INNISFAIL – Town council has moved aggressively towards industrial land development of 60 acres of reclaimed sewage lagoon lands in the southwest corner of town by directing administration to prepare tenders at a cost of up $5.5 million, an expenditure financed through the creation of a borrowing bylaw.
If council approves the bylaw, Innisfail, which has long prided itself as being a debt-free community, could find itself carrying a significant debt load for the first time in recent memory.
“When you develop the industrial park, you now have land for sale. When you have companies come in and purchase industrial land you now have property taxes that are being paid. So, you look at that as an investment and there is a return on investment,” said mayor Jean Barclay. “You can sit and not do anything and not develop any land and the town doesn’t grow.
“We know that economic growth is one of our key priorities,” added Barclay, noting the move ties in “perfectly” with the town’s recently approved Economic Development Strategy & Tactical Plan, also known as Power of Place. “We know that there is interest in industrial land and we want to make sure we deliver that to the market.”
At its April 25 regular meeting council unanimously approved a motion directing administration to tender the development of the southwest industrial park at a budgeted amount of $5.5 million.
Council also approved a second motion to have administration proceed with drafting a borrowing bylaw for the funding of the park’s development and to bring it back to council for review and approval.
Administration is expected to come back to council in June to seek approval for the new borrowing bylaw and to bring a recommendation for a construction contract award.
The goal is to have the construction started by August and complete surface works in 2023.
Coun. Gavin Bates pointed out the $5.5 million expenditure was estimated in 2019 and wanted to know how comfortable the town was that the price tag was still in the “ballpark".
“Until we start doing a lot of the work we won’t know,” Bates said.
Steven Kennedy, the town’s director of operational services, said project pricing is dependent on “availability”, especially for materials and their supply.
“It is a tough one for me to know,” said Kennedy, adding a 10 per cent contingency component was added in 2019 to the estimated construction cost, as well for engineering, which he said is now lower than first estimated. “(We’re) fairly confident we will be within that budget.”
Bates also wanted to know if the town had any reserves that would be appropriate to apply to the project to either reduce the borrowing or guarantee the "safety” of the projected $5.5 million cost in the event expenditures increase.
Erica Vickers, the town’s director of corporate services, told council there was “likely” a stabilization reserve with more than $2 million that could be used.
“It changes the lens on a lot of our discretionary spending down the road and even our ability to do whatever we do with recreational facilities, all those things down the road, depending on how big they get,” Bates said later, noting just a few weeks earlier the projected cost was half a million dollars lower.
Bates also cautioned council that interest rates on borrowing, which have been rising in recent months, could be an issue.
“None of us know where this will go and we will see this as this evolves. It probably won’t be going down, and it will probably go up,” said Bates. “Obviously as this has evolved, (we) have to do our due diligence and we will have to ask a lot of questions. You guys will have lots of answers for sure.”
Coun. Jason Heistad said messaging was key for the town to let the public know council was thinking “long-term” and that the project was “very positive” for Innisfail and that the estimated $5.5 million cost may be different, depending on the cost of materials and incoming contract bids.
“I think our messaging should really key on the future,” said Heistad. “We want to talk about the positives that are going to come out of this.”
The passage of both motions follows news the town received on March 30 that Innisfail no longer had to wait five years before it could begin industrial development on the 60 acres of reclaimed sewage treatment plant and lagoon lands, located south of 37th Street.
The town had been bound by a five-year no-development clause in an agreement it made with the province and the federal government when it secured almost $6 million dollars in a Small Communities Fund (SCF) grant in 2015.
Each of the three parties put up $1.6 million to remediate the lagoon lands. If the town went ahead with development before the five-year deadline the town would have been forced to pay back the contributions made by the province and federal government.
However, after serious lobbying to the province by Barclay the Alberta government agreed to allow the town to now proceed with the industrial development without any punitive measures.
In an April 25th letter, Ric McIver, the provincial minister of municipal affairs, told Barclay he wrote to Dominic LeBlanc, federal minister of intergovernmental affairs, infrastructure and communities, last January requesting the federal government waive the five-year ownership retention clause for lnnisfail's SCF project.
McIver added he has not yet received a response.
If the federal government declines to have the clause removed the town will be asked to pay its $1.6 million portion of the SCF monies back to Ottawa. However, McIver told Barclay in his letter his department will share equally with the town the cost of refunding the federal government.
“This will minimize the financial burden on the town with respect to the refund and hopefully enable the town to proceed and not delay economic opportunities,” said McIver in his letter.
Todd Becker, the town’s chief administrative officer, said if the federal government sticks to the original agreement the town’s “worst-case scenario” would be to pay back $800,000 to the federal government.
On May 3, Becker told the Albertan his office has not heard from the federal government on any details of McIver’s letter to Barclay, or whether it would make adjustments to the five-year no-development clause in the tri-party SCF grant agreement.