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Digging out of debt
Fort McPherson residents continue to shoulder the burden of $2-million debt accrued by past hamlet council

Miranda Scotland
Northern News Services
Published Monday, December 1, 2014

Cost saving measures implemented by Municipal and Community Affairs (MACA) to rid the hamlet of Fort McPherson of its $2-million deficit are impacting the community's bottom line positively but at a cost to residents.

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Bill Prodromidis, former mayor of Fort McPherson, says efforts to reduce the hamlet's $2-million deficit have caused difficulty in the hamlet. Residents are struggling to pay bills, it's difficult to get service at the hamlet office and there's no bylaw officer to enforce the rules, he added. - NNSL file photo

MACA relieved the hamlet mayor and councillors of their duties in July after reaching the conclusion that the elected officials would be unlikely to approve and implement a debt reduction plan.

"It got to the state where decisions couldn't be made because of a lack of quorum, so we had to go to the next level," deputy minister of MACA Tom Williams told News/North previously.

MACA officials appointed a municipal administrator to takeover the day-to-day operations in the community and implemented a number of cost saving measures, including increasing municipal service rates and reducing municipal staffers work hours.

"We're in the third quarter now and we're seeing results from implementing these measures," said Williams, who is a deputy administrator for the Hamlet of Fort McPherson.

Of the $2.1 million deficit, approximately $800,000 is from the operations and maintenance budget and $1.2 million is from the water and sewer services budget.

MACA is aiming to reduce the deficit by $600,000 this fiscal year.

"We were pleased to report to the community (last week) that we're on target for those proposed deficit reductions," said Williams, adding the situation could change if the hamlet is faced with unexpected circumstances, such as a heavy snowfall year.

MACA intends for the deficit to be paid off in about three years but Bill Prodromidis, who was elected as mayor in December 2013 and served until MACA stepped in, said he believes the timeline should be adjusted. The cost reduction measures that have been implemented are creating hardship and without a bylaw officer or dogcatcher the hamlet is unsafe, added Prodromidis.

"Right now we have no control in the community. We use to have a curfew over here for skidoos and four wheelers. Now everybody is running around at 2 o'clock in the morning, 3 o'clock in the morning, and there's nothing we can do about it. We don't have a dog officer. Dogs are running loose. People are scared over here."

Williams said that not having a bylaw officer isn't just about saving money - it's been a challenge to find someone to do the work.

"There were attempts to try to hire a qualified bylaw enforcement officer and advertise for a bylaw enforcement officer trainee but those were unsuccessful attempts to try to recruit someone," he said, adding in the meantime, the RCMP is helping fill the gap. "We will have to try to find someone for that vacant position because it is an important position."

Another issue, said Prodromidis, is how cuts to staff hours are affecting service at the hamlet.

"If you have an issue with your driver's licence or get anything to do with your car or whatever you've got to go to Inuvik because nobody is available to help you out."

Mackenzie Delta MLA Frederick Blake Jr. told the legislative assembly in October that he'd received a number of calls from constituents "asking why they now have to be the ones to pay back the amount council overspent."

New water rates were introduced in April and residents are struggling to cover the additional cost, said Blake. Community members went from paying an average of $150 a month for water, septic and garbage services in March to $425 a month from April onwards, said Blake.

"The local housing authority is not getting an extra subsidy for the increase in water ... and homeowners barely making it now have to pay almost three times what they were paying normally."

Following complaints, MACA implemented a special water rate, retroactive to April 1, for residents over 60 years old.

Blake asked the department to do more to work with the community to lower municipal service bills. He suggested a five-to-10 year timeline to pay back the deficit would be more reasonable.

"There has to be a common goal of both the department and for my constituents. They are not happy paying such high prices to the hamlet. They are going into arrears and are given warnings that services may be discontinued, and at home people have been refused water delivery," Blake told the assembly. "Can we sit down and come to an agreement to bring municipal service rates to a level where my constituents can hope to keep up with their bills?"

