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City of Cold Lake lays it all out for residents

COLD LAKE - Residents wanted to know what the future holds should Cold Lake not receive their 2019 or future ID 349 dollars.

The city answered their questions and more during a presentation on Wednesday, Dec. 11 at the Lakeland Inn.

“What we really want to do is talk about the journey, the history, and especially the last couple of years, including the developments that have gone on using the air weapons range funding,” Mayor Craig Copeland told the dozens of residents in attendance.

About city spending

Right away, the public wanted to know whether the city considered their spending to be "out of control."

Copeland said, “We would never have done some of the things we did if we had known this day would come where they would just chop us down from $26-million to $16-million. When council was visioning out, and were doing our 10-year capital plan, by no means did we not have (ID 349) growing."

Another resident pushed it even further, asking Copeland if it was normal practice for the city to spend money before it's even in their pockets, such as the $16-million in ID 349 dollars the municipality had been expecting for 2019.

CAO Kevin Nagoya clarified, "The Government of Alberta has already committed the funding. In that aspect, they're obligated, in our view, to pay."

What sparked the need to lay it all out for the public was recent news that Municipal Affairs would be withholding the city's $16-million of 2019 ID 349 funding, in addition to reviewing the agreement for 2020.

But Cold Lake isn't the only community impacted. Also involved are the Town and MD of Bonnyville, Village of Glendon, and Lac La Biche County.

According to Copeland, before Municipal Affairs will agree to release the 2019 dollars they want to see a new agreement reached between all municipalities.

"The changing of the deal is what’s generating the conversation right now. We don’t know what the future is. The city is in an about $16-million deficit without being notified with only a month to go until the end of the year… That’s money that’s already spent," Nagoya outlined. “Now, the uncertainty of the future in the letter (from Municipal Affairs) is saying that they’re going to review the funding in its entirety, which is now at risk. So how do we address this in our budgets? There’s a lot of unknowns right now, and where do we go from here.”

The agreement has changed over the years

The province’s decision follows amendments made to the agreement in 2017 by the former NDP government, requiring the city to share the about $26-million income they were getting from the Cold Lake Air Weapons Range (CLAWR).

In the end, Cold Lake received $16-million, while the Town of Bonnyville was given $4-million, and the MD saw $1-million allotted for the maintenance of the La Corey resource road in addition to $1.2-million over the span of 15 years to cover the debenture costs of applying asphalt overlay to the road.

The Village of Glendon was also guaranteed a piece of the pie with $500,000 going their way. An additional $6-million was set-aside for the ID 349 Intermunicipal Fund.

Once the UCP government came into power, the Minister of Municipal Affairs informed those involved that there would once again be changes made to the funding model and required each community to submit their own recommendations in the fall. This was also when they told municipal leaders they were putting a freeze on the 2019 monies.

How ID 349 impacts the city's budget

The city uses roughly $8-million of their $16-million from the ID 349 agreement to cover operating expenses, while the remaining $8-million goes to capital. Without the $16-million promised in 2019, Cold Lake is facing a deficit heading into their 2020 budget deliberations.

Nagoya said, “If the funding will be cut from ID 349, we’re going to see an operating impact, but we’re also going to have to make some decisions on the capital side.”

“We’ve had two council meetings in regards to the city budget, and it’s been very difficult to do a budget this year, probably the most difficult in my entire time (on council), because we don’t really know what the ID 349 money is going to be, we don’t know what we’re going to have to work with in terms of planning,” detailed Copeland. “Once we know the ID 349 funding (amount), we feel we can easily obtain a budget by Dec. 23, so we’re going to finish up on that day.”

What the public may not know, Copeland added, is a chunk of ID 349 dollars was used to cover roughly 20 per cent of the city’s operating costs, which includes recreation facilities, policing, fire services, and transit.

“Transit is 100 per cent funded by the CLAWR, no one’s tax dollars are used for transit,” he stressed, adding it’s an expense of roughly $900,000 annually.

The agreement also funds the Payment in Lieu of Taxes (PILT) shortfall, which is money owed to the city by the federal and provincial governments.

"Our federal government doesn’t exactly pay 100 per cent of their tax bill when they get it, so the CLAWR’s $8-million that we’re putting away is paying the bad debt allowance,” Copeland detailed.

Over the years, the city has put the money toward capital projects such as the new fire hall in the south and the Cold Lake FCSS building.

What was at one time an additional $20-million in their pockets for capital projects thanks to the ID 349 agreement, equalling a $25-million capital budget in 2016, has seen a significant drop.

According to Nagoya, without including any ID 349 dollars, the city is expecting a capital budget of around $6-million for 2020, which will be made-up of provincial grant funding and municipal taxes.

“That number will drift, without any CLAWR, that will go down… It will probably drift to about $4-million in future years without any new money being introduced into the model,” he stated.

Copeland stressed that when the ID 349 agreement was first struck, Cold Lake made the decision to keep taxes the same, and instead, to use the money to better the community.

“Even though we got the CLAWR money coming in (in 2011), what you don’t see is taxes going down. It’s not like we gave a tax holiday in a significant way to all of the residents. We just kept it constant, some years maybe three per cent, others zero, but we kept collecting from residents. We didn’t lower it down or ratchet it down just because of the ID 349 money, we piled a lot of that money to expand the services we wanted to provide residents and put it into commercial.”

When it comes to the city's expenses

“Recently we’ve seen some news, and we’ve been thrown under the bus, about some of our expenditures,” Copeland stated, noting a specific incident where the city was targeted regarding their administration fees.

