OLDS - The Town of Olds was able to stave off defaulting on a loan payment that was supposed to be funded by Olds Institute by dipping into reserves last week.
Olds Institute’s creditors, including the Town of Olds, put Olds Institute into receivership in June. The appointed receiver, BDO Canada Ltd., informed the town at the end of August that the Sept. 15 loan payment to the Town of Olds could not be made.
Council, although not unanimously, voted on Sept. 13 to adjust the 2021 operating budget to include the $452,647 payment, bringing the budget total to $31,141,470.
Administration recommended the payment be made from reserves.
Mayor Michael Muzychka called the move "a little irregular” as funds in reserves are earmarked monies. But he pointed out that taxpayers could have been on the hook – in the neighbourhood a of five per cent tax increase – had reserves not been used.
“This would be a significant tax increase if we were to take it out of general funds and asked the taxpayers to pay for this. This is a very, very serious decision we’re making here today to be able to make this payment,” Muzychka said.
Over the years, the municipality has backed about $14 million in loans to Olds Institute through the Alberta Capital Finance Authority for development of the fibre optic network in town.
A re-organization of the debt occurred in 2017 whereby only the interest had to be paid for a period of three years. The first of principal payments started this month.
Coun. Mary Anne Overwater questioned whether "if sooner or later, somebody will be able to make this payment."
The town’s chief administrative officer, Michael Merritt, said it is up to BDO, as Olds Institute’s receiver, to determine.
Muzychka said the expectation is that once Olds Fibre Ltd. – the corporate name of O-NET – is turned into a municipally-controlled corporation, that the newly-formed corporation would pay the $452,647 back to the Town of Olds.
The Town of Olds intends to acquire all of the issued and outstanding shares of Olds Fibre Ltd. from Olds Institute in order to operate and maintain the Olds Connected Community Network and ensure continuity and quality in the provision of fibre optic internet services to the residents and businesses of the town and the surrounding service areas.
Prior to acquiring the shares of Olds Fibre Ltd., the town must first consider a business plan which satisfies the obligations of the Municipal Government Act and the Municipally Controlled Corporation regulation.
Olds Fibre Ltd.'s business plan was presented to council during an in-camera session on Aug. 26. A supplemental business plan was also presented to council during the meeting in camera.