Minister Robert McLeod denied Blake's request, saying if they took too much time to pay off the books, it might affect the hamlet's ability to provide many services and the deficit still has to be paid at the end of the day. He also noted that the water and sewer costs hadn't been increased in a number of years even though the cost of providing the service had gone up.

Residents who have been unable to pay their water bills are still getting service, according to Williams.

"We may have slowed down service and reduced service delivery but we've never cut off water. We want to make sure residents, for health and safety reasons, have the water that's required. We encourage them to come in and make payment plans to pay off their arrears."

The hamlet recently received a cash infusion of about $1.2 million. A large chunk of the money - $840,715 - came from the gas tax fund. The hamlet didn't receive payments in 2012-2013 and 2013 -2014 because the financial reporting requirements had not been met.

The rest of the funds came from an insurance claim the hamlet filed after irregularities were found during a forensic audit. The RCMP launched an investigation in the summer to determine what happened to the missing funds. The investigation remains active and no charges have been laid at this time, according to Const. Elenore Sturko.

In light of the new funds, Prodromidis believes MACA should reinstate him as mayor and bring back the councillors or hold an election.

"If (the deficit) is $600,000 we (the mayor and council) can manage that. We can make some kind of plan for five, six years for the people to pay off the debt. That's no big deal," he said. "Why do they have to suffer the people with these higher prices?" ... Every time you talk to MACA and you try to give them advice or suggestions they don't want to listen. It's a frustrating situation over here."

The deficit hasn't been reduced by $1.2 million, said Williams. Although the $403, 287 in insurance money will be used to pay down the debt, the gas tax funds must be used for infrastructure projects.

"The funding is used for infrastructure and needs to be used for this purpose only to comply with the federal funding agreement rules. But it allows the community to do some infrastructure projects in the future."

The community's arena, for instance, will need to be repaired next summer as some of the pilings are lifting and the integrity of the foundation is compromised, said Williams, adding a structural engineer said it was safe to use the building for the winter.

It's unlikely the community will have elections in the near future. Williams said the plan is to assess the situation in year two and possibly hold elections for mayor and council in year three.

"It's not in our best interest as government to look after the affairs of the community it should be the community looking after their own affairs," he said, explaining that even when that happens MACA will continue to provide some guidance. "There will likely still be some assistance through our office to help with administration. We will probably assist them in finding a senior administrative officer and then to help train and support their new SAO until the person gets up to speed."

Although there are some residents who are unhappy with the MACA taking over the local government there are others who are supportive, said Williams.

"Last time I was in the community we had residents, when I was on the radio call, phone in and specifically thank me and thank MACA for providing the service we are," he added. "I think generally it's appreciated that it was timely that we did come in because the existing council, nothing against the council, but there was a $2.1 million deficit and residents didn't know. There were a lot of unanswered questions."

"One of the commitments the minister and I made was to ensure residents are fully informed on the progress of the debt recovery and any activity that's happening in the community."

To make good on this promise, MACA sends out newsletters to residents and is looking at providing regular updates on the local radio. Administrators visited the hamlet office last week and held an open house for residents to ask questions of the MACA team. More than 50 residents turned up, according to Williams.

"We got a lot of appreciation for our efforts."

NNSL photo/graphic

Cost-saving measures introduced in Fort McPherson after hamlet government was dissolved in July:

  • Contracted out water delivery and sewage collection services.
  • Increased water, sewer and garbage service rates.
  • Added or increased facility user fees, equipment rental rates, dump tipping fees and rental rates for municipal buildings, among other fees.
  • Reviewed areas to improve energy efficiency and implemented a project at the arena to change all lighting to LED lights.
  • Started closing municipal owned buildings when not in use.
  • Reduced municipal staffers work week to four days and work days to 7 hours from 7.5 hours.
Source: Department of Municipal and Community Affairs

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