The Municipal Infrastructure Loan Program (MILP) was administered by Canada Mortgage and Housing Corp. on behalf of the federal government. The $2 billion was to provide low-interest loans to help municipalities pay for infrastructure improvements. The program raised eyebrows in March when it was revealed that well over half the fund went to municipalities in Quebec.
Now it appears some investments went to Ontario municipalities that didn’t appear to qualify under the terms of the program. The small community of Blind River received a $49.5 million loan, even after Ontario’s Ministry of Municipal Affairs and Housing warned the municipality that it could not handle the payments.
According to CMHC, loans were to be approved based on the municipality’s authority to borrow, its ability to meet repayments, and a legal opinion stating that the municipality had carried out all necessary steps to authorize borrowing and expenditures in relation to its project. Expense reports for each of the projects were also to be monitored and sent to CMHC six months after the project’s completion.
Blind River’s plans for the CMHC money were changed at least twice. The town initially wanted the money for a large scale solar energy project, but that fell through because officials had not secured the necessary regulatory approvals. According to CMHC, the loan could not be repaid before the 15-year term ended.
So after the solar project fell through, Blind River proposed investing half the money in a number of smaller solar projects and $25 million in startup Plasco Energy Group, the Ottawa waste-to-energy company now under court protection from its creditors.
Blind River is a town of 3,500 with annual revenues of $8 million. According to the municipality’s own filings with the provincial government, Blind River had tangible assets of just $52 million in 2010. The town’s modest financial situation has led some to wonder how it could have qualified for a CMHC loan of almost $50 million that required repayments of almost $4 million a year.
“I cannot see how CMHC could have said, ‘Here’s the money. You didn’t meet any of the criteria, but now that you’ve got the money, you can’t pay us back, so go and speculate on whatever,’” said Charlie Angus, the NDP MP for Timmins-James Bay. “If they (CMHC) were that in a hurry to get the money out the door, it raises questions of mismanagement of taxpayers’ funds.”
CMHC has stated repeatedly that Blind River met all of the criteria to receive funding under the MILP.
Pierre Poilievre, the federal minister of employment and social development and minister of state who is responsible for CMHC, referred all questions about the program back to the housing agency.
When asked to clarify how it ensured that loans were spent on the intended projects, CMHC spokeswoman Karine LeBlanc replied that municipalities were supposed to provide audited financial breakdowns detailing their spending within a certain period after projects had been completed.
“Municipalities were required to provide CMHC with audited final capital cost statements by licensed accountant which assessed the final cost of the work within six months of construction completion,” LeBlanc said in an interview.
But Blind River’s original planned projects were never completed. Plasco never built its commercial plant, and it appears to be winding down its business under court protection from creditors.
The Citizen filed access-to-information requests for a breakdown of the spending in Blind River under the federal loan program. According to town officials there are no records detailing how the $49.5 million in federal funding was actually spent.
“With respect to the complete audited breakdown … requested, please be advised that such documents do not exist,” Kathryn Scott, Blind River’s clerk administrator, told the Citizen in a letter.
The Town of Blind River has had to quietly renegotiate its loan with CMHC to extend the payback period to 22 years (as opposed to the original 15 years), with a lump-sum payment of $22.5 million due in March 2037.
Blind River isn’t the only municipality having difficultly paying back the CMHC loan.
Dryden also had to quietly renegotiate its original loan when it was unable to make payments on the $12 million it borrowed under the MILP in 2010.
The money was advanced to the northwestern Ontario town despite the fact that the town was struggling with as much as $24 million in debt due largely to an earlier — and failed — attempt to operate a regional cellphone business. In 2010, the town was running a deficit of $8.4 million. Officials from Dryden — which has 7,600 residents and collects around $13.85 million in taxes annually — were not available to comment on this story.
When asked in March about the state of the loans made under the MILP, an official with CMHC responded, “there are no MILP loans in arrears”.
According to CMHC, the initiative was aimed at helping to spark the development of housing-related infrastructure in towns and cities across the country by focusing on providing funds for projects that were “shovel-ready.”
“Eligible loans will be approved largely on a first-come, first-served basis, provided the proposal meets eligibility requirements. However, CMHC will also seek to facilitate equitable access to the program and will work to encourage applications from urban and rural municipalities across Canada,” according to the federal agency’s website.
The low-interest loans were also to be fully disbursed by March 31, 2011, just eight months before the 2011 federal election.
According to CMHC, 289 applications for funding from municipalities were received and 94 per cent of those were approved. However, the supposedly national fund was handed out to cities in only 110 of Canada’s 308 electoral districts and of that, more than half of the $2 billion fund went to just two cities: Montreal and Quebec City, which account for 23 federal ridings. The two cities attracted a total of $1.05 billion of the national fund.
“I’m very surprised that half of the country didn’t apply. Are we to assume that any municipalities in the other 200 ridings didn’t make any applications?” said Angus. “We’re talking about extraordinary amounts of money that went into certain parts of the country and there needs to be an explanation about how the rest of the country were left out. In every municipality I’ve ever been in, there are projects sitting there waiting for funding.”
Officials from CMHC have said the money was simply handed out as municipalities that met the criteria applied on a first-come, first-served basis until all of the $2 billion was spent.
“This is a government that’s played games with infrastructure money, clearly for a long time,” said Matthew Kellway, opposition critic for Infrastructure and communities.
The NDP MP for Beaches-East York in Toronto charged that the Conservative government is using the $14-billion New Building Canada Fund, now two years old, to political advantage in the lead-up to the federal election in October.
“The New Building Canada Fund, as we know, has been stacked up with very little spending coming out of that fund until now, pre-2015 election,” said Kellway. “We’ve seen the latest budget put forward $150 million under the Canada 150 community infrastructure fund, which is clearly a political action and not an economic action fund for the Conservative government in advance of a fall election.”
Original Article
Source: canada.com/
Author: VITO PILIECI
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