Initially published in the Alliston Herald on June 4, 2009
Several months ago I wrote that the New Tecumseth Improvement Society ("NTIS") - the corporation that formally owns the Georgian Bay Water Pipeline - owes the Town of New Tecumseth the sum of $10 million related to the town's investment.
In response, the mayor and senior town staff claimed, rather emphatically, that I was wrong. My suspicions were aroused, however, when the town adamantly refused to produce copies of the financial statements of NTIS (after initially saying they were available) on the basis it is a separate corporation.
This past week the town, in response to a Freedom of Information request by an unknown third party, released a report prepared in March 2008 by the accounting firm Deloitte & Touche. The report contains a detailed review of NTIS.
Happily, the Deloitte report includes the financial statements of NTIS for 2007. These statements clearly identify the outstanding debt payable to the Town of New Tecumseth as $10 million. In fact, this is consistent with the mayor's own representation of earlier this year that there is a total of $31.3 million of outstanding debt related to the pipeline. The $10 million owed to the town is included in this total.
The Deloitte accountants specifically acknowledge the existence of the $10-million debt owed to the town as well as the accuracy of the financial statements. Not only that, the Deloitte professionals add the following gem: "...we have reviewed the records of the Town and there is no indication that the Loan Receivable from NTIS has been reduced...". Furthermore, it turns out that town staff advised Deloitte that "...the Town has not forgiven" the $10-million loan owed to it by NTIS!
The good news is that Deloitte concludes, contrary to an earlier legal opinion, the town is not on the hook for the $21 million owed to the Ontario Clean Water Agency ("OCWA").
However, what is highly bothersome is the staff report that accompanies the Deloitte document. This report appears to confirm my fears that there is a plan to walk from the $10 million owed to the town by NTIS and, at the same time, unload the incredibly valuable pipeline asset.
By way of background, it is critical to remember that NTIS was set up for the benefit of the residents of our Town. In fact, the corporation's letters patent specifically identify the existence of the corporation as being for the "...benefit of the residents of the Corporation of the Town of New Tecumseth."
Ironically, although the town previously refused to provide the NTIS financial statements on the basis it was a separate corporation, the town now, as reflected in the staff report, appears to assert that NTIS needs to be replaced! Town CAO Terri Caron writes, "NTIS as a corporation... must be replaced with a new financially viable and sustainability governance structure that will ensure the appropriate asset management and future operational requirements are achieved..."
Similarly bothersome (if not entirely absurd) is the newly asserted claim by the town that the pipeline (which was paid for by the equity/debt of the Town and NTIS) was created not for the benefit of our town but was rather constructed for the benefit of our "region."
Specifically, the most recent assertion advanced by the town is that: "The pipeline was constructed as regional infrastructure and not solely for the benefit of New Tecumseth" (emphasis added).
As I wrote back in February, openness and transparency need to prevail. If there is a plan to "walk" from our $10-million investment and hand over the pipeline to a "regional" entity (as advocated by the province), the taxpayers are entitled to know. Smoke and mirrors are not acceptable.
Sadly, if this comes to fruition it will only reinforce the town's well-earned reputation as that of a patsy for the provincial government.
I suspect that the "Pipeline Giveaway" is not far off. Even if it isn't, I believe the town's ill conceived and short sighted memorandum has severely compromised our negotiation position.
Alas, that is fodder for another column.
