The wheels continue to spin on a viable plan to bring sewer service to Innisfil Heights industrial lands. The prolonged examination of a strategy centred around the creation of a Municipal Services Corporation has come to an abrupt end.
An early staff report to Council (DSR-53-15, March 18, 2015) discussed a study from KPMG, which included an option for a Municipal Services Corporation:
“… the KPMG study concluded that the best option for the municipality was to create a municipal services corporation (MSC) and place the assets for both water and wastewater into that structure which would enable the MSC to separate the assets and liabilities from the Town’s books. The future debt capacity would vest with the new corporation consistent with the manner in which we handle the financial requirements of INNPOWER …”
“On January 1, 2016, the Town transferred the water and wastewater assets, including two water pollution control plants, one surface water treatment plant, municipal wells and the associated collection and distribution systems to InnServices [Utilities Inc.]. InnServices is also tasked with building over $200 million in new infrastructure …” [Town of Innisfil website]
The second part of the strategy was to sell half of the Innisfil electric utility to Edmonton-based Epcor, which is owned by the City of Edmonton. The company had $1.9 billion in revenue in 2015. This strategic partnership was supposed to create potential opportunities “related to power distribution, LED lighting, cellular tower ownership, fiber optics, renewable energy generation, district heat, water and wastewater servicing, and land development.”
However, the deal floundered because “Part of the proposal called for Innisfil receiving a $3.5 million finder’s fee from EPCOR once it invested $75 million within town borders. [Innisfil CAO] Reynar said that would mean selling shares in InnServices to EPCOR since there were no investments of that size available through an InnPower deal alone.” (Rick Vanderlinde, Innisfil Journal, Apr. 6, 2016)
It seems the proposed agreement was structured in a way that could quickly dilute the Town’s share ownership in the venture:
“If either the Town or EPCOR identifies an opportunity to acquire a small LDC, it will notify the other and if the other shareholder wants to pursue the opportunity the two (2) shareholders will pursue it together. EPCOR at that point will take the lead in pursuing and negotiating a transaction and once it has negotiated an acquisition transaction, it will come to the Town and give it the opportunity to elect to participate in the acquisition at a level between 5% and 49%.” (Staff Report DSR-208-15, Dec. 9, 2015)
“Should the Town’s percentage ownership of InnPower decrease, so will its governance rights. Decreases in the Town’s percentage ownership would occur if the board of directors of InnPower calls upon EPCOR and the Town to contribute equity to fund required capital investments and the Town refuses or is unable to contribute its proportionate share.” (Staff Report DSR-208-15, Dec. 9, 2015)
“…we understand that InnPower management estimates that up to eleven million dollars ($11M) in equity may need to be contributed to InnPower over the next five (5) years.” (Staff Report DSR-208-15, Dec. 9, 2015) [InnPower was to receive $19 million from the sale; expectation was that up to 58% of that might have been earmarked for future capital investment.]
A March 16 Council “vote means a call to tender the project will go out to three companies that have already been shortlisted by InnServices. The tender could be awarded as soon as the end of July with completion by late 2018 or early 2019.” (Rick Vanderlinde, Innisfil Journal, Mar 17, 2016) The search for a winning formula to finance utility infrastructure continues.