On Monday evening, Kimberley City Council indicated their intent to take the sale of the SunMine to voters in a referendum this fall, to coincide with the municipal election.
The potential buyer for the solar farm is Teck Metals Ltd., and Mayor Don McCormick said the city has been in discussion with Teck for the better part of two years.
As stated in a report to Council from CAO Scott Sommerville, the City has other infrastructure priorities competing for the more than $2 million necessary to expand the SunMine, so a private sector partner was sought to fund the expansion.
“More than a dozen private sector companies expressed interest in partnering with the City for an expansion of the SunMine,” wrote Sommerville. “Teck owns the brownfield land upon which the SunMine is located and the substation infrastructure to which the SunMine is connected.
“As such, Teck is a party to any potential expansion and must give their approval…Teck suggested and the City agreed that Teck itself would be the best proponent to take over the expansion of the SunMine to 2MW of power and beyond.”
Because the SunMine is considered a utility, under the Community Charter the city must have the approval of electors to sell it.
The other method for gaining that approval is the Alternate Approval Process (AAP) but McCormick says that by the time the whole process was complete, it would be election time anyway.
“The most important thing is we are doing this for two reasons,” McCormick said. “The first is so that taxpayers don’t have to subsidize the operation, and the second is to ensure its expansion.”
He says that the SunMine has been producing but at only one MW it doesn’t have sufficient cash flow to continue to make money as it ages and maintenance becomes more of an issue.
It’s purely a cash deal, McCormick says. The city will receive the $2 million it originally invested plus interest until the loan can be paid. That can’t happen right away as the city borrowed through the Municipal Finance Authority.
“It’s a bond-based debenture. There is a window when MFA will allow the loan to be paid out, at around the ten year mark. So we will put the money in reserve for seven or eight years until MFA opens that window and we can pay it off.”
It will potentially cost another $2 million to expand the SunMine and Council decided there were other, more important infrastructure needs should the City borrow that amount of money.
“Part of the ongoing discussions with Teck has been the expansion to 2 MW. More details on that will follow when the deal closes,” McCormick said.
“Teck is far and away the best partner for this. We had many inquiries but Teck is so involved, it’s their land. It just makes sense.”
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At a Special Meeting of Council on Monday, four out of five present Council members voted to bring the sale of the Kimberley SunMine to a referendum vote. Councillor Darryl Oakley voted against the motion, while Councillors Bev Middlebrook and Kent Goodwin were not present at the meeting.
Councillor Oakley says he voted against the referendum motion because this “could be a risky move for taxpayers”.
“I would rather play it safe and go through the alternate approval process,” said Councillor Oakley. “I think if they [taxpayers] vote no on this, then there’s a huge risk to them. I do understand that this fits within the election year, I understand and respect that, but I think we could have done it another way that is less risky to the taxpayers.”
Councillor Hoglund says he “totally disagrees” and that putting it up for referendum is the best option, especially considering that is how the SunMine was built in the first place.
“The SunMine was built on a referendum. It went to the people and 76 per cent of the people that voted, voted for it,” Hoglund explained. “I think to go the alternate approval process [route], is totally wrong. It’s not a safer way to go; it doesn’t take much to get ten per cent of the people to come in here and vote, especially on an item like this. I think this tells the people in Kimberley that we are an open Council and we are going to bring it to a referendum.”
He adds that the SunMine “basically has to be sold” because Council made a commitment to the taxpayers.
“The way it’s going, we’re not putting enough money into the reserve fund,” he said,
Councillor Sandra Roberts says she is also in support of the referendum.
“I was open to educated persuasion when it became clear to me that we really need to focus on our obvious transparency,” she said. “Our ability to communicate with our taxpayers as well as being evidently transparent in how we do things [is important].”
“There’s always a risk to throwing this question out there to the public, but I think we have enough time to educate them on our business case and what it could mean going forward,” said Councillor Nigel Kitto. “I am confident that we have enough time to talk to the taxpayers and they can make the right decision come election day.”
Councillor Oakley says that the SunMine “isn’t going anywhere”, and that it will simply have a new owner.
“If people in Kimberley decide they want Kimberley to remain the owner, there is the potential for massive tax increases. That’s why I am nervous about it,” he explained.
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Mayor Don McCormick says that timing is key for the referendum process in this instance.
“There are two methods of elector assent. We have the referendum process and we have the alternate approval process. Timing, in this particular case, is interesting because whether we started with an AAP or went through the referendum, we’re going to complete at about the same time,” he said. “AAP’s have a place in the middle of a term, or certainly when there is no election looming, where you can capitalize on the cost that’s already being absorbed for the election.
“I think it behooves us to ensure that we have communicated, as best we possibly can, all of the nuances of what we’re doing and why we’re doing it. That’s where the element of risk comes in, if we don’t communicate this correctly, the wrong impression may in fact be left and it could have an impact.”
“I’m disappointed that it had to come down to this,” said Councillor Hoglund. “I don’t think we would be having this discussion if the SunMine would have been built as a 2MW project to start with. Council dropped the ball on getting the 2MW up and running in the time frame required. We lost a grant of over $1 million and I blame Council on that.”
The Mayor says this is a “great deal” for the City of Kimberley.
“We will have the SunMine, it will be expanded, and we don’t have to pay for that expansion,” he said. “We’re out from under any financial liability from an operating point of view. This is a win-win all the way around and I think we are in a pretty good position here.”