Lease going up at the Legislative Assembly
Richard Gleeson
Northern News Services
Yellowknife (Jan 24/01) - The cost of running the legislative assembly building will soon be going up.
The legislative assembly's Board of Management is currently meeting with members of the building society to negotiate an $6,500 increase in the monthly lease payments on the building.
Unless the assembly is considering moving to a new home, there is not much room for negotiation.
"How we do it is the issue," said NWT Legislative Assembly Building Society president John Argue.
The legislative assembly building is being leased from the building society by the legislative assembly.
Currently the government pays $182,166 per month, $2.2 million annually, for the assembly.
The building society assumed responsibility for raising the $25 million to build the first permanent Northwest Territories Legislature. It did so by selling bonds and getting a mortgage.
The 46,000-square foot structure officially opened in 1993, at a time when interest rates were substantially higher than they are today.
As a result, the building society is locked into a mortgage that is higher than the going rate, and is paying returns of 11-13 per cent on outstanding bonds.
"The bank said flat-out, there would be no renegotiation of the interest rate (on the mortgage)," society lawyer Gerald Stang told the Board of Management two weeks ago.
Stang said the penalties for paying off the mortgage and getting a new one at current interest rates are prohibitive.
The mortgage runs from 1991 to 2014. When it expires, the building will belong to the government.
The lease between the building society and the government of the Northwest Territories includes a provision to renegotiate lease payments every five years.
The board agreed in principle to the increase in lease payments. Officials are currently negotiating. No decision was made on a society request to reduce or remove the five-year wait to renegotiate.
Lease payment increases have been renegotiated upward the last two times the lease has come up for renegotiation, in 1991 and 1996.
