Tax-exempt status for biodigester

Motion allows bylaw to be drafted which will return to council for approval: Mayor

By Mike Williscraft

NewsNow

While several aldermen questioned exactly what was being passed, Grimsby Council did pass a motion Monday night allowing the biodigester to be tax exempt.

The issue was the subject of an intense debate at Administration and Finance Committee last week.

On Monday, Ald. Steve Berry, who chairs AFC did not comment on the motion this time around either as part of his meeting minutes review or after it was lifted from the minutes to allow for a thorough debate.

Resident Rob Hattin gave a detailed presentation as a delegation, citing many reasons he believed the motion  should not be passed.

He estimated revenue from the biodigester’s generation of electricity under its 20-year FIT agreement to be about $110,000 per year with about $1.3 million in expenses to create a net loss of more than $1 million annually.

Hattin also added many other aspects of operation which would add to the overall cost impact at the site.

“The Town is losing out if the biodigester cannot pay out a dividend. The tax exemption is financial relief to the corporation, not to the Town,” said Hattin after the meeting.

“The biodigester cannot pay until it makes money. The Town loses out until the bio is on its feet.”

Hattin, who had many questions for council in his presentation, provided all to the Town last week. CAO Derik Brandt made a presentation in which he attempted to answer the questions.

“There were no answers to the big questions,” said Hattin, which he characterized as the viabilty of the project, the level of losses, lack of transparency on hydro financials and why there is such a lack of accountability from council.

Brandt’s presentation outlined to council that the Town benefits from keeping the full value of the taxes for the site in the community, but did not touch on anything relating to the utility’s ability to pay any dividend.

“Where Derik Brandt’s analysis ended it needs to be expanded upon to get the whole picture,” said Delight Davoli, who attended both the AFC and council meetings, after Monday’s session.

“It’s easy to draw teeter totters and to pull $100 bills out of your wallet.  But it’s another thing completely to share those financial statements and reveal how those companies are really doing.  I would love to hear Derik explain in detail why the “Investment in subsidiary companies” changes every year and whether the number on the balance sheet for that line  is the fair market value of what those companies are worth.”

“At the end of fiscal 2016 it’s $21.9 million. Is that the combined worth of GPI, GHI and GEI? No, because that’s not what the account measures.  GPI is probably worth $30-35 million and according to our bio directors, they spent $10-12 million so they must think GEI is worth $10-12 million. So why isn’t the investment in the sub companies on the Town’s balance sheet something like $40-47 million? Because that’s not how municipal accounting is done.”

There was considerable confusion still with aldermen about what the difference between the utility being a private company with shares being wholly owned by the Town.

“It’s the shares that are owned by the Town, not the assets,” Hattin clarified for Ald. John Dunstall.

“That is why you don’t want to disclose the financials.”

Much of council’s discussion centred around a pending MPAC assessment as both the use and overall tax impact will be determined with that report.

On the motion itself to bring the biodigester into the municipal capital facility agreement, alderman seemed uncertain as to what the motion actually meant as it reads, in part, “That the Town of Grimsby exempt from property tax all of the property at 424 Sobie Road…” and “That the municipal capital facility agreement between the Corporation of the Town of Grimsby Energy Inc. be amended,” and “That by-law 15-61 be amended authorizing same.”

Despite this wording, Mayor Bob Bentley was very specific when questioned by Ald. Michelle Seaborn that approving the motion meant staff will be authorized to send the matter to lawyers for a review and a formal bylaw will be brought back to council for approval at a later date.