Province waived $23M grant to Resolute

Sam Odrowski

A local town councillor is requesting information from the province regarding an agreement struck under the previous Liberal government between Resolute and the Ministry of Natural Resources and Forestry.
Coun. Douglas Judson wrote to current MNRF Minister John Yakabuski on Sunday, asking for a copy of the agreement that was struck in June of 2017, and indicates Resolute would no longer have to repay a $23 million grant it received a decade prior for the construction of the bio-mass boiler at the Fort Frances mill.
Through Resolute’s quarterly filings to the U.S. Securities and Exchange Commission (SEC) Coun. Judson discovered that the conditional incentive was to be repaid by Dec. 2, 2014 but the deadline was extended several times over a three-year period from Dec. 2, 2014 to June 30, 2017 before being forgiven altogether.
“What the SEC filings disclose–in my view–is an effort on the part of Resolute to avoid repaying taxpayer funds it received for the purpose of supporting its operations in Fort Frances, which it closed down shortly after cashing the cheque,” Coun. Judson remarked.
“Not only did the government extend the deadline to repay the funding nine times over three years, but it ultimately allowed Resolute to keep the money, and did so right before the 2018 provincial election,” he added.
“Two years later, Resolute sold the mill, and has presumably been able to walk away with those proceeds too, and we have no indication that the Liberals had any foresight or intention of putting in place terms which prevent the dismantling of these publicly-funded assets–key economic assets for our district.”
Part of Coun. Judson’s request from the MNRF is a “fact-finding exercise” to determine what conditions they put into place to have the $23 million repaid.
“You could think of any number of conditions they could have put in place to protect the viability of the asset and the economy of Fort Frances,” he reasoned.
“And in full fairness they might have done that but we don’t [know] and so that’s part of this exercise is trying to smoke out what the full breadth of terms and conditions attached to that facility are.”
Coun. Judson told the Times people in the region are entitled to know what these conditions are and if none were put in place, why not?
He’s looking to the two former ministers of natural resources who served under the former Liberal government to clarify those terms.
“Bill Mauro and Kathryn McGarry need to answer for that,” he quipped. “Was it politically expedient to sell out Fort Frances? How was the public interest reflected in these decisions?
“What these facts remind us is that the mill properties are not, and never have been, a purely private asset,” Coun. Judson added.
“This industry functions through the provision of publicly-owned forest resources, and these specific properties in Fort Frances have benefitted from sizeable public investments over the years.”
Bill Mauro told the Times via email that funding for the project was approved many years before he took office and said it was seen as an important move to increase affordability and keep the mill competitive through a difficult forestry climate.
But regardless of when the funds were approved, Coun. Judson said Mauro was the minister when the deadline extensions occurred, as he served his term from June 2014 to June 2018.
The MNRF’s decision to extend deadlines and wave the $23 million debt could be seen as discouraging to the many local small businesses who apply for government funding and follow strict conditions on how and when the grants are paid back, according to Coun. Judson.
“Certainly, I think it’s disappointing when government has different rules for different operators,” he remarked.
Moving forward, Coun. Judson said there’s nothing the taxpayer can do about the $23 million that was waved but they can still try to find out what terms and conditions were attached to the facility through the $23 million grant.
“I just want to emphasize that yes it is discouraging that perhaps Resolute pursued not to have to repay this funding, they act in their own interests they’re a corporation, that tends to be what drives corporate decision making,” he reasoned.
“I think the bigger question is how public actors respond to this information and how public interest decision makers in our levels of government are going to ensure that those public investments in this facility are respected.”
In related news, Coun. Judson said the town has had a few “fairly productive” meetings with Riversedge, the company who recently purchased the Fort Frances mill but is concerned that they haven’t come forward publicly with their intentions for the property.
“There might be good reason for that but they haven’t done it and I think the public at some point is entitled to know whether those intentions are aligned with our interests as a community and whether they are a white knight or a trojan horse,” he remarked.
“We want to underscore that the community has a vested interest in the future of this facility and the taxpayer has contributed a lot to its success over the years and so we want the new owner to understand that as well,” Coun. Judson added.
“All of that investment, all of those resources would be very much sunk if the operating capacity of the facility were thrown away.”