Rocky View reaches $14-million settlement with Sunterra Beef

By Enrique Massot
The County News

The news was dropped as 2017 was coming to a close: A “made-in-Rocky View solution” for water and wastewater in Balzac was going to cost taxpayers an additional $14 million.

The payment settled a legal claim of Sunterra Beef against Rocky View for the County’s failure to honour water and wastewater servicing agreements to the Rancher’s Beef abattoir and packing plant in Balzac.

“After years of effort and negotiation, the County agreed to pay $14 million to Sunterra Beef Ltd. to fully settle the matter,” a Rocky View Dec. 12 release read. “The funds will come from the County’s reserves.”

Rancher’s Beef opened the plant in June of 2006, but ceased operations in August of 2007.

After a period of inactivity, the company was declared bankrupt in February of 2008 and its assets were subsequently sold, together with water and wastewater agreements, to Sunterra Beef Ltd.

In March of 2008, Rocky View told Sunterra it needed to enter into new servicing agreements.

“Regarding the water agreement, Rocky View said it had no water to provide to the Plant,” noted a statement of claim that Sunterra Beef Ltd. filed on March 28, 2013 against Rocky View, Rancher’s Beef Limited Partnership and Ranchers’ Beef Ltd.

Sunterra said refusal to honour the water and wastewater agreements prevented selling the plant to Lilydale in 2008.

In January, 2013, Sunterra notified Rocky View of another agreement to sell the plant to Harmony Beef Company.

In February, 2013, the statement of claim alleged that Rocky View told Harmony that, to provide water, Harmony would have to enter cost-contribution agreements for water and wastewater at an “initial cost” to Harmony of $6.6 million for water infrastructure and $6.5 million for wastewater.

Sunterra argued it had already made capital contributions for both water and sewage and that the site had been fully developed and connected to water and sewage infrastructure.

The problem was, during the plant’s inactivity, the County had allocated the plant’s water and sewage capacity to other users.

“Rocky View, in further breach, permitted other users to use the facilities constructed so that the County now refuses to provide wastewater services to the plant unless the owner pays for the construction of new wastewater facilities,” the Sunterra statement read.

Rocky View, in its Dec. 12 release, acknowledged it.

“With the plant closed and using little or no water, the (then) MD of Rocky View proceeded to assign water and wastewater capacity to other developments in the East Balzac and Conrich areas in order to support the municipality’s continued economic development,” noted the County’s release.

In a statement of defence filed in June, 2013, Rocky View alleged that an August 2006 provincial moratorium on the issuance of water licences to withdraw water from the Bow River constituted a force majeure event.

“As a result…the County has never had the capacity to supply water to the plant pursuant to the water agreement,” it noted.

None of the allegations was proven in court.

“The decision to reassign water and wastewater…has brought thousands of jobs to Rocky View County.” Rocky View

The $14-million payment adds up to about $135 million the County spent to build water and sewer infrastructure servicing Balzac and east Rocky View, according to estimations of the residents’ group Rocky View Forward (RVF) published in the County News on Dec. 16, 2016.

In its Dec. 12 release, Rocky View estimated that “the decision to reassign water and wastewater capacity to other businesses and developments…has brought thousands of jobs to Rocky View County, and tens-of-millions of dollars in non-residential property taxes and levies.”

County officials, however, haven’t shown how much extra tax revenue the County is making in order to offset $135 million spent in infrastructure.

In addition, contrary to early projections and 12 years after starting the project, the County is still in debt for about $90 million.

According to page 18 of the December 2016 audited financial statements, the County owes about $58 million to banks and financial institutions.

Based on information provided by Rocky View officials, RVF was able to establish that the County also owes about $16 million to taxpayers and close to $15 million to developers.

Purchasing a water licence to the Western Irrigation District for $15 million added to the project expenses.

In addition, the operation of the water and sewage infrastructure requires subsidies to the tune of between $1.5 million and $2.3 million per year, according to RVF estimations.

And while debt with banks and financial institutions has slightly gone down, the wastewater treatment plant in Langdon is near capacity and will soon need upgrades estimated to cost $35 million.

  • Guest:

    Rocky View taxpayers deserve to be informed of the decisions the County has made–and is still making–to front end expenses to facilitate urban development in Balzac and Conrich, so that the claim of “tens of millions of dollars in property taxes and levies” allegedly overflowing the County’s coffers can be duly verified.

    This is no doubt what the late Rick Butler had in mind during his one-year time as deputy reeve when he spearheaded a third-party audit on Rocky View’s debt, which after his untimely death in December 2011 was quickly watered down to an “in-house” audit.

  • Guest

    With these kinds of decisions and costs, it seems to be very expensive to keep the inhouse engineering department that makes recommendations for these kinds of decisions and projects. Perhaps a review of the department’s past recommendations and activities may suggest consideration for outsourcing of the services to non-affiliated small engineering experts and removal of the private interests. It seems the expense of keeping the inhouse department far exceeds the regular salary budgets.