The Nest’s $66 million construction loan, once taken from UBC, will soon be financed by an external bank. This will reduce the interest rate from 5.75 per cent to 3.5 per cent and save students millions, said AMS President Ava Nasiri.
At the current rate of interest at 5.75 per cent, it costs $4,066 per day. The reduction in interest rate means that it will cost the AMS $2,475 per day instead, meaning that less of the Nest fee paid by students will go towards paying it off.
However, the Nest fee of $100 a year per student will not go down.
“What this means is that students won't have to pay it for as long as they would have,” said Nasiri. “Whereas originally the fee would have been $100 per student per year until 2050, now we can stop paying the loan much sooner.”
The refinancing will not affect other Nest or AMS services such as food venues or Speakeasy.
UBC, the original financier of the loan, supports the AMS refinancing the Nest.
“It makes sense for the student union, which is completely independent of the university, to try and find a lower rate of interest and it makes sense for the university to have the loan repaid,” said Peter Smailes, UBC treasurer, in an emailed statement to The Ubyssey.
There is a remote possibility of the AMS defaulting or failing to repay the loan, which will mean that the bank financing the loan will take possession of the Nest. However, the possibility of this is slim, according to Nasiri, even given the new changes in the BC Societies Act.
“It would have to happen through a referendum to allow students to opt out of paying the mandatory Nest fee or some kind of major change in legislation,” she said.
“There is confidence in the AMS’ ability to maintain upstanding financial status, both from the university and the bank from which we end up financing the loan, because students, when faced with the decision to pay the fee or lose the Nest, I think they will want to maintain and keep the use of this building.”
The AMS had begun discussing the possibility of refinancing the loan in the fall of 2014, and it has since been approved by a credit rating agency and most recently, the Board of Governors. It is now pending approval by the provincial government.
“While there is a provincial election going on, this is a matter of the financial well-being of students, not just today, but for the next 40 years,” said Nasiri. “The sooner it’s addressed and the sooner we can move forward on it, the better it is for the generations of UBC students to come.”