Opinion: Rocky View’s debt still needs investigation

Enrique Massot

County News Online
Six years after the fact, the public is still ill-informed on the reasons the County had for starting a borrowing spree six years ago.
 The late deputy reeve Rick Butler received support from his peers in Council, shortly after being elected in 2010, to commission a third-party audit on the debt and its management. However, Butler’s approved motion was later watered down to an in-house report that shed no light on crucial questions. As a result, the County has wasted three years, during which time money-losing levies remained in place.

No organization, country or individuals can move on without clarifying the past. Many questions remain on Rocky View’s management. This became even more clear after the update of offsite water and wastewater levies in July increased them by more than 3,000 per cent as in the case of a Balzac development still pending approval.

Are the levies too high now or were they too low before? Let’s remember that municipalities in Alberta cannot, by law, make a profit on levies; they are only allowed to recoup the investments they make. In consequence, if the levies are now proper, they were low before.

Third-party audit three years overdue

To clear the air, one of the first actions by the Council elected Oct. 21 should be to commission an impartial, third-party audit of the procedures followed since the County began to look at its notorious Made-In-Rocky View-Solution to servicing around 2004.

The East Rocky View wastewater system, made up of a Balzac-Langdon pipeline, lift stations and an upgraded wastewater treatment plant in Langdon was promoted in 2005 as a system capable to service 16,000 acres of residential, commercial and industrial development with capacity equivalent to 100,000 persons.

Water was to come through a 54-million litres per day licence that Rocky View was going to pump from the Bow River south of Langdon.

Staff told Council—and Council chose to believe—that large amounts of development would happen and levies would be pouring in at a rate of about $10 million per year, allowing the County to quickly pay back the debt.

Solberg reveals ‘have water’ mistery

Incumbent Earl Solberg aspiring to re-election in Division 5 encompassing Conrich has provided some on-the-record information otherwise kept in deep background. In his website , Solberg tells the word-of-mouth story, widely known within developers’ circles, that deputy premier Shirley McClellan promised water to Rocky View officials—verbally. 

“November 2004…(reeve Al Schule) got an urgent call from the Deputy Premier (Shirley McClellan) to meet her in Calgary…the gist of the meeting was the province will get you the water,” wrote Solberg. 

Rocky View went ahead with borrowing money and building the sewage treatment infrastructure in 2005, with the initial purpose of servicing the short-lived Ranchers’ Beef packing plant. As for water, not everything went as planned, Solberg acknowledges: 

“Shortly thereafter for some ‘unknown reason’ the Bow basin was abruptly closed,” he wrote.

Provincial moratorium on the Bow River was game changer

In reality, Rocky View knew full well that a group of agencies of which the County was part had researched the state of the Bow River, and established that the stream had been over-allocated. The province followed up on the group’s recommendations and in August 2006 imposed a moratorium on new licences. 

From that moment, Rocky View’s dreams of developing 16,000 acres and a 100,000-person equal in residential, commercial and industrial development were dead in the water. (pun intended).

Let’s recall that at that time Rocky View had approved CrossIron Mills retail centre in Balzac and was obligated to supply water. 

In the following months, Rocky View elected officials scrambled to find water, spending millions in a study on how to pipe it from the Red Deer River through Drumheller. The attempt failed, but the Western Irrigation District came to the rescue and its members approved, by a narrow margin, selling some of their water rights to Rocky View for $15 million.

Water Co-op disregarded as water supplier

 However, the County kept quiet about Rocky View Water Co-op, which was capable of supplying CrossIron Mills. In fact, the co-op did supply the mall on an interim basis, while the County built its own water infrastructure. Whether elected officials purposely kept silence in hopes to get more water, is one more question for an audit. Fact is, the water the County obtained was far less than needed to match the Balzac-Langdon sewage system and develop the 16,000 acres. At that precise moment, it must’ve been clear that the massive project needed revision in light of the new reality.