“Close to $4-million of our (administration costs) includes bad debt allowance. It shows that Cold Lake has a lot of cost for administration, usually around nine per cent of your operating costs are in administration, but this is a big number, and that’s because of the PILT, the bad debt allowance. It shows up on our books under administration,” he detailed. “Municipal Affairs is flagging this as though Cold Lake has this huge administration cost, but no one does the work to find out why we have such a big number."

Copeland noted that when the city entered the original ID 349 agreement, which was created in 2011 for the sole purpose of sustaining Cold Lake, the Minister of Municipal Affairs told council not to put the money in the bank, but instead to use the funds to leverage the community.

In the past, the money provided by ID 349 has been used to pay for everything from the Cold Lake RCMP Police Dog Services Unit to special transportation, and work at the Energy Centre.

“All that money was coming in and enhancing our community on the operating side," stated Copeland.

What now

“The province is looking at the deal once again with the new government and when we did our budget in 2019, we squared away that $16-million as our new number and our administration worked on the capital while council focused on the operating side. Unfortunately, what’s happened, is we haven’t gotten the cheque,” explained Copeland.

He added, while the city has reserves to cover some of the shortfall, it's difficult to frame a budget or 10-year capital plan without solid numbers.

In order for the municipality to continue business as usual, they require a minimum of $10-million from the new agreement.

“We need about $10-million per year to stay on-par with the depreciation of our assets. We need to put in that amount minimum into capital expenditures,” Copeland expressed.

With this in mind, they submitted their suggestions for the structure of the new ID 349 agreement in September, which included creating one or two specialized municipalities.

Copeland explained, "Get an urban or two inside of a major urban municipality and have the ID 349 amalgamated to the MD of Bonnyville and create one or two specialized municipalities within this region and just be done with it.”

Their second recommendation was to create a land bridge between the city and ID 349, while their final possibility was distributing the tax dollars on a per capita basis.

“The unfortunate part is we never received a reply, so we have no idea what the province thought of it. We’ve been in limbo,” added Copeland.

Representatives from each municipality and Municipal Affairs will sit down for a meeting on Monday to discuss the future of the agreement and come to a decision, something Copeland is looking forward to.

The thoughts of elected officials

Coun. Kirk Soroka was disappointed that the city was left out of certain discussions, including correspondence between local municipal leaders and the province.

“We’re that shining city on the hill that’s basically being undercut at every move by our regional partners. I would submit that the only real regional partner Cold Lake has at this moment is the MD, because they understand the value of a city that’s robust, vibrant, and growing, and all of the services it provides. We deliver services and support and benefit a catchment of 65,000 people,” he stated. “If we’re going to continue to be undercut and crushed, it’s just going to slow our growth down, which is just going to achieve the aim that the Town of Bonnyville wants, which is to slow Cold Lake down.”

Soroka was referring to a letter sent in 2017 by Town of Bonnyville Mayor Gene Sobolewski to Municipal Affairs.

“The mayor of Bonnyville, shortly after the meeting where all of the CAOs were there (in 2017), penned this letter to the minister saying ‘Cold Lake will be able to sail on into the future with at least $24-million in future revenues guaranteed to them each year to do as they please. Our council fears that this imbalance will only put Bonnyville at an extreme regional disadvantage, unable to compete due to the lure of Cold Lake,’” said Copeland. “We didn’t know this was going on until we did the major FOIP, and it’s unfortunate that during this time, the town never sat down with Cold Lake and said, ‘is there any way you guys may want to get involved in putting more money to our side?’ It always felt like they were robbed of ID 349 in the first place."

For Coun. Chris Vining, the most frustrating piece of the picture was "this isn't a financial issue for the Town of Bonnyville. When you look at where you're at in the town right now, even with their taxation rate, they're split 50/50 with their industrial."

“They’ve never done the tax increases we’ve had to do within the city, but they want to talk about the fact that they think they’re being treated poorly and unfairly,” he continued. “That’s the frustrating part for myself coming on council in 2010 when we were really staring down the barrel of the gun and we had to go through all of the hoops to prove we needed the money to survive, and to at that time be told by the Town of Bonnyville and the Village of Glendon that ‘you’re fine, we’re fine, go figure it out…’ It’s frustrating, disrespectful, and really demeaning to the conversation for a municipality to say they’re so hard done by when they’ve never had to go through and deal with what we’ve had to deal with.”

Sobolewski told the Nouvelle the letter was sent during “tense times" when the city refused to join the Town and MD of Bonnyville and the Village of Glendon on a committee.

“The City of Cold Lake absolutely refused to come to the table and participate at that committee level unless amalgamation and regional government was discussed… I remember that letter very distinctly… There was a frustration with the disparity and inequity with the funding and the spending almost at will.”

He continued, "There was a growing frustration, and I wrote what I wrote... and every word that was written was meant, and for the City of Cold Lake to now, in 2019 to say 'we wish they would have talked with us,' there was no talking at that point in time. The city absolutely had no wish to dialogue with us unless it was about amalgamation."

What can residents do?

Finally, the public wanted to know if there was something they could do to ensure the city gets its fair share of ID 349.

They were told writing to Bonnyville-Cold Lake-St. Paul MLA David Hanson and Municipal Affairs was one way they could help.

Coun. Jurgen Grau said, “They’re going to mess with us, but they aren’t going to mess with you.”