City of Powell River council has moved forward on using funds in reserve accounts to buy Catalyst Paper Corporation’s shares in PRSC Partnership Ltd.
Council passed the initial readings of a number of bylaws at the June 20 meeting that pave the way for using $1.5 million that had been set aside for equipment at the Westview Wastewater Treatment Plant.
One of the bylaws was to amend the five-year financial plan to include the transfer of $1.5 million to be used for a loan to the Powell River Waterfront Development Corporation (PRWDC), a city owned company that is a partner in PRSC.
There were three other bylaws on the agenda, but when Mayor Dave Formosa read out the individual bylaw numbers, he skipped over Bylaw 2353, which transfers $1.1 million from the sewer fund treatment plant membrane reserve to the economic development capital reserve fund. Only two bylaws received first, second and third readings, the bylaw that establishes an economic development capital reserve fund and the bylaw that transfers $400,000 from the sewer fund treatment plant equipment reserve to the economic development capital reserve fund.
Councillor Russell Brewer voted in opposition to all the bylaws. “I can’t support this,” he said. “While the objective may be a good one, the means to get there, I don’t support.”
During question period, Brewer said he thought the city should borrow the money to buy the PRSC shares, either through long-term or short-term borrowing.
Catalyst has agreed to sell 50 per cent of its shares to PRWDC and the other 50 per cent to Tees’Kwat Land Holdings Ltd., a Tla’amin (Sliammon) First Nation company that holds PRSC shares. Catalyst has also agreed to retire the $4.6-million mortgage for $3 million. The city and Tla’amin will be 50-50 partners once the transaction is completed.
This was the second attempt to transfer funds from the membrane reserve fund to PRWDC. In April, council was poised to consider a resolution to lend about $1.6 million to PRWDC for the transaction. Powell River resident George Orchiston questioned whether the city could use the funds in the membrane reserve for another purpose and, after consulting with its lawyers, at the 11th hour, the motion was pulled from the April 4 council meeting agenda.
Staff brought forward the new recommendations at the June 20 committee-of-the-whole meeting and councillors agreed to refer the recommendations to that night’s meeting.
Orchiston once again questioned the legality of the transfer. In a four-page letter to mayor and council, he references the Community Charter, which states, “Subject to this section, money in a reserve fund and interest earned on it must be used only for the purpose for which the fund was established.” The section also states, “If the amount to the credit of a reserve fund is greater than required for the purpose for which the fund was established, the council may, by bylaw, transfer all or part of the amount to another reserve fund.”
Orchiston argues that the money should be used to replace all of the membranes at the Westview wastewater treatment plant, because the facility does not meet its permit requirements.
“Should city council adopt Bylaw 2353, 2013 and use the funds credited to the membrane reserve for another purpose, it is my position that this action would be a willful violation of the Community Charter and illegal,” wrote Orchiston.
When Orchiston asked during question period if council believed it was acting legally, Formosa replied that the city had legal advice that it was.
At the same meeting, council passed a resolution to purchase and install membranes from GE Water and Process Technologies Canada at a cost not to exceed $920,000, funded from the membrane reserve fund. The city is purchasing enough membranes to replace 50 per cent of the existing membranes.