County uses taxpayers’ money to issue legal threats 

However, officials forged ahead without changes, and when some resident groups such as the Central Springbank Task Force for sensible development  began voicing concerns in 2010, the County resorted to legal threats to residents’ websites and poured money into a public relations operation, attempting to disguise its failure as success, trumpeting contempt for the City, traffic lights in Balzac, and portraying Rocky View as the new tax-rich tiger. 

Meanwhile, officials did exactly the opposite of what they should have done, keeping levies calculated in function of 16,000 acres of development. By dividing the total cost of the infrastructure by 16,000, the per-acre resulting levies were too low. As a result, Rocky View would not be able to even service its debt, which is exactly what happened.

“Heavy water users pay as little as 1 per cent of true costs (and) potential losses are in the tens of millions, ” wrote Coun. Al Sacuta in his Ourbearspaw.ca website. 

Let’s recall how the collection of wastewater levies went, from 2006 to 2012, according to numbers provided by Rocky View staff:
















Total wastewater levies collected in six years: $10.9 million. Realistic?

Interest paid on the wastewater debt in the same period: $8.3 million. Proportionate?

Levy amount remaining to make principal payments: $2.6 million. A pittance?

As a result, for some of those years, the County had to obtain holidays on debt payments, which increased the debt even more, to a peak $75 million.

Early in the game, it should have been clear to insiders that these levies were not going to recover the County’s investment.

Deputy Reeve Butler’s audit thwarted 

It was clear to four councillors elected in 2010. Since the beginning of their term, councillors Al Sacuta, Margaret Bahcheli, Kim Magnuson and Rick Butler, who died in December 2011 and was followed by Liz Breakey, began asking for a revision of the money-losing wastewater levies. However, they were quashed by a majority of five other councillors. Nothing happened in spite of a County commitment to annual levy reviews.

On top of that, the County did not reviewed levies in 2011 and 2012, in spite of a commitment to annual reviews. It only did it in 2013, when the County’s lawyer acknowledged the need for new levies, endorsing the requests of the minority.

Updated levies show appalling difference

When Council approved new levies last July, the New Horizon Mall catering to Asian customers planned to host 500 shops and services across from Cross Iron Mills.would have paid $4 million in wastewater levies. Using the old levy, the same development would have paid (this is not a typo)…$138,000.

With the backing of a majority of her peers, Coun. Lois Habberfield succeeded in passing an amendment to give a break to two pending development applications. As a result of the amendment (opposed by three councillors from the west), the $4-million levy turned into $1.5 million.

County was not crying poor before 2005

Since at least 2004, officials have repeated that the County needs to diversify its tax base, as a justification for the investments they authorized to attract development. Let’s remember that the County, before 2005, was in a stable position with no long-term debt. The increase in value of its acreages in the west kept dollars pouring in, compensating for the low rates paid by agricultural lands.

Indeed, a financial planning study report produced by the ISL team of consultants in February, 2008 to serve as basis for the Growth Management Strategy noted:

“Rocky View’s strong assessment base is to a large extent a function of the high value of its housing stock. Rocky View’s residential equalized assessments per capita are roughly 70% higher than the average for the comparative municipalities.”

That is another argument in support of investigating the real reasons officials had to make a risky investment of the taxpayers’ money in a project no resident was asking for.

Province declines to investigate

The four western councillors and at least one citizen did make a request to the provincial government to conduct a review of Rocky View’s books. However, the Minister of Municipal Affairs, Doug Griffiths, declined to take action, virtually telling taxpayers “you elected them, you deal with them.”

Electing hidden-agenda candidates may cost money

Taxpayers’ interest is to strive to uncover the real agendas of candidates before voting. Some times is difficult to do so, but necessary to keep democracy alive. Some candidates may say all the ‘right things’ and keep their real intentions deep under wraps. Others have a record that can be researched with Google’s help. Once candidates become elected officials, they will set up to work on their agendas. It then becomes nearly impossible to redress any errors. Citizens have so far tried everything they can: the Courts, the Province, the media, etc. It remains the best option is to elect officials willing to work for fellow residents. Those with an agenda to serve private business’ interests will do what they’ve set out to do—residents be dammed.