Mayoralty candidate Rory Ring penned the following open letter to the residents of Sault Ste Marie to address the Essar-Algoma Tax deal reached at a special city council meeting held Monday August 20th.
Ring doesn’t agree with the Mayor’s assessment that Essar-Algoma Tax deal was a victory.
The Mayor Cooks the Books on Failed Essar-Algoma Tax Deal
Time for Mayor to Come Clean on Real Numbers
Last night the community was told taxes owed by Algoma will be paid and the City and the Mayor achieved a great victory. The community was told that Essar-Algoma owed $23.8 Million and the City negotiated a settlement of $21.8 Million. This is not true. The total taxes owed by Essar-Algoma from the time they went into CCAA until now is more than $36 Million and the city only got just over $20 Million. The Mayor is misrepresenting the facts.
I have been engaged with stakeholders on the Essar-Algoma tax file in my role as CEO of the Chamber. I know the that there was no victory and in fact what the Mayor is shading as a victory is actually one of the biggest boondoggles in the history of this city.
The Mayor decided to hire high priced Toronto lawyers to sue Essar-Algoma and its lenders for unpaid taxes while Algoma was in CCAA. That decision cost the taxpayers $535,000. The lawsuit contributed absolutely nothing to the amount of the settlement and it was a pure waste of money and time.
The facts are complex, and I was disappointed that despite several attempts by various individuals to explain them to the Mayor, he either failed to understand them or he ignored the reality of the situation and he set out on a legal misadventure which cost the community more than half a million dollars—which by the way is roughly equivalent to a ½ percent tax increase on our city taxes.
The City, by provincial legislation, has a first claim if a company can’t pay its taxes. This right is the equivalent of a lien on the lands of the company. A city never has to sue to collect taxes. Cities have a right to lien lands and get paid first. But the Mayor insisted on going to court rather that working out a plan to get paid.
At the time they went into CCAA, Essar- Algoma owed the city approximately $14 Million. Up to April of 2017 they racked up another $10.8 Million and the amount grew each month after that by approximately $650,000. The total amount Essar-Algoma was on the hook for was just shy of $36 Million. Not $23.8 as the Mayor would have you believe.
What you weren’t told was that prior to going into CCAA, Essar-Algoma filed appeals with the Assessment Review Board, which is where you go to appeal your MPAC assessment. Essar-Algoma was seeking a major reduction in the assessed value of their lands, and consequently a major reduction in the amount of taxes they would have to pay. The Mayor worked on this file directly with senior staff and a second set of lawyers from Toronto unnecessarily.
In April of 2017, Essar-Algoma won a substantial victory in its assessment appeal and the value of its land was dropped from $83MM to $39MM. While the Mayor had his eye off the ball fighting an unnecessary battle in Toronto courts, Essar-Algoma was winning a huge tax break at the Assessment Review Board.
According to the report filed with council last night the City will only be getting $20.4 Million from the deal and Algoma’s tax bill for the future will be drastically reduced.
Of course, it sounds like the Mayor did a great job by claiming the City is getting 92% of the amount owed. He is not telling you that the appeal the City lost and Essar-Algoma won, cut the tax bill substantially. In reality, the city got hammered on the Essar-Algoma tax appeal and even after such a major loss, the Mayor couldn’t even collect 100% of the lower sum that they owed the city.
The Mayor is telling you that the settlement with Essar-Algoma will not impact services or taxes. That is also untrue. The city has already significantly raised the taxes of all the major employers in the community to make up for the shortfall from this major loss. Not only did the Mayor fail to stand up for local businesses he clearly demonstrated his indifference to the hardship and financial loss local employers faced.
The same local businesses and employers who lost more than $25 Million when Essar-Algoma went into CCAA are now on the hook thanks to the Mayor, to pay even more in taxes to make up for what the city lost from Essar-Algoma.
We now have the highest business tax rates in Ontario. We might as well put up a sign that says: “Sault Ste. Marie—Don’t Invest Here.” We can no longer afford this kind of leadership at city hall.
All of the data in this letter is from affidavits and sworn testimony filed by the city in the CCAA case. If you would like, I can send you copies. Email me at [email protected]
Rory Ring, Candidate For Mayor