Funding bodies leaving towns in limbo.

Editor's Note: Northern Ontario Business is pleased to introduce a new editorial feature. Tales From the Front Lines will feature guest columns from municipal leaders across the North each month, allowing them to give voice to the unique issues facing their communities.

In May 2000, Canada watched as the small town of Walkerton, Ontario was devastated by bacterial contamination in its municipal drinking water system. The result: the management of drinking water in Ontario was forever changed.

I will not belabour the details of this very unfortunate tragedy. The Honourable Dennis R. O'Connor articulated the events and issues in his widely read report. I will, however, discuss how the lack of apparent foresight has pushed many communities to the verge of insolvency. It is this very issue that has been the subject of many discussions at the meetings of the Northeastern Superior Mayors Group (NESMG).

Certainly the Mayors of the NESMG (Chapleau, Dubreuilville, White River, Hornepayne, Manitouwadge and Wawa) have recognized that they have a very distinct role to play when it comes to managing the safety of drinking water in their communities. They recognize the ongoing costs and have reluctantly accepted the massive debt heaped upon their declining tax base needed to pay for the required capital water projects. It was indeed a welcome relief when the province announced funding (up to 83 per cent) from the Ontario Small Town and Rural Development Initiative (OSTAR), the Ontario Strategic Infrastructure Financing Authority (OSIFA) and the Northern Ontario Heritage Fund Corp. (NOHFC).

So, how do the funding programs work, you ask?

Not very well, I say.

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My own community of Wawa has annual revenues in the range of $10 million. Our new legislated water treatment plant and extension will cost $11 million.

The anticipated funding is in the area of $8 million. Has Wawa seen any of the promised funding? Yes, an initial deposit of $900,000 was received in 2003. Despite filing additional claims, other amounts are as scarce as walleye on opening day. To date, Wawa has borrowed over $5 million, incurred interest costs of $100,000, emptied the bank account, stopped all non-legislated capital spending and made its bankers nervous. There is no hope on the way as OSTAR continues to barrage the municipality with petty questions on miniscule invoices and matters that should not interfere with cash flow. But they do, while changing analysts more often than the closure of Highway 17 north of the Soo.

Beginning to see the picture?

Why would the funding agencies not provide a good portion of the funds in advance of the project? It's a good question, and one I have asked on several occasions.

Such an advance would assist with offsetting interest and help with cash flow, particularly with a project that exceeds the annual revenues of a community.

The answers have ranged from, "the flow of funds is based on approved claims only" to "the borrowing costs are your contribution to the funding program."

What "tiny box" generates this kind of thinking? Was it not the provincial legislation that required such expenditures in the first place? Municipalities have a good record of managing their cash flow--like they have a choice--and should be trusted with such advances.

All of this is exacerbated in Northern Ontario--one size just doesn't fit all! Sometimes a solution needs to be developed to fit a particular situation--that's called "thinking outside the box."

If the type of rigid thinking so prevalent in the handling of small communities in Northern Ontario continues without foresight, don't be surprised to hear of a "municipal bankruptcy."

Don't believe me?

Just ask the mayors of the NESMG.

Chris Wray is the CAO, clerk and treasurer for the Township of Michipicoten (Wawa). He can be reached by e-mail at [e-mail].