OLDS — Town officials say one big reason for their decision to place the Olds Institute for Community and Regional Development (OICRD) into receivership and turn it into a municipally controlled corporation is financial.
They say the OICRD couldn’t possibly make its upcoming scheduled debt payments.
Among other entities, OICRD contained Olds Fibre Ltd. (OFL) which in turn has overseen O-NET, the community-owned firm that provides high-speed internet as well as phone and TV service.
Town officials say the total owing is about $18 million, including $14 million of debt and a $4 million line of credit.
Town officials say the burden of that debt is constraining the town’s ability to undertake other efforts to improve and serve the community.
A town document in response to frequently asked questions (FAQ) from the public says the next payment, scheduled for Sept. 15 this year, is $452,646.87 ($217,374.17 principal plus $235,272.70 interest).
That document says next year, two principal and interest payments are due, totaling $905,293.74.
“According to the financial review conducted by BDO Canada Limited, as the town’s financial advisor, OICRD and OFL do not have sufficient revenues to be able to make the principal and interest payments,” the document says.
In response, Joe Gustafson and Stirling McLeod who have been heavily involved in OFL/O-NET, wrote that the principal and interest payment would have been made in September as scheduled.
They said the line of credit would have been “reduced” over the year, “had the town not interfered with the operations of OCCN and O-NET.”
They said BDO Canada’s conclusion that OI did not have the funds to make those loan payments is based on paying out $745,000 of private loans in 2021.
“These loans would have been automatically renewed without town interference,” they wrote.
McLeod and Gustafson – and others involved in OICRD/OFL boards of directors who spoke during a public hearing on July 26 said several requests were made to see a BDO report that concluded OICRD/OFL couldn’t make the debt payments but were told the report was privileged information.
The FAQ document concedes that turning OICRD/OFL/O-NET into an MCC “does not in and of itself solve the town’s debt limit issues.”
However, town officials say it would consolidate OICRD/OFL into a single entity and that way, “provides more options for how to capitalize and finance O-NET going forward.”
Some residents say they fear that the ultimate aim is to obtain investors or perhaps sell the OFL/O-NET business outright.
The FAQ document says the new business structure “will be prepared and ready for seeking and accommodating potential investors.”
“While the OCCN and O-NET concept was well ahead of its time, interest by other municipalities in fibre networks and services has caught up with Olds, and while too early to tell, this does offer additional opportunities for investment, all of which have indicated to the town that restructuring the town’s investment through a municipally controlled corporation simply makes the best sense, both now and for the future.” the document says.
“We all like quality services from O-NET, but at what cost to the town and its residents and businesses," it says.
“Fiscal responsibility is in the best interests of the residents and businesses of Olds and requires that the town proactively addresses the impact of debt and issues created by the inability to repay it.
“Awaiting default is not proactive and not in the best interests of the residents and businesses of Olds.”