Library Gets Loan

Monday, December 18, 2006 08:35 PM

The Prince George Library will be getting a loan from the City of Prince George. The $323 thousand dollars will be used to install a new Library Automation Software System.

The existing system has been in operation since 1981 and is “due to retire” said the report to Council. The Library has spent over a year looking for a system that was affordable and has found one which will fit the bill.

The City will loan the money from the Endowment Reserve Fund over a 10 year period at an interest rate of 3.25%. That means the Library will have to pay just over $38 thousand a year to repay the loan. The City may have to increase the Library’s operating grant to cover that payment.

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Posted on Monday, December 18, 2006 08:35 PM in News by 250 News

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Comments

Posted by: Palopu on December 18 2006 9:59 PM

Now let me see?

(1) Loan $323,000.00 to Library over 10 years at 3.5%

(2) Get money from Endowment Reserve Fund

(3) Increase grant to Library so that they can make yearly payment of $38,000.00 on loan.

(4) It appears that the City is paying itself interest on its own loan.

Posted by: Runner46 on December 18 2006 11:22 PM

bloody good idea/

that is my money at work

Posted by: owl on December 18 2006 11:28 PM

If they are, that is great. It is called cost accounting.

I assume the money in the Endowment Reserve Fund collects some interest.

If that is correct, then removing that money will mean a loss of opportunity of making that interest.

So, if the Library wants to borrow money, the cost of that loan ought to be shown as a cost to the library program.

I know, it is the world of high finance. ;-)

Of course, the sad fact is that the City can only get 3.5% on funds in reserve. I know some stocks which will get a much better return. Guaranteed. Honest. Would I lie?

;-)

Posted by: Chester on December 19 2006 8:05 PM

Heck, a daily interest account with ING Bank pays that much. (3.5%) Is that really the best we can do?

Does the magic of compound interest work the same with debt as investing? Seems to me and my simple way of looking at things, compounding interest should work exactly the same in both directions. Chester