Westlock County and DK Consulting Services have reached a $2.2 million lease/sale agreement on the Tawatinaw Valley Ski Hill.
Councillors went in-camera at their Dec. 8 meeting to work out further details of the agreement before approving the deal, which includes the sale of hill and yet-to-be used chalet by a 4-2 vote — councillors Jim Wiese (who resigned over the deal) and Albert St. Louis voted in opposition, while Coun. Don Savage excused himself from the vote citing a conflict of interest.
Although the Westlock News has yet to be provided with the sale agreement, it’s known that DK Consulting Services, headed by Tawatinaw-area landowner Dom Kriangkum, will lease the site for three years before having the option to buy. If DK Consulting doesn’t follow through, ownership will return to the county, along with any improvements made at the site.
Until its purchase, Kriangkum will pay $18,000 yearly in rent, as well as municipal taxes. Over the next 36 months the county will be liable for 100 per cent of the costs on the new chalet and 50 per cent of any major works required at the site. DK Consulting will be responsible for any minor maintenance and the operation of the ski hill.
The municipality is currently two years into a 20-year, $1.5 million debenture it took to pay for the new chalet. That loan has a principal and interest payment of over $170,000 annually.
Despite the continuing financial exposure to the ski hill in this agreement, reeve Bud Massey says it’s a good deal for residents as over the nine years they ran the site it lost $1.6 million.
“Yes, we spent more money on the hill in the last nine years than what we are receiving for the hill,” he said. “But we continue to lose money every year. That was eating into the financial resources of Westlock County.”
A further $2.7 million has been spent on capital works, a figure that includes the new chalet.
However, the county also has a further $913,000 on the books for the hill that’s yet to be reconciled, although CAO Peter Kelly said that some of that total is already included in capital works expenses.
During the council meeting it was suggested the final capital expenditure for the site, including the chalet, could be over $3 million, while Wiese suggested it would come in at around $3.2 million.
Wiese, who resigned from council Dec. 8 over the sale, is scathing in his criticism.
To start with, he claims the $1.6 million operating loss figure is wrong.
He says much of the money put into the hill for day-to-day operations was budgeted for and is part of the county’s duty to provide recreational services.
“The county provides services, it’s not in it to make profits necessarily,” Wiese said. “
“The ski hill is part of what you provide for services to the community. It’s no different than fire services, or police service, or the public works that maintains our roads.
“To paint it in the picture that it’s this big albatross that is losing so much money that it’s affecting the rest of the county is ridiculous. That’s just a spin job to make it look better to the public.”
Of that $1.6 million “loss,” only $360,000 was unbudgeted over nine years, which Wiese says is the real operating loss.
Wiese also attacked the final price as being too low, claiming it was undervalued and didn’t take into account money spent on capital improvements, including the new multi-million dollar chalet.
“The total value of the assets out there are $4,876,860,” he said. “Some of the assets have been depreciated down to nothing and therefore the value has been included as nothing.
“Everybody in business knows that just because you depreciate an asset out, it does not have zero value. In my opinion, this is the single biggest give away of public assets in the county’s history.”
Massey and Kelly don’t agree. The Municipal Government Act says that the county must get market value for public assets and after two valuations, that’s what they got, said Kelly.
“Just because you spend money on it doesn’t increase its value,” Kelly said. “What we did was sustain its value. We invested for long-term sustainability. We had two formal appraisals and got more than market value.”
Wiese also takes issue with the lease, noting in a normal lease agreement the lessee takes on much of the risk over the life of a deal.
“This agreement is exactly opposite to that. The county picks up all of those costs,” he said.
“Although the taxes are being paid in this agreement, they’re not really being paid. The lease fee has been reduced by the amount of taxes that you would pay.
So although it shows the taxes are technically being paid … it is certainly a breach of the spirit of the Municipal Government Act, in my opinion.”
Over the last few weeks councillors met in-camera at least four times to work on the deal.
When council went in camera Nov. 24, Savage declared a conflict of interest and excused himself from any further participation.
Savage later told the News that he withdrew from discussions because his wife worked with the Kriangkum on preparing documents for the agreement.
“To start with we’ve know Dom since he moved to the area here, like 12 years ago,” Savage said. “Early in the year Dom … said, ‘I want to put in a proposal for the ski hill.’
“My wife has done some work in that area and he asked her for her help.”
One of the reasons for further in-camera meetings were last-minute amendments to include a clause related to mineral and natural resources in the area.
A map listed on the Alberta Geological Survey website, titled Sand and Gravel Deposits with Aggregate Potential, Tawatinaw, Alberta, shows significant deposits of ‘clean sand’ in the area, including close to the ski hill.
Sources have suggested that the mineral, known as FRAC sand and used in the coal seam gas extraction process, could be worth millions.
It’s believed the added clause includes rules that the county will get 100 per cent of any revenue made off natural resources on the site.
Further, Massey said that the county’s land-use bylaw meant that council had the final say on any resource extraction and there was no avenue for an appeal to the province.
Only the ski hill and facilities were included in the valuations the county obtained and potential FRAC sand deposits were not looked into. Massey and Kelly rejected ideas that it should have been included as part of the valuation.
“I wish they would have came and raised those issues in all of our debates in the last couple of months,” Massey said.
“That would have been interesting if they had brought those issues to council. It’s part of the reason we have our public forums.”
As part of the deal, any major works conducted at the site for the next 20 years, including capital works, must be approved by council and if the ski hill ends up in the hands of the county again, it inherits them.
“Those revert back to the county with no cost,” Massey said. “For example, if a zip line is put in, if a BMX track is put in, it reverts back to the county.”
Before the announcement people lined up at the council meeting to applaud the deal.
Many were positive that hill users now had some certainty around the site’s future.
“I realize not everyone on council is not in favour doing this sale agreement, I’m wondering why some people are against?” asked Reint Boelman. “I would like to know the reasons. I thought it was a good deal myself.”
The county has said that it hopes the ski hill, along with the new chalet, will open Dec. 19.
Two weeks ago Massey said that snowmaking couldn’t begin until the temperature consistently dropped below -10 degrees.
Originally a project of the Canada 150 celebrations in 1967, ownership fell to the municipality over nine years ago.
In 2013 the previous council approved the new chalet, but then it was discovered in 2014 it had been placed in a low spot and needed to be lifted — the new chalet remained closed all last ski season.
Originally pegged at around $1.5M, a final cost for the chalet has yet to be released.
