ADMINISTRATIVE REPORT

Date: November 6, 1997

Author/Local: H. Creighton/ 2156

CC File No. 2001

TO:	City Council
FROM:	Director of Finance
SUBJECT:	Redemption - Bylaws 5272 and 5575 - Canada Mortgage and Housing Corporation

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RECOMMENDATION

THAT the existing loans from Canada Mortgage & Housing covered under Bylaws 5272 and 5575, in the amount of approximately $7, 000,000, be retired, effective December 31, 1997.

GENERAL MANAGER'S COMMENTS

The General Manager of Corporate Services RECOMMENDS approval of this report.

COUNCIL POLICY

There is no Council policy directly applicable to this issue.

PURPOSE

This report proposes that two existing loans of the Property Endowment Fund to Canada Mortgage & Housing Corporation (CMHC), which were obtained to finance infrastructure development in False Creek, be retired.

DISCUSSION

When the City-owned lands in False Creek - south shore, were being developed in the 1970's, the City required funding to pay for the infrastructure development in the area. Under an existing program then offered by CMHC, the City (PEF) was able to access funding in the amount of $10 million through thirty year loans from CMHC at 8% interest. These loans will mature in 2008 and 2011. When these loans were entered into, the interest rate of 8% was below current borrowing rates.

At the present time, long term interest rates have fallen below the 8% figure, and I believe it is in the City's interests to retire that loan. Coincidently, the PEF will receive a payment of approximately $8 million at the end of the year when Pacific Centre Ltd. exercises its option to purchase Block 42.

Thus, it is convenient and opportune to retire the existing debt, and this action is recommended.

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(c) 1997 City of Vancouver