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Mono council refuses interest break on tennis club loan

November 28, 2024   ·   0 Comments

By JAMES MATTHEWS

An agreement is an agreement and its terms should be respected.

That’s the message the Mono Tennis Club received from town council during its Nov. 26 meeting. It was in answer to the club’s request that interest on a loan from the municipality be reduced to nothing.

Even at the current prime interest rate, the additional interest payment alone would be $3,574 plus the principal of 4,362 for a total of $7,837 for the first year.

The first loan payment based on the agreement would be plus 7.2 per cent interest. That would be $4,603.82.

Currently, the prime rate is 5.95 per cent and it is expected to be reduced in December before an expected further reduction next year.

Patti Powell, the tennis club’s president, appeared before council on Oct. 8 and requested the interest on a loan be reduced from prime to zero per cent.

The prime rate at the time the loan was negotiated was 6.45 per cent. And the agreement states the prime rate used to calculate the year’s payment would be the prime rate at the beginning of the year.

But here’s the rub: The prime rate was 7.2 per cent in January. It wasn’t reduced until June to 6.95 per cent and before a further reduction to 6.45 per cent.

The loan was for new wheelchair-accessible tennis courts for which the club would pay $4,262.80 per year over 15 years.

“Quite a huge undertaking for a small club with several disadvantages in our path to complete this task,” Powell said during the October meeting. “We are current on this loan which for the first two years has been at zero interest. However, going forward, interest payments are set to increase to prime which will make repayment exceedingly difficult to achieve.”

Les Halucha, the town’s treasurer, said he hasn’t sent the club an invoice yet until council answers the question of interest.

“My memo recommends not zero,” he said. “But something else.”

“This is difficult,” Deputy Mayor Fred Nix said.

He said council can’t openly discuss the club’s financial statement, which had been provided to council.

“The tennis club is a private club, but they do serve, I think, a public function here in the town,” Nix said. “I know an agreement was an agreement. We should be really tough. But I think when the agreement was made we didn’t contemplate the prime interest rate being 7.2 (per cent). That’s pretty high.”

Interest has to be paid, he said. And he suggested council cut the interest payment in half.

“Or something reasonable,” Nix said.

“I think a deal is a deal,” Councillor Melinda Davie said. “I think it’s questionable in the community whether we really needed all of the tennis (amenities).”

She’s heard many residents question the need for the new tennis courts.

“Time will tell, but already people are asking can we also play pickleball on them?” Davie said. “This was brought to us by a request from the tennis club. A deal is a deal.”

The interest payment is not an arduous amount of money, she said.

“It’s a fluctuating rate,” Davie said. “It’s prime. It’s not to say that it will always be this seven per cent either. I strongly believe a deal is a deal for the residents of Mono. We lent them money when we didn’t have it to lend ourselves.”

“We made an agreement, a contract in good faith,” Coun. Elaine Capes said. “And there were a number of residents who said we could’ve paved roads instead of building more tennis courts. I remember that clearly.”

Quite simply, Capes said, the tennis club should honour the agreement it made with the town.

“If this was the bank, what do you think they’d say?” Capes said. “Sorry, you signed the deal. That’s the deal.”

Capes wondered how much interest the town has paid on the money it got to loan to the tennis club.

“The interest is being paid on that somewhere,” she said.

“That tennis court project was funded by government grants,” Halucha said.

The club’s portion, according to the stipulations of the grant, was a little more than $68,000 which the town shelled out for from its Parkland Reserve, minus $5,000 paid upfront by the club.

“So that’s reserves that is not earning interest because we spent it,” Capes said.

“I think this was a very good deal for the tennis club,” Coun. Ralph Manktelow said. “In general, I believe in user paying. They’re not really supporting that principle. We asked for their financial report and then we were told that it had to be kept quiet.”

But Manktelow said he was going to make some use of that report anyway.

“The revenue stream that they proposed is not fiscally responsible and they need to be more realistic,” he said. “And they probably will be if they have to pay for the interest.”

“I add parenthetically that it was rather disappointing to see a sign up on our tennis court that said that it was members only,” Creelman said.

Council decided there would be no change to the loan agreement.

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