Parish councils could fund new projects by borrowing money from the district council and paying it back by increasing council tax under a proposed new scheme.
South Holland District Council is looking to create a new £500,000 Community Reserve.
Parish and town councils in the area would be able to borrow money for projects including new buildings, play facilities, turning street lights back on, match funding and to acquire land.
However a requirement of the loan would be that the precept (the parish council’s share it receives of the council tax its residents pay) would be increased.
The loan would have to be paid back to SHDC at the Bank of England’s annual interest rate plus one per cent with recommended lengths of loans being five, ten or 15 years long.
Payments would be taken annually by deducting the cost ahead of SHDC transferring the yearly precept payment to the relevant authority.
Among the written evidence needed get a loan from the Community Reserve, parish councils will need to show that the project has the support of local residents as well as a right to install.
The district council hopes it will prove an alternative funding source for parish councils to the Public Works Loan Board which a report to the council’s cabinet by senior policy advisor Greg Pearson describes as “admin and resource intensive”.
The report continues: “This will enable parishes to access capital funding to help build, buy or improve community assets with preferential terms and repayment periods.
“This will generate greater resident satisfaction with the local area.
“It will provide residents with access to community resources that they may not be able to receive otherwise.
“It will provide parishes with an alternative to Public Works Loan Board funds that is less resource intensive to secure.”
Despite Spalding not having a town or parish council, the report to next week’s meeting of the SHDC cabinet does not rule out projects in the town using the proposed scheme, but it could be restricted.
The report continues: “It must be noted that there are no parish or town councils that service any of the Spalding wards.
“Therefore, while these wards are not precluded from accessing this reserve it must be noted that they are limited by what can be reclaimed through the Spalding Special Expense Area as there is no precepting function to allow repayments of loans.”