The price that Ponoka County paid as a creditor of a bankrupt energy company is high.
At its regular council meeting on Oct. 25, administration informed council that the county will have to eat $1 million in uncollected taxes and penalties owed by the now defunct Waldren Energy.
CAO Charlie Cutforth explained that the sale of what was left of Waldren has been conditionally approved by an Alberta court judge for what amounts to zero dollars and that due to the company having no liquid assets — mostly pipeline infrastructure — administration has no legal way to collect the more than $800,000 in taxes and another $200,000 in penalties that were owed.
“As a council, you could place an objection with the court regarding the sale. However, even if you do, the court could simply overturn that and proceed with the sale anyway,” Cutforth stated.
He added that it has take close to two years for someone to come along wanting to buy Waldren and this is likely the best opportunity for a sale with the chance for the county to receive tax revenue from the new company in the future.
Cutforth then recommended that council approve a motion stating it will not object to the sale as well as pass another motion that would cancel the taxes and penalties owing.
“If this sale doesn’t proceed, then it’s likely there will never be a sale and we won’t get any taxes ever,” he stated.
Council, minus Coun. Nancy Hartford who was out of the country, passed both motions with Reeve Paul McLauchlin stating, “At the end of the day, it’s good advice to take.”
However, Coun. Bryce Liddle had some reservation about the county taking the full hit, wondering if it could hold back the school tax portion. That idea, however, won’t fly as Cutforth explained that money is automatically taken by the province and its up to municipalities to collect it. He added there is a lobby effort underway to change that, but it has so far fallen upon deaf ears.
“We knew this was coming and we’ve never experienced anything like this before,”added Cutforth, noting the setback the county will take is minimal when compared to its budget and will be nearly covered by the reserve set aside for this kind of loss.
However, Cutforth did state there could be more coming down the road as the county derives 73 per cent of its tax revenue from oil and gas companies.
Third and final reading of a rezoning bylaw was approved by council for a property that has twice before attempted to have an application approved.
A 20-acre parcel of the 80-acre property, located along Range Road 252 about one mile north of the county line, will now be zoned country residential hobby farm. Council decided that many of the area properties already have subdivisions.
Council let down the representatives of the Rimbey Kinsmen, who petitioned the county for assistance in paying down a portion of the $250,000 loan they must pay for the new skate park that was built.
Kinsmen members explained that all of the oil and gas corporate donations dried up due to the lagging economy and they were bringing the situation to the county’s attention, in hopes they would be able to help them.
However, Coun. Doug Weir explained the county isn’t in a position to assist until the group can demonstrate it has other funding sources available. Only then, said Weir, will the county look at providing some sort of top up to those financial commitments.
Lastly, council was told there could soon be a solution to the tire recycling problem at the former Cutting Edge site. A company expressed interest in taking all of the tires, even the large ones, to use in its asphalt processing system.
Cutforth said he is cautiously optimistic about a possible solution, though staff are presently still working with their lawyer to chase down and serve the former owners with a notice of intent and also trying to connect with the tire recycling authority.