Letter: Tax Loss Exposed and Explained

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letter to the editor

RORY RING, Candidate For Mayor

RE: ESSAR-ALGOMA TAX LOSS EXPOSED AND EXPLAINED

I am writing in response to the media coverage of the August 20th release from my campaign office, “The Mayor Cooks the Books on Failed Essar-Algoma Tax Deal: Time for Mayor to Come Clean on Real Numbers”

The subject of the story is of deep importance to the voters of Sault Ste. Marie and as such the facts must be made clear.

The Mayor’s position is flawed, while ignoring the evidence of the true loss suffered by city taxpayers. The core questions are, how much did the city lose and where did the calculation come from?

The Mayor claims he negotiated a great deal to get 92% of the Essar-Algoma taxes and he ignored the facts and the evidence. Recall that council, on Monday, August 20, was told the Essar-Algoma taxes were $23.8 Million and that the City will collect $21.8 Million. The real numbers are in fact that Essar-Algoma taxes were really $36 Million, so the city only recovered 58%. A loss of $15 Million dollars.

The truth is in the evidence given under oath by the former city solicitor Nuala Kenny on April 18, 2017. She provided sworn testimony as follows:

4. The City has filed a proof of claim in these CCAA Proceedings for, amongst other things,a secured claim of $13,998,028.13 in respect of realty tax obligations owing to the City at the time of the commencement of these CCAA Proceedings (the “Pre-Filing Tax Obligations”).

5. The Debtor is also indebted to the City for realty tax obligations that have arisen subsequent to the commencement of these CCAA Proceedings, which, as of April 5, 2017, amount to $10,815,665.32 plus interest thereon and which realty tax obligations continue to accrue in the ordinary course (collectively, the “Post-Filing Tax Obligations”).

It is clear from this sworn evidence that city was owed $24.8 Million up to April 5, 2017.  The question is why did the Mayor come to council more than a year later and tell the community that the amount owing was only $23.8 Million?

In her sworn testimony on May 3, 2017, retired city solicitor, Nuala Kenny swore under oath that from April 5, 2017 onward, the city taxes owed by Essar-Algoma accumulated at the rate of between $650,000 and $700,000 per month.  At page 15, Ms. Kenny testified as follows:

Question: So, would you agree with me that Algoma’s property tax obligation is in the range of about $650,000 to $700,000 a month on average is how it works out?

Answer:  I think that’s correct.

Essar-Algoma taxes were in the range of $650,000 per month.  So, for the 17 months from April 2017 to August 2018, the bill would have grown by an additional $11.05 Million.  The sum of these numbers, $13.998, $10.815 and $11.05 is $35.86 Million.  This does not include all the interest and penalties.

Additionally, at a meeting of council on September 11, 2017, a report of the Mayor and CAO was accepted by council and the debt was $32 million.  The Mayor and CAO reported:

“As of the last report to Council dated July 17, 2017, pre- and post-filing obligations for property tax, including interest and education share, were almost $32 Million…” (see Page 32 of the agenda package)

It has also been implied the payments Essar-Algoma made to the City from 2017 onward are in addition to the $21.8 million.  However, those payments are already included in Mayor’s total of $21.8 million. This information is contained in the agenda package from the meeting on August 20, 2018 on page four paragraph B.

The Mayor claims the City didn’t sue Essar-Algoma for the unpaid taxes. However, once the City decided to seek an order from the court for payment of taxes, it in effect sued Essar-Algoma.  It was the City who brought the request for relief to the court in the form of a motion.  There was testimony, cross examination, arguments and an order and the city lost.  The judge ruled as follows:

The City has a lien… The City has filed no evidence that its lien is not protection for it.

The Mayor spent over $500,000 fighting a case where the city had the protection of a lien to secure its payment and got nothing.

In the meantime, Essar-Algoma filed an appeal for a lower assessment at the Assessment Review Board. The Mayor chose to refuse to negotiate a tax settlement before the assessment case went to a hearing. The city lost badly. And the Essar-Algoma tax bill was practically cut in half as a result.  It wasn’t until after the city was hit with that decision, that the Mayor came to the table to make a deal.

Now that I have pointed to the sworn testimony and the calculations, our community should understand that we lost $16 Million and not $2 million. To the best of my knowledge in all the history of the steel mill restructurings over the last 50 years, never has the city taken such a huge loss.  Let’s come clean on the real numbers.

Yours truly,

Rory Ring, Candidate For Mayor

5 COMMENTS

  1. David, you are one of our citizens that continually works at bettering the system for our city. If only more citizens got involved, not just by voting, we would get better representation down at city hall and have council control the outcome of different issues instead of Staff. We need people that care about our city and not ones that want to hold onto their jobs, no matter what.

  2. Day care was just one example among the others that you mentioned, and no there is very little transparency with this present council. We have the right to know about everything that goes on down there. A couple of other things that should be mentioned are the building of the Solar farm, which the councillors swore that would bring down our electrical bills. There is a lot behind that story that was never publicized, like conflict of interest issues. Was there any?

  3. After an election, all the wanna-bees climb back into their caves and we don’t hear from them for another 4/3 years. I for one am always concerned and very vocal before, during and after an election, as many politicians will attest to. Mr. Ring is also vocal but in a different way. He is the CEO of the Sault Ste. Marie Chamber of Commerce and all his talking is usually done behind closed doors and to the business people of our city. I resent the fact that Mr. Wing will allow a common citizen to bitch and complain about what City Hall is doing during their tenure and wait until it is to his advantage to speak up. If you are concerned, you are concerned the year round and not just at election time. I have no problem with Mr. Ring running for mayor and am certain that he is one of the more qualified to do so, but speak up about all things that don’t seem right and not just the business side of election issues, like the elimination of Public Day Care.
    People like David Poluck, Andy Martens, Ron Shinners and many more concerned people in this city are always ready to complain and/or compliment council for their actions so let us hear from you year round and on matters that concern everyone in this city.

    • Just curious. If Ring wasn’t running for office, would you find his information interesting and alarming, or would you just accept what city council was telling you? And the elimination of Public Day Care was only one sad thing done by our present council. The travesty delivered upon the fire service, with city council turning deaf ear to the information supplied by the local firefighters, only to end up spending a huge amount of money to find out they were duped by the former fire chief. There was also the cuts to bussing that affected working citizens resulting in times where they had to take more expensive(than bussing) cabs rides. I understand what you are saying about the wannabes however, the public deserves information. The public always deserves the truth. I would really like to know who is providing the full truth here, because Mr Ring does supply some facts with his story regarding sworn evidence coming from the city’s former solicitor.
      This council proclaims transparency. Are we getting it.

    • Mike,
      I have been keeping busy…because of local ratepayer efforts of which I was involved the Municipal Act was amended in section five Accountability and Transparency which passed third reading back in February which now requires all municipalities to have a Lobby Registry Registrar, Auditor General, Integrity Commissioner and Municipal Ombudsman which other than the appointment of an Integrity Commissioner now in place will be happening locally in 2019.
      The Association also lobbied for review and changes to improve of the Code of conduct which happened with this last council.
      All changes to improve our system and level the playing fields for both council and community for a better system of governance.
      In order to do any job you need the right tools to get best results. In this case it took two years.
      I figured my time was better spent doing what was needed and lobby with others provincially to change legislation, than continue pushing the rock up the hill without the tools of democracy that the Act allowed us to have.
      Now that the municipal election is in full swing I and others will be involved openly to bring public awareness to the changes.

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