Initially published in the Alliston Herald on February 6, 2009
It would appear that some at New Tecumseth town hall were not particularly fond of last week's column that focused upon New Tecumseth's rather enormous debt. As a result I have been told to expect a public rebuttal that will correct my alleged errors.
If the town should respond in this fashion we might consider the famous quote from Hamlet: "...thou doth protest too much, me thinks."
As the first line of attack one can anticipate an assertion that the $31 million debt related to the water pipeline from Georgian Bay does not belong to and/or is not the responsibility of the town. The explanation will no doubt be factually complex and thoroughly confusing.
As has always been the case, the formal "owner" of the pipeline is a corporation known as the New Tecumseth Improvement Society (NTIS). The transaction was structured in this manner for tax reasons. Indeed, past financial statements of the town have confirmed this fact by acknowledging that NTIS is "organized to benefit the residents of the Town of New Tecumseth."
New Tecumseth paid around $7 million (in effect, think of it as a down payment) towards the cost of the pipeline. The remaining funds came from various parties with the largest amount being a loan (think of it as the mortgage) from the province via an entity known as the Ontario Clean Water Agency.
The New Tecumseth Council Minutes from November, 2000 reflect the Town's investment in the pipeline. They refer to a transfer of up to $7.2 million from the hydro reserve fund to finance the "water pipeline capital project." The same minutes provide that proceeds from agreements with various developers in the Alliston Secondary Plan would replace, and replenish, the $7 million from the hydro fund.
Guess what? We've never seen the $7 million. We likely never will!
As for the pipeline debt, it was expected to have been repaid from revenues generated by the sale of water to other communities. Unfortunately, when a 2003 deal for the sale of water to Bradford was near, the Town of Collingwood started to grumble and claimed that this was not permitted.
Tragically, the town played the role of a weak-kneed patsy and folded like a cheap suit in response to this assertion. It gave up without a fight. Our town was analogous to Charles Atlas on the beach with the bully before Charles bulked up!
The deal with Bradford never happened as, it would seem, we were too stricken with terror to conclude the transaction. I fear that our paralysis on this issue is likely to haunt our community for decades to come.
Quite simply, the town's inability to deal with the pipeline debt in the future arises in large part as a result of the failure to stand up for its rights on this issue and instead appease more assertive third parties.
As a result, we have a mess on our hands. Lest there be any doubt that the debt is the town's problem, I quote from a 2005 press release issued by the town: "New Tecumseth Council has been working with the present government to address the pipeline debt problem."
The release includes a reference to the town's "...insistence that the burden of the pipeline debt must be removed from the water users in New Tecumseth...".
Unfortunately, it appears as though New Tecumseth is posed, when the debt becomes due, to hand over the pipeline - an asset that I suggest is conservatively worth more than $100 million - with no strings attached. In the process I expect the town's original investment of $7 million will be forever lost.
Why? I suggest it is because the town will be too eager to take the easy way out. In this case the easy way out means that we passively hand over this wonderful asset to the Ontario Clean Water Agency with but a whimper.
Let's hope it doesn't happen. If it does the biggest losers will be the taxpayers of New Tecumseth.
