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HomeMy WebLinkAboutFIN-09-037 - Grand River CarShare - Line of Credit1 Krrc~~R • Financial Services Report To: Councillor Berry Vrbanovic, Chair, and Members of the Finance and Corporate Services Committee Date of Meeting: March 2, 2009 Submitted By: Dan Chapman, General Manager of Financial Services & Treasurer Prepared By: John McBride, Director of Transportation Planning Saleh Saleh, Senior Financial Analyst, Financial Planning Ward(s) Involved: All Date of Report: February 12, 2009 Report No.: FIN-09-037 Subject: Grand River CarShare Line of Credit RECOMMENDATION: That the provision of a $30,000 Line of Credit to Grand River CarShare be extended by five years to April 30, 2014 from the current termination date of April 30, 2009 and, That the interest rate on the Line of Credit be reduced from the current rate of 10% to a rate equivalent to the City's short-term investment yield to be adjusted quarterly and, That one in-kind parking spot be provided to Grand River CarShare at a City parking lot where there is excess capacity; and, That the value of this parking space be recognized as a cost to the City's Transportation Demand Management Program upon implementation of the program; and further That the Mayor and Clerk be authorized to enter into an agreement with Grand River CarShare satisfactory to the City Solicitor. BACKGROUND: Grand River CarShare (GRC) is anon-profit organization with a mission to develop and promote car sharing as an alternative to privately owning a car in the Region of Waterloo. In 2002, Council granted GRC a line of credit in the amount of $30,000 at an interest rate of 10% with full payment required by April 30, 2009. The City of Cambridge, City of Waterloo and the Region of Waterloo also partnered with GRC on similar agreements expiring on April 30, 2009. As this agreement is expiring, GRC has contacted staff to investigate options with respect to formalizing a new partnership agreement with the City of Kitchener. GRC has also approached the City of Waterloo, City of Cambridge and the Region of Waterloo with similar requests. Attached to this report is an official letter from GRC outlining their request. REPORT: Staff have met with GRC and have summarized the following options in the table below. OPTIONS ADVANTAGES DISADVANTAGES 1. Do Nothing (allow the Line -The City is free from any -May result in GRC not of Credit facility to expire and financial obligation toward providing any service in demand repayment of the GRC Kitchener. outstanding balance on April -Inconsistent with the 30, 2009) City's strategic focus on the environment with respect to providing efficient, environmentally friendly transportation policies and programs for the future 2. Renew the Line of Credit to -Continues with the excellent -Interest rate is seen as April 30, 2014 at an interest partnership we have with excessive in our current rate of 10%. (Same rate as GRC. economic conditions and existing Line of Credit -Higher rate of interest is GRC is looking for a more Agreement) reflective on the risk involved favourable agreement. in a Line of Credit -Fits with the City's strategic focus on the environment 3. Renew the Line of Credit to -Continues with the excellent -Loss of interest revenue April 30, 2014 at an interest partnership we have with to the City's tax-supported rate of 0%. GRC. operating budget. -Fits with the City's strategic focus on the environment -Gives GRC some financial flexibility. 4. Renew the Line of Credit to -Continues with the excellent April 30, 2014 at the City's partnership we have with short-term interest rate, GRC. adjusted quarterly (2008 -Fits with the City's strategic Average rate was 3.5%) focus on the environment -Gives GRC some financial flexibility. -City will be no worse off financially assuming good a ment histo continues Staff are recommending Option 4 which would extend the Line of Credit to April 30, 2014 at the City short-term interest rate. GRC is also requesting one in-kind parking spot which staff are recommending approval for, at a parking lot where we have excess capacity. It is proposed that the value of the parking space be recognized as a cost to the Transportation Demand Management program upon its implementation. GRC has been up-to-date in making payments on their existing line of credit with $5,000 left owing to be payable on April 30, 2009. Support of car sharing programs fits with the City's strategic directions and is an effective Transportation Demand Management tool, in that it can reduce vehicle travel, parking demand and is largely run without municipal involvement. FINANCIAL IMPLICATIONS: Staff are recommending Option 4, which is to extend the Line of Credit for GRC to April 30, 2014 at the City's short-term interest rate, to be adjusted quarterly. COMMUNICATIONS: None CONCLUSION: Partnering with Grand River CarShare fits with the City of Kitchener's Environmental strategy and Transportation Demand Management initiatives. Extending the Line of Credit at the City's short-term investment rate will provide some interest rate relief to Grand River CarShare without adversely impacting the City's investment yields. Dan Chapman, MPA, CA General Manager of Financial Services and Treasurer John McBride, Director Transportation Planning Saleh Saleh, CPA, CGA Senior Financial Analyst Financial Planning