City officials are not expecting any delays in the planning and construction of a pair of contentious Build Kamloops projects, despite a legal challenge to their financing.

A petition filed in BC Supreme Court last month by a Kamloops resident claims the City didn’t follow the proper “spirit and intent” of the Alternative Approval Process.

The passing of the AAP in September gave final approvals to previously-passed bylaws, which give the City the ability to borrow as much as $275 million to build the long-planned Centre for the Performing Arts, as well as a four-plex ice rink in Dufferin.

The suit filed on October 22nd alleges a variety of missteps by the City during the AAP, including the approval of a counter-petition window at a time-of-year when people vacation, as well as allegations surrounding the clarity of voting notifications given to the public, while also questioning the metrics used to come up with the voter threshold needed to quash process.

While the City intends to dispute the allegations if it makes it before a Justice, Deputy Mayor for November, Dale Bass, has confirmed the City has decided not initiate any borrowing through the Build Kamloops approvals.

“I fear what’s going to happen is its going to cost the taxpayers some more money to go into court to, perhaps, have the judge — most likely — say the provincial government approved this process,” said Bass, who notes the AAP was vetted by the BC government before the City opened the counter-petition process on July 30th.  “The Ministry approved this… the provincial government approved this. They said ya, this is OK, we like the wording you’ve got now. Go for it.”

Its not clear at this point when — or if — the case will make it to a full hearing.

Options and timing for Build Kamloops borrowing remains fluid

Even though the City is going to hold-off on using its borrowing option for now, Bass says the planning work behind the projects will continue.

“As we move forward, we’re going to use some of our internal funds that are available,” noted Bass.  “Then, when we get to the point where we start to need to spend the bigger money, that’s when we planned on applying [for a loan]”

City council had already approved spending $7 million in February to complete the final design work on the Centre for the Performing Arts.

Cost estimates for designing the multiplex have not been set, though a council committee voted during an October 21st meeting that council authorize designs for a four ice-sheet concept.

Construction of both projects has been set to begin in late 2025 or early 2026.

This would give the City a year to take on the court challenge before the start of construction, which is a point in the process where the City may have a need to access capital through the Build Kamloops borrowing authority, provided it survives the would-be court challenge.

At this point, City’s plan for borrowing to pay down the debt for the Centre for the Performing Arts and the multiplex ice rink isn’t due to start until after the projects are finished.

Both are due to be completed by mid-2029.

Still, its believed the City’s Finance Department would hope to maintain flexibility as to when it can apply for funding through the provincial government-backed Municipal Finance Authority, which is the financing vehicle used by local governments in BC to secure long-term loans.

Flexibility would allow the City to be more strategic in its timing of any loan application, one of which could be made well ahead of 2029 to try to put Kamloops in a stronger financial position moving forward.

Sources close to the process have told Radio NL the Build Kamloops financing plan includes using part of the $275 million available to clear off the existing MFA debt on the Tournament Capital Center.

This would most likely put Kamloops in a stronger financial position when approaching the MFA to start paying for the Arts Centre and the multiplex.

*Editor’s note:  The City’s Finance Department has since told Radio NL the borrowing program does NOT include paying down the debt for the TCC.

MFA interest rates for long-term loans are normally locked-in for the first 10-years, with an option to refinance every five years after that.

The MFA board only comes together twice a year — the spring and fall — to rubber-stamp loans applications vetted by MFA experts, who can adjust lending rates based on a local government’s perceived ability to service and repay its loans, as well as broader market conditions.

Those market conditions have become somewhat less stable recently, with Donald Trump and the threat of protectionist tariffs returning to the White House on January 20th.

This could create concerns for the national and provincial economies, potentially forcing the Bank of Canada to adjust its economic policy, which has shifted to cutting interest rates and maintaining the current rate of inflation.

At the same time, a new majority mandate for David Eby’s NDP could put pressure on BC’s bond ratings, depending on what signals the new government puts out to the market.

Now-retired Finance Minister Katrine Conroy confirmed just a few weeks before the election the provincial deficit is likely to hit $8.9 billion by the time the fiscal 2024/2025 year comes to a close at the end of March.

While that $1.1 billion dollar increase in projections didn’t foster any immediate movement, the main credit rating agencies already have BC on notice, with consecutive ratings downgrades in each of the last three years, including a downgrade by S&P in April.

Those downgrades make BC government debt more costly to service, while also putting pressure on authorities to increase MFA lending rates.