted 2020-2021 hockey
season. The COVID-19 impacts on the two hockey seasons has significantly reduced
revenue streams. These impacts make therequest to defer the 2020 and 2021 principal
payments to the Cityand to extend the 2022 debenture over tenyears instead of the approved
fiveyearsnecessary.
***This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994for assistance.
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The original loan balance of $9,600,000 has a current outstanding balance of $5,611,000. All
principaland interest payments have been made in accordance the re-payment schedule from
January 25, 2012 to May 26, 2020.
The remaining interest and debt servicing payments until the loan renewal date of November
2022 are as follows:
Interest Payment -$85,528.25 November 2020
PrincipalPayment -$635,000.00 November 2020
Interest Payment -$76,638.25 May 2021
Interest Payment -$76,638.25 November 2021
PrincipalPayment -$653,000.00 November 2021
Interest Payment $67,006.50 May 2022
Interest Payment $67,006.50 November 2022
Outstanding Balance of $4,323,000 to be financedover 5 years
The KRHC would like to defer the principal payments in November 2020 and 2021 until a later
date.All interest payments will continue to be paid in accordance with the scheduled dates.
The revised payment schedule until the loan renewal in November 2022 would beas follows:
Interest Payment -$85,528.25 November 2020
Interest Payment -$76,638.25 May 2021
Interest Payment -$76,638.25 November 2021
Interest Payment -$67,006.50 May 2022
Interest Payment -$67,006.50 November 2022
Deferred Principal Payment -$1,288,000.00 to be repaid withinterest*
Outstanding Balance of $4,323,000 to be financed over 10 years
*The KRHC will be charged interest on the deferred principal amounts at a rate to be
determined as part of the amendedagreement. The interest payments on the deferred
principalamountscan be paid on the same due dates as above, ona semi-annual basis,or
alternative schedule as agreed upon.
The requested changes are necessary as the KRHC deal with the financial challenges of
COVID-19.The request is for deferral assistance only and does not request any type of relief
from theirfinancial obligations of the building loan.
The KRHC have a strong history of partnerships and honouringtheircommitments with the City
of Kitchener and the community as whole. Amending the current loan agreement to defer two
principal payments and to extend the 2022 outstanding loan balance over ten years will support
KRHC through the impacts of COVID-19.
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ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
The
the delivery of core service.
FINANCIAL IMPLICATIONS:
The City will still be required to make the 2020 & 2021 principal payments on behalf of the KRHC,
but will not be recouping those funds from KRHC until a later date. To account for this, the City
will charge the KRHC interest on the deferred principal payments to recoup the lost investment
income the City could have earned,and ensure taxpayersare not financially disadvantaged by
the change in agreement with the KRHC.
COMMUNITY ENGAGEMENT:
INFORM
council / committee meeting.
PREVIOUS CONSIDERATION OF THIS MATTER:
Previous reports CSD-11-102 and CSD-11-110.
ACKNOWLEDGED BY: Michael May, Deputy CAOCommunity Service Department
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