Municipality to use reserves to pay off Inverhuron servicing project costs


 By Barb McKay


The Municipality of Kincardine will dip into its reserves to pay off nearly $500,000 in unfunded costs related to the cancelled Inverhuron servicing project.


During its meeting last Wednesday, municipal staff provided council with several options of dealing with the debt. When the project was shelved earlier this year when council realized it could not be completed by March 2016, the deadline that had to be met in order to receive $6 million in federal and provincial funding, the municipality was left with $1.41 million in costs accumulated through engineering fees and the environmental assessment process. The provincial and federal governments agreed to provide grants for work completed up to the deadline, amounting to $928,000, leaving $482,000 for the municipality to cover.


Treasurer Roxana Baumann said that taking the money out of a reserve fund, as council had done at the beginning of the year to pay off the stranded debt from the shoreline pipeline project, was the preferred option. Water and sewer funds should be avoided, she cautioned, because they are funded by existing users and the money is intended to cover operating costs and future repairs and replacements of systems already in place.


Other options included charging a fee for capital costs to property owners who would benefit from the services when the project is eventually completed, funding the debt through the tax rate or holding off on paying the debt until the project proceeds.


While obligatory reserve funds cannot be used to cover the costs because of regulatory requirements, Baumann said there is an Inverhuron sewer reserve fund that was started more than a decade ago and staff could not find any documentation dictating that the fund could not be used for this purpose. Councillor Laura Haight cautioned, however, that only some users in Inverhuron already on municipal services had paid into that reserve.


Council ultimately decided that the funds should be withdrawn from the municipality’s lifecycle reserve fund. Mayor Anne Eadie pointed out that the municipality will receive money from SP Armow as part of its agreement with the municipality for the Armow Wind Project and also from OPG for the deep geologic repository project if it is approved by the province. Those contributions would go to replenish the lifecycle reserve fund.