This plan shows the approved rezoning that ensures the land where the old hospital sits can accommodate the Landrex deal recently approved by Town of Ponoka council. Illustration courtesy of the Town of Ponoka

UPDATED: Town of Ponoka resident serves council regarding borrowing bylaw

A resident of the Town of Ponoka has served council and administration

A Town of Ponoka resident has served notice to town councillors and administration over a recently passed borrowing bylaw.

The only councillor excluded from the list is Coun. Loanna Gulka as she voted against the bylaw.

The bylaw in question is 380-17, which is needed in order for the town to enter into a lease agreement with Landrex over the proposed learning centre.

Ponoka News obtained a copy of the claim, which was submitted by resident Greg Nelson to the Court of Queen’s Bench in Wetaskiwin on June 19.

The claim is that councillors went against Section 275 (1) of the MGA. “I request the noted mayor and councillors be held liable to the municipality for the amount borrowed,” states the remedy sought.

According to section 275 (1) of the MGA, there is potential of civil liability of councillors when a municipality makes a borrowing:

“When a municipality makes a borrowing, loan or guarantees the repayment of a loan that causes the municipality to exceed its debt limit, a councillor who voted for the bylaw authorizing the borrowing, loan or guarantee is liable to the municipality for the amount borrowed, loaned or guaranteed, unless the borrowing, loan or guarantee has been approved by the Minister,” states the MGA.

Nelson’s claim alleges that the annual lease cost of 28,000 square feet at $25 per square foot ($700,000) over the course of 25 years exceeds the town’s borrowing.

As it stands, the Town of Ponoka can borrow $16 million.

Nelson provided the information presented to council on March 14 by Gord Parker, of Rowland, Parker and Associates. The claim states that Parker estimated the overall cost of $24.5 million (at the time the bylaw was proposed at 35 years, which was amended to 25 years after the meeting).

It also alleges that the bylaw contains two false statements: The town’s debt at $572,468, which is actually at $7.4 million. Secondly, the claim alleges the lease will have exceeded the town’s borrowing by $8 million.

“I believe that the town officials responsible for drafting this bylaw, by omitting to state the amount of the borrowing as required by Sec. 251 and by grossly understating the current town debt as well as falsely stating that the borrowing will not exceed the town’s debt limit, did try to mislead even some of the town councillors,” states the claim.

Mayor Rick Bonnett did not comment on the claim except to say that the town followed the MGA and that he is confident the proper steps were taken. He added that no money is being borrowed to make the annual lease payments.

With the MGA, long term leases require a borrowing bylaw. The bylaw was approved and there were no petitions against it at the time.

A justice reviewed the claim July 4, but adjourned the decision to Feb. 15, 2018 for a summary judgement. It is believed in a case like this a judge is expected to make a decision for or against the claim, but is not expected to go to a trial. The town may have to present a statement of defence for the judge to review.

It is also believed that the learning centre project could continue despite the claim.

If the project is delayed due to the claim, Bonnett stated the town will be seeking damages.

Development set to move forward

Council voted in favour of third reading the rezoning bylaw for the proposed learning centre at its regular meeting June 27.

This sets out the zoning guidelines for the property where the old hospital sits and provides outlines of what can be built in the four lots.

One of the concerns provided by residents at the June 13 public hearing was over vehicle access to Area C via the back alley (the southeast side of the property).

“Access remains to be recommended from the lane to the onsite parking,” states the preamble to council. “This alleviates an additional vehicle crossing over the sidewalk onto 50 Street.”

“Additional text has been added to provide the allowance of parking on Area B to alleviate the requirement for all parking on site at the rear of the building. Further, at the time of development, access spacing and corresponding lane improvements are to be addressed.”

Another area with additional clarification is in the landscaping and site improvements as some comments were provided by the developers. “This included clarification of the on-site pedestrian circulation and landscaping calculations.”

The developer has since been provided with a development permit for demolition of the old hospital and the project is expected to move forward pending the decision from the Justice.

***This story has been updated to add the judge’s decision to adjourn a decision until February next year.***