More than $400,000 alleged to be missing from Muskeg Creek local improvement project funding was not earmarked exclusively for the project and was never improperly used, Town of Athabasca administration has stated.
The explanation came in response to the Athabasca Ratepayers’ Association (ARPA) claim that the Town of Athabasca had not properly used all of the project’s funding, which ARPA believed to be $1.25 million.
ARPA demanded in a 40-page report it delivered to Athabasca town council in June “that the full $1.25 million be applied towards the cost of the Muskeg Creek Project.”
According to Town of Athabasca chief administrative officer (CAO) Ryan Maier, part of the figure that ARPA has arrived at is provincial grant money that was never tied to the project.
“The ratepayers’ argument is that, ‘Well, no, you received $300,000 in (Municipal Sustainability Initiative) funding specifically for Muskeg Creek,’ and that’s what they’ve been contending, and that’s not the case,” said Maier with regards to 2010 MSI funding from the province.
The town also had $300,000 from the province’s 2002 Streets Improvement Program (SIP), which made for a total of $600,000 in grants ARPA said should have been used for the project.
This grant funding was not intended for the Muskeg Creek project, according to Maier. The town estimated the total cost of the project would be just under $750,000, and town council passed a bylaw in 2012 to authorize administration to apply for a debenture for $650,000.
Maier did not know why the town’s debenture amount fell $100,000 short of the total estimated cost.
The $650,000 debenture was intended to pay for most of the project up front. Council also authorized a local improvement tax “in respect of all lands that directly benefit from the Muskeg Creek local improvement project” to help pay back the debenture, which must be repaid by 2027.
Former Town of Athabasca CAO Doug Topinka surveyed local residents, and a majority agreed to pay 50 per cent of the original costs associated with the project. Council decided benefiting residents would pay $324,740 in annual payments over a 15-year term; the other half of the $650,000 would be covered by general taxation ($325,260).
According to 2008 estimates, the Muskeg Creek project was initially going to cost $1.1 million, according to then-mayor Colleen Powell in a 2009 letter to residents. Powell said instead of half, the town would pay two-thirds of the cost.
“The town’s share was $700,000, and the rest the residents’ share. The town’s share is higher than the residential share because the town owns land in the area,” wrote Powell, adding MSI funding was available but cut by a third that year due to the recession.
The total cost of the project eventually decreased. Estimates varied between $700,000 and $750,000, but according information obtained by a Freedom of Information and Privacy (FOIP) request by ARPA, the final cost totaled $749,970.63.
Maier acknowledged that because $100,000 more than the $650,000 acquired via the debenture was required to pay for the project, the difference was taken from a combination of MSI and SIP grant funding.
The remaining $500,000 of provincial money remains in grant reserves for future projects, he said.
Allied Paving Company was awarded the Muskeg Creek paving project in 2010 for $805,960, as directed by council at a June 2010 town council meeting. The slightly higher figure was partly due to GST on the total project cost, according to the town’s annual statement of funding and expenditures submitted to Alberta Transportation the following year.
The higher cost was also partly due to another smaller project in town by the same company, according to Maier.
At the July 16, 2013, town council meeting, councillor George Hawryluk made a motion that “council direct administration to amend the grant reporting of the Muskeg Creek paving project, based on the advice provided by legal counsel.” The motion was carried.
“That was after we had taken all of the information provided by ARPA, as well as all of the background information that we had on the project, and we sent it off to legal for an opinion,” said Maier. “And their recommendation to us was to amend that grant reporting to properly align with the actual funds used,” he said.
ARPA maintains that the town should have responded and amended the grant reporting sooner.
The group still claims that because the town’s 2010 statement of financial expenditures specified only Muskeg Creek was being funded by the $600,000 in reported grant funding, that is where the funding was required to be allocated.
“The Muskeg Creek paving project was the only project approved in 2010 for the MSI or the SIP grants,” said ARPA vice president Nichole Adams, who claimed grant money intended for a specific project must, by law, be applied to that project.
Maier maintains grant funding can carry over from year to year and is not required to be spent on any specific project, though he acknowledged the funds obtained by debenture had to be — and were — spent on the project.
The CAO said although Muskeg Creek was the only project reported as being SIP-funded that year, it’s possible there may have also been other projects.
Maier said he cannot account for the way the town bookkeeping was done in the past but maintains that today, the numbers still add up.
According to an agenda item included in the Sept. 17 council agenda, councillor George Hawryluk had been seeking further clarification on the Muskeg Creek issue. However, he wrote, “The more this issue was discussed, the more confused I became.”
Hawryluk questioned whether the town was at fault in how it dealt with the paving project, if grants had been used appropriately and whether or not Muskeg Creek residents had been duly informed of the project, its cost and a possible appeal process.
Maier said Hawryluk at that time had not had a chance to talk to him yet for clarification on the circumstances.
“If the answers to the above questions indicate that the paving project has been mismanaged by the town and that the residents of the Muskeg Creek were misinformed and misled by the town, then I suggest that the entire motion (to amend the grant reporting) be nullified and the council revisit the issue once again in order to resolve it to the satisfaction of all parties involved,” wrote Hawryluk.
At the Sept. 17 meeting, council voted largely in favour of upholding the amended grant reporting, voting 6-1 against Hawryluk’s recommendation.
Council passed a second motion to direct administration revisit the interest rate applied to the local improvement tax and report back to council.
ARPA claims the interest rate should have reflected the rate at the time the debenture was applied for, not the time of calculating the project’s initial cost.
“They really need to look at why did the tax rate go up between 2008 and 2010, when they were not allowed under the law to raise it,” said Adams, claiming one property owner in the Muskeg Creek area was charged more than twice what they had been charged previously.
Adams claimed the local improvement tax has increased by “tens of thousands of dollars” and alleged the town was in violation of the Municipal Government Act by raising taxes when the cost of the project had decreased.
Maier said he did not know if the tax rate went up between 2008 and 2010. He added the local improvement tax rate has never increased since 2010.
On Sept. 17, council passed a third motion directing administration to determine whether a term other than 15 years may be applied to the local improvement tax.
Adams claimed when residents were informed the project would be going forward in 2010, they were denied the opportunity to petition against the tax rate; however, a letter from Topinka to local residents that year indicated he received no negative responses to his canvassing.
With the exception of one local resident who had paving incorrectly applied next to their property, Maier questioned why ARPA has been so vocal while local Muskeg Creek residents have largely been mute.
