Langley approves $75M loan to buy strategic land, somewhere

The Township of Langley is set to borrow nearly $75 million dollars to buy “strategic land” for the municipality—although it’s not clear exactly which land the township plans to purchase.

Langley has a bevy of projects it plans to undertake in the next few years including building a new Brookswood firehall, creating new ice rinks, upgrading parks, establishing a new boat launch at Fort Langley’s marina park, and widening various roads.

To make those plans happen, the township needs to borrow money, not just for the construction itself, but also to buy land.

So last week, council approved a $75 million loan to pay for the acquisition of what it calls “strategic land.”

But although voters were given the opportunity to oppose the borrowing, it’s still not clear exactly where the land is or what it will be used for. And the township isn’t likely to reveal it soon.

According to the loan’s original bylaw—a key document in the bureaucratic process of borrowing money as a municipality—Langley won’t say where the strategic land is, or what it will be used for, until after it has already been purchased. That’s not unusual because revealing such information can potentially impact negotiations and the price a municipality will have to pay to buy land.

Staff wrote in the bylaw that “negotiations for the land acquisitions are still in progress” and that they wouldn’t identify which properties were being considered, or say anything more until the properties were purchased.

The $75 million could be used to buy a variety of properties: in Langley’s Yorkson neighbourhood, five acres of vacant parkland are assessed around $14 million, while in Willowbrook, 21 acres of vacant industrial land are assessed at around $45 million. Those assessements are tied to the land’s zoning—which the municipality has control over.

The loan is the latest in a wave of borrowing predicated on Langley’s development trends staying about the same.

Development cost charges—fees paid by developers when they get permission to rezone land or build new structures—will be used to pay back about half the money borrowed for strategic land. The other half will come from general revenue, which includes money raised through property taxes.

With an interest rate of 4.98%, Langley expects to spend around $5 million each year for the next 30 years repaying the loan. Roughly $2.6 million of that money will come from developer fees, while $2.5 million will come from general revenue.

Langley’s use of loans to spend developer fees before they have been collected is different from most other Fraser Valley municipalities. Although there are individual exceptions, cities typically save their DCC fees until they have enough money to build new amenities—usually after new residents are already living in the community. Because of that, municipalities are often playing catch up, trying to improve services or amenities after the city has already grown.

Mayor Eric Woodward campaigned for more and better infrastructure before the 2022 municipal election. He said he wanted roads and recreation facilities built faster, and wanted developers to speed the process along. By borrowing now and repaying its loan with DCCs later, the Township has front-loaded its spending to build the infrastructure and facilities Woodward has promised.

While it’s not rare for a municipality to take out an individual loan to pay for a single showcase project that may be financed by developer fees, the scale of Langley’s borrowing is notable. The newest multi-million dollar loan is one of several now on the books for the township. By December 2024, council had approved a half-billion dollars in borrowing to finance various projects, according to a story in the Langley Advance Times.

In September, council approved the borrowing of $138 million. That includes nearly $20 million to construct drainage infrastructure in the Smith neighbourhood, $19 million for the Jericho booster station, nearly $15 million for the Yorkson Community Park, almost $50 million for arena construction, $30 million to expand the Willowbrook Connector, and $6 million for infrastructure on 212 Street.

All those loans come with a cost: at a 5% interest rate, $500 million in loans would result in $25 million in interest payments alone each year. That is not how much the township is likely paying however. Although the township has authorized a half-billion in loans, it’s likely not all of those loans have actually been taken out.

As well, the loans outlined in Langley’s 2023 annual report have an average interest rate of 2%, resulting in annual interest payments between $4 million and $5 million. (Total payments on the then-$161 million in debt averaged around $14 million a year.) As of the end of 2023, the township expected to pay roughly $19 million in interest over the next five years. That number is likely now significantly higher, given the new borrowing that was approved over the last year.

The Current asked the township for a current breakdown of active loans, including a list of loans that have been paid off in the last year, but did not receive a response before publication.

Langley’s borrowing has increasingly become a topic of debate and disagreement around the council table—particularly since municipal loans are much more complicated than simply borrowing a $20 from a friend.

There are many steps a municipality has to go through to get a long-term loan, including getting the loan approved by the Municipal Finance Authority and others. That process can take a long time, so municipalities can get a temporary loan while they wait for the long-term loan to be approved. (The temporary loan can be paid off with the funds from the long-term loan when it comes in. The long-term loan, on the other hand, cannot be repaid before its end date.)

The $75 million strategic land loan approved last week is a temporary loan; the permanent loan for the same amount of money is currently making its way through the bureaucratic process.

The money from the temporary loan will be sitting in the bank when the township needs to purchase its “strategic land,” although the Township won’t necessarily use all of it right away. (Langley approves the borrowing of up to $25 million each year for “general revenue” to cover any funding gaps between January and July, when property taxes come in, but the township does not typically need to dip into that fund.)

But a temporary loan’s flexibility comes with an additional cost. Temporary borrowing is more expensive, and it is typically used as a “last resort,” township finance director Sandra Ruff told council in July.

“Our intention is to prefer not to pull it, but the borrowing process takes almost two years at this point,” she said.

Coun. Kim Richter said at the time that she had “a lot of concerns” about Langley’s use of temporary borrowing, and has made a number of comments about the sheer total of Langley’s loans on her Facebook page in the months since. (Richter has been absent from some of the meetings when loans were approved.)

“Inflation crisis continues [and] is not helped by excessive spending and borrowing,” Coun. Richter wrote on her Facebook page a few days before Langley’s $75 million temporary loan was approved. “I consider the half a billion dollars of new debt incurred by this Woodward-slate Council excessive.”

Getting an exact number on Langley’s debt has been tricky even for members of council. Coun. Margaret Kunst—who, like Coun. Richter, did not run with the Contract with Langley slate—had asked staff to bring back a report in May outlining the township’s debt, with the anticipated principal and interest payments, and where that money would come from. The motion was narrowly defeated, with five of nine council members opposed. (All of the opposing council members were elected with Woodward’s Contract with Langley slate.)

Residents do have opportunities to share their disagreement with Langley’s large loans, although that rarely happens. In order to approve the new $75 million permanent land loan, council underwent an “alternative approval process”—a process similar to a referendum, although not as intensive. (Instead of voting yea or nay to the loan via a ballot box, residents were told to send in a letter if they were opposed, similar to a signing petition.)

If roughly 10,000 people shared their disagreement, council would have to send the loan to an official referendum. Only five people wrote in saying they were opposed to increasing the township’s debt by $75 million.

But while voters were given the ability to oppose the loan, they weren’t given any information about what the borrowed money would actually buy.'

Because negotiations for the purchases were still underway, staff refused to say which properties the township would buy. Staff won’t disclose which land is being considered until after the properties are already purchased, meaning Langley’s future “strategic land” is still a closely held secret.