New legislation has been put forward to help the Corporation of Hamilton deal with its financial challenges, but more work must still be done.

While amendments to increase the Municipality’s ability to collect parking revenue and increase its debt ceiling were tabled on Friday, Hamilton mayor Charles Gosling said the burden of the $18 million Par-la-Ville loan guarantee still hangs over the corporation.

“To date [Mexico Infrastructure Finance] have been patient with the process,” Mr Gosling said. “At some point in time that patience may snap. They are in a position to seize the assets of the corporation to ensure payment.

“We have been working extremely hard to ensure this does not take place as we do not want corporation staff to pay the price of poor decisions being made at the elected council level.

“We are also greatly aware the impact a default would have on investor confidence in our Island.”

He added that through the corporation’s actions, a liquidator has been appointed to wind up the operations of Par-la-Ville Development, and the Minister of Home Affairs has made a complaint to the police regarding the matter.

“These two groups are better placed than we are to fully investigate the process by which the loan guarantee was agreed leading to the release of the final escrow monies,” he added, saying the corporation is interested in recovering what they can.

Mr Gosling said that the Traffic Offences Procedure Amendment and Validation Act 2015 would help to address a drop in parking revenue caused by past amendments.

“There is an increase in the parking fine from $50 to $75,” he said. “The two municipalities will receive the revenue from these fines. Unfortunately, at this point in time because there is no enforcement when the tickets are issued and payment becomes overdue, only 15 per cent of those ticketed actually pay the fine. No enforcement means 85 per cent do not pay their fines at a loss of almost $700,000 a year.

“Lack of enforcement has also impacted the corporation’s sales of parking vouchers and EasyPark revenue. This loss in voucher revenue is well over a million dollars a year. Combined losses would be almost $2 million.

“The removal of enforcement was due to the passage of an amendment to the Municipalities Act a couple of years ago which invalidated a number of ordinances including the most recent parking ordinance. This was challenged in court about a year ago and among other points.”

Noting the impact of the $18 million loan guarantee for the Par-la-Ville hotel project, Mr Gosling said: “Interest on this accumulates at 7 per cent, or $3,450 per day. Obviously, we have been working with government to make the appropriate changes to various acts and ordinances to allow us to live up to the full guarantee obligation promised by the previous council.”

He said that in order to repay the guarantee in a reasonable time frame, correct the losses in parking revenue and have enough of a return to do “even the minimal” amount of capital work, the Corporation needs to expand the pay parking area to cover the entire city, have corporation staff empowered to issue parking tickets, gain the ability to enforce parking through clamping, the ability to increase parking rates without an ordinance process.

Mr Gosling also noted an amendment to the Municipalities Act — also tabled on Friday — which would increase the Corporation’s debt ceiling from $20 million to $30 million.

“If the corporation is to borrow $18 million to repay the guarantee, then our debt ceiling has to be increased above the current $20 million limit.

This need has been apparent and identified for some time,” he said.

“Since we are instructed that the other necessary items set out above are being presented in another series of amendments, or even a new act in March or April, we need a written commitment to show any potential lender that we will be capable of repaying their terms for this loan.

“The corporation has been able to get a couple of term sheets from two local banks. Each one has its good and not so good points.

“This repayment is doable as long as we are able to confirm the new and protected revenue streams (as detailed above) to the lenders and show that we are able to enter into a legal agreement regarding the loan through an increase to the debt ceiling.

“We are almost there in terms of meeting our obligations. We just require some determined pushing in terms of providing our potential lenders and the council the confidence that we can enter into a financial contract that is realistic, achievable and minimalises the long-term impact this guarantee process and hotel project has done to the corporation and its ability to function even at the most basic level.”