A draft loan from Clarien Bank to the Corporation of Hamilton to secure financing following the non-payment of the $18 million loan to Mexican Infrastructure Development Finance LLC has been approved in the Senate.

The loan, which was approved by the House of Assembly on Monday, is currently to the value of $19 million but the final amount will depend on the accumulated interest.

The purpose of the loan facility is to enable the CoH to pay the existing loan owed to the bank. The bank required the CoH to provide security in the form of the mortgage over certain freehold properties and land of the corporation as listed in schedule 8 of the credit facility agreement for properties.

Michael Fahy, the Minister of Home Affairs, said that in order for the corporation to service the monthly payments to Clarien, they must generate additional revenue to void the fault on any loan arrangement.

He stated that in an effort to assist the corporation to secure the necessary financing to service the monthly debt to Clarien, he had worked on behalf of the corporation, meeting with the MIF financing group, providing a letter of assurance to the corporation to the Attorney General to provide comfort that the necessary legislation would be tabled to help the corporation repay the debt and a letter of comfort between the Minister of Finance and Clarien Bank intending to provide assurances that the full loan, once released, would be covered until the corporation is in a position to service its commitments independent of any government guarantee.

The House recently passed the Traffic Offences Procedure Amendment Act 2015 that provided for the municipalities to collect all revenues generated from parking tickets within the municipal limits. Amendments to the municipalities Act 1923 were also passed that permitted the CoH to increase its borrowing limit from $20m to $30m.

The Ministry of Home Affairs has also been working with the Attorney General’s Chambers to table legislation that would permit the corporation the ability to clamp motor vehicle offenders since the previous regime was not proving effective. That legislation is actively under review by the technical officers. While the senate approved the proposal, they expressed concerns, noting that they had very little time to review the documents. During the senate debate independent senator James Jardine, a former Hamilton alderman, said he was saddened by the documents noting that numerous properties were listed as potential securities, although Sen Fahy said the list was a draft and the list had already been reduced. Among the properties potentially to be assessed to serve as securities are the Bulls Head Car Park, the City Hall Car Park, the Par-la-Ville Car Park, the Lemon Tree Cafe property, the Depot Yard, the Elliot Street car park and Barrs Park. Senators also questioned to what extend the corporation had “shopped around” for a deal and what efforts were being made to recover the missing $18 million.

Sen Fahy responded that police are investigating the matter and that talks were had with another jurisdiction seeking their assistance in recovering the funds.

Regarding the selection of Clarien Bank, he said there was a focus on finding a local bank to keep as much of the money on island as possible.

“They did shop around, but the best deal was with Clarien,” he said. “One of the other deals involved a sizeable government guarantee. This agreement does not include a government guarantee.”

Explaining the deal, Hamilton Mayor Charles Gosling told The Royal Gazette: “We can use properties for raising a mortgage with Clarien in order to pay off the loan with the MIF Group. The main interest from Clarien is that they have properties that produce income sufficient enough to pay off the loan if we are unable to raise the monies ourselves.”

Mr Gosling added: “We are in the position of working with government to re-establish some of the parking ordinances that we lost a couple of years ago which have had a huge financial impact on the revenue stream of the corporation and once that is firmly in place we will be able to pay off the loan as well as the interest.”