At a special Monday afternoon meeting of council, the city gave first and second reading to a bylaw authorizing the borrowing of $3.5 million.

The city will use the money to purchase the Yellowknife Public Library, housed in the Centre Square Mall.

Council decided to purchase the library from Centre Square Developments Ltd. late last year.

Following that decision it asked for -- and received -- permission from the territorial government to borrow the money without holding a plebiscite.

The city argued that it was simply refinancing an existing deal. No plebiscite was held on the original lease agreement.

Finance director Joe Kronstal said it was difficult to predict how much the city will save by purchasing the space.

It is currently paying 10.5 per cent on a lease-to-own agreement that expires in 2010. Monthly lease payments are $37,750.

He said the city will pay the going prime rate on the money it is borrowing for the purchase. The debt will be repaid over nine years.

Prime rate currently stands at 4.5 per cent. If that rate holds through the life of the debenture, Kronstal calculated the city will save about $2.1 million.

The loan agreement the city is considering includes the option of fixing the rate at any time.

Taking into consideration lease payments already made, the total cost of the library will be just over $7.3 million.