Assiginack debt

by Diana Smith
MANITOWANING --- Assiginack may become a financial victim of the 
provincial government's desire for urgent upgrading of all municipal 
water systems, following the Walkerton e-coli disaster of 2000.
While 66 percent of the capital costs to build a water treatment 
plant will be covered by the province and the federal OSTAR program, 
both kicking in 33 percent, respectively, that still left Assiginack 
with 34 percent of the costs of a $7.1 million project. However, the 
Ministry of Northern Development and Mines has since offered to cover 
50 per cent of the municipal share, although Assiginack had hoped it 
would have been closer to 90 percent. That still leaves Assiginack 
with a total share of about $1.19 million to raise.
The new water system will be an user-pay one, as ordered by the 
province, but the Manitowaning water system only has 247 users, while 
Sunsite Estates carries a mere 64.
Assiginack will definitely have to borrow the dollars needed to 
complete its soon-to-be-divulged plans for a water treatment plant.
"If we have to go out and borrow money the municipality is only 
capable of carrying a certain amount," explained Assiginack Reeve 
Hugh Moggy. "Our pay back capacity on a debenture is about $280,000 
in any one year. If we were to do this with our water and sewer it 
ties up all municipal funding. We wouldn't be able to do anything 
else until that was paid off."
Clerk Treasurer Gord Tokaryk concurred, explaining, "If we have to 
borrow 17 percent of the possible $7.1 million we could need for a 
water treatment system, we would be close to our annual debt 
repayment limit that is established by the province."
The amount of time needed to pay back a loan for a new water 
treatment plant could be five years or more, leaving the Municipality 
of Assiginack's borrowing power for any other planned project or 
emergency situation hampered. During the period of the loan, 
Assiginack's ability to borrow would be limited to borrowing only 
what has been paid back on the debenture.
"For example, if we sought funding to fix Cardwell Street between 
Wikwemikong and Manitowaning and had to come up with a couple of 
hundred thousand dollars as our portion, our hands would be tied," 
said Reeve Moggy. "This will seriously interfere with the 
municipality's ability to do business. But, we still have the option 
of trying to appeal our borrowing limit to the Ontario Municipal 
Board."
Last week, Kathy Horgan, a Municipal Advisor with the Northeastern 
Municipal Services Office, met with Assiginack Council to discuss the 
towns' situation. She was conducting a follow-up visit that Assistant 
Minister of Municipal Affairs and Housing for Rural Ontario, Brian 
Coburn had promised after members of Assiginack Council had met with 
him at the Association of Municipalities of Ontario conference last 
August.
Ms. Horgan explained to municipal councilors that the Municipality of 
Assiginack would indeed be limited in their borrowing power.
Assiginack has been identified as one of the small rural Ontario 
municipalities that will be facing a monumental struggle to meet 
provincial water treatment regulations.
The majority of people in this area have long been told their yearly 
income is well below the provincial average. Those on fixed incomes 
are especially vulnerable to the potentially large bill they will be 
faced with as their share of up front capital costs for the plant, 
not to mention the higher water bills they will most certainly pay 
for future maintenance.
Reeve Moggy explained, "I tried to get across to the municipal 
advisor that this would affect the whole Township, users and 
non-users alike. It is unfair to the rest of the taxpayers in the 
Township to be burdened with our limit, when it is all used on one 
project."
The provincial government's response to the situation has been to 
point out that property values will go up once a water treatment 
plant is constructed. Unfortunately, property, especially vacant 
lots, in the Manitowaning area that will be the beneficiary of the 
project do not experience a prolific turnover in real estatesales, a 
problem that applies to many small rural areas that are located 
further away from mainstream Ontario. Also to be considered is that 
the owners of property that do go up in value will also likely have 
the added burden of paying higher taxes.
Ms. Horgan also advised Assiginack Council that legally an user fee 
(perhaps reduced) could be charged on vacant lots even though they 
are not hooked up.
"One thing is for sure, we are going to have to start a reserve fund 
for future water needs. The government has been definite that this is 
an one-time deal. They are not going to come back and do anymore 
upgrades. OSTAR has also been explicit that their third of the 
present funding will only cover the already established water system, 
not future expansion," said Reeve Moggy. "If we are going to put in 
a water treatment system, with no more capacity than what we have 
today, what happens in the future?"
Assiginack is looking at the construction of two water treatment 
plants, one in Sunsite Estates and one in Manitowaning. A possibility 
of one plant servicing the two areas is also being looked at. Actual 
figures are still not currently available to the community, but the 
different options will be heard at a public meeting in January.
Reeve Moggy said that he feels he and the rest of council know what 
most of its residents can afford to pay and this capital expenditure 
will be devastating for a vast majority of them.

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