OLDS — Joe Gustafson, a former director of Olds Fibre Ltd. (OFL) an entity of the Olds Institute for Community and Regional Development (OICRD), is puzzled by the town’s decision to put OICRD into receivership.
More than a year ago, town officials indicated the $14 million debt incurred when Olds Fibre Ltd.(OFL) which ovesees O-NET -- the community-owned TV, phone and internet service -- began installing fibre optic cable throughout the community it had “placed significant constraint on current and long-term planning for the Town of Olds.”
So they called on OICRD and Olds Fibre Ltd., which owns O-NET to find other alternative and replacement sources of financial support.
That didn’t work out so now, OICRD is being placed in receivership to consolidate its assets. The plan is to then create a town-owned corporation to mange it in the future.
During an interview with The Albertan, Gustafson said he was surprised by the town’s decision because back in May last year, when the town made its demand for OICRD/OFL to find other ways to deal with its debt, he was feeling very positive about O-NET's operations and its future.
He said O-NET made about $350,000 in 2020.
Gustafson said it takes about seven years for a small business to really come to “that point of sort of really stable, really positive.”
“The understanding is and was – and I believe still is – that this debt has no impact upon the debt limit of the town because the debt is being managed and being paid by someone else besides the taxpayer (O-NET customers). So it doesn’t have any impact upon the tax rate in the town,” Gustafson said.
"O-NET makes payments to OI, OI makes payments to the town. And we’ve never missed an interest payment, we’ve never missed a tax payment, we’ve never missed a payment of any sort in all the time we’ve been in existence.”
Town officials say their plan to turn OICRD and its various arms like O-NET, Olds Fibre Ltd. and Mountain View Power into a town-owned corporation won’t change how they operate or the services they provide.
So why do so? The Albertan asked.
“In the town’s opinion, and based upon advice received, this will make a more efficient business and operating structure,” an email from town officials says.
Earlier, town officials announced that they had hired BDO Canada to serve as a receiver for the OICRD in order to make that consolidation happen.
From there, the municipally-owned corporation would be created to hold all those assets under one roof. Town council plans to choose the board of directors for that new corporation.
A public hearing on how the corporation will operate will be held July 26 at 1 p.m. in town council chambers.
Several years ago, the town arranged to obtain loans totalling $14 million to help finance the installation of fibre optic lines to homes and businesses throughout Olds to connect customers to O-NET.
On May 22 last year, town council called on OI to repay a $14-million loan as part of a larger call for that entity’s loan refinancing to be “reorganized” and "additional process thereafter."
“The result of the receivership, if it proceeds as planned, will be a municipally controlled corporation in the form of Olds Fibre Ltd., just as it exists today, which will continue to provide its services and will also own the fibre optic network that it currently operates and maintains,” an email from the town says.
The purpose of a receiver is to sell/liquidate the assets of a given company or corporation.
However, town officials said in their earlier news release that OI and Olds Fibre Ltd., via an advisory committee, weren’t able to obtain any “interest or offers that would be capable of satisfying the town's need for substantial reduction or elimination of the town's financial supports for OICRD/OFL."
That being the case, The Albertan asked town officials how creating a municipally-owned corporation would solve that problem.
“While a typical receivership would be seeking a buyer as you have noted, the town’s current intention is to be that ‘buyer’ so to speak, in essence acquiring the assets of Olds Institute in satisfaction of the some or all of the outstanding loans owed to the town,” the email said.
Town officials were asked if they plan to make the new corporation a utility.
“There are no plans to bring the operations or assets of Olds Fibre Ltd. and O-NET under direct town operation,” the email says.
In a letter to the editor, former directors of the board of O-NET announced that they had resigned as a result of the town’s decision to put OICRD into receivership.
Watch for more coverage of the OICRD/OFL O-NET situation in the coming weeks.
