Edward River Council — formed in 2016 as an amalgamation of the former Deniliquin and and Conargo Shire councils — made the decision to terminate each of the eight to 10 year loans at its December meeting.
The payments will be taken from a combination of areas, including council’s unrestricted funds and specific restricted reserves.
While the move is expected to impact on council’s income from interest earned on cash reserves, council manager finance Colleen O’Connor’s report indicated it would save $48,169.15 on loan repayments and interest by paying the loans early.
‘‘Council approached National Australia Bank for early termination costs for each of the loans. The loans are a fixed rate and therefore council is required to pay the bank’s economic cost if council chooses to pay the loans out early,’’ she said.
‘‘At council’s request, New South Wales Treasury Corporation (TCorp) conducted a cost-benefit analysis of paying out three of the highest value loans early.
‘‘New South Wales Treasury Corporation has found it makes good economic sense to repay all the loans early.’’
The value of the remaining loans at November 30, 2018 was $2,239,027, or $2,317,017.80 with the added termination fees.
Loans to be repaid early, and their remaining balance including termination fee, are:
●Levee Bank (1) – $544,253.26 (to be paid from unrestricted cash reserves).
●Levee Bank (2) – $119,469.45 (unrestricted cash).
●Medical Centre – $496,941.33 (unrestricted cash).
●End Street Deniliquin – $238,937.18 (unrestricted cash).
●Stormwater Drainage – $56,734.49 (unrestricted cash).
●Sewer Effluent Re-Use Facility – $696,936.63 (Sewerage Services Fund).
●Library – $113,979.73 (Library Reserve).
●Aerodrome – $49,765.73 (Airport Development Reserves).
After payment of the loans, council’s Sewerage Service Fund balance will be reduced to $5,555,610, and Edward River Council’s share of the Library Reserve would be reduced to $308,231.
After the repayment of the aerodrome loan, $241,681 would be left in the Airport Development Reserve. Of that remaining balance, $100,000 has already been committed in the 2018/19 operational plan for runway development.
Council’s unrestricted cash reserve was $10.4 million at the end of November 2018, and will be reduced by $1,456,336.
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