Residents of Takhini North could end up pay about half the interest rate they were expecting on the Local Improvement Charge (LIC) the city is charging each property owner for work being done in the area.

Along with building new lots in the neighbourhood off Range Road, the city is overhauling the water, sewer and roads.

The owners of properties fronting the streets are being levied a local improvement charge, totalling about $1.1 million of the $9.6 million worth of work, based on the size of their lots.

Most individual property owners are set to pay between $8,000 and $22,000 on their properties. The exception is condo owners at 30 Normandy Rd., who will each pay $1,559.60, and the Yukon government, which will pay $113,182.40 for the charge on its property.

City officials originally estimated an interest rate of eight per cent on the charge with a 15-year repayment plan for residents. However, as council heard last night, that could change thanks to the recession and the federal government.

Rob Fendrick, the city's director of administrative services, said the federal government's Economic Action Plan 2009 has a number of housing-related initiatives being delivered by the Canada Mortgage and Housing Corp. (CMHC).

"These measures are intended to create employment through timely and targeted investments to build new and renovate existing social housing, and fund housing-related infrastructure," notes the administrative report delivered to council by Fendrick.

"This is a very timely and fortuitous event in terms of the Takhini North LIC, as the rates are very favourable."

The indicator rate with the CMHC is at 3.75 and 4.25 per cent now compared to the eight per cent indicator rate that was initially expected through the bank.

However, as Fendrick pointed out, the indicator rate is simply that: an indication of what might be expected. It could be higher or lower depending on where rates are in December, when the loan is expected to be taken out.

The interest rate will remain the same though for the 15-year amortization period on the loan.

Questioned by Coun. Dave Stockdale, Fendrick noted the work on Takhini North - including a second phase of development of new lots next year - will bring the city's capital reserve for the work down to about $1 million after it is finished.

"Slowly but surely, we've sort of had to finance some of these projects through one of two reserves and then we'll have to re-allocate the land bank reserve," he said.

"And in about five years, we'll be back up to the $20-million mark in the reserves, but currently we're using the reserves."

Council will vote on whether to go ahead with the bylaw to borrow for the LICs next week.