The Tawatinaw Valley Ski Hill leasee wants an estimated $500,000 in work done at the site — including an upgraded parking lot, among other work he says was promised — forcing Westlock County to suspend the parties lease/purchase agreement signed last December.
At their June 28 meeting, councillors voted 6-1 to suspend the agreement between the county and DK Consulting and excuse lease and tax payments until a new CAO is hired and a fresh agreement can be penned.
“The organization that’s leasing it feels they’ve lost a lot of money last year and feels it would be justifiable to suspend the monthly taxes and the lease payments because of the loss,” said reeve Bud Massey.
As part of a 36-month, $2.2 million lease/purchase agreement, DK Consulting pays $18,000 yearly in rent, as well as municipal taxes.
DK Consulting owner Dom Kriangkum confirmed he made the request.
“There are some things we agreed upon in the past that they haven’t been able to rectify,” Kriangkum explained. “It’s a challenge to make it a year-round facility at this time.”
In December 2015 the county and DK Consulting signed a $2.2 million three-year lease/purchase agreement. Council voted 4-2 in favour of the deal, with councillors Jim Wiese — who resigned following its acceptance — and Albert St. Louis against it. Coun. Don Savage excused himself from the vote citing a conflict of interest.
Wiese was scathing in his criticism of the deal at the time saying that the total value of Tawatinaw’s assets was $4,876,860, while a reported nine-year $1.6 million operating loss had been over exaggerated by $1.2 million.
As part of the current deal the county is liable for 100 per cent of the costs on the new chalet and 50 per cent of any major works required at the site. DK Consulting is responsible for any minor maintenance and the operation of the ski hill.
The municipality is currently into the third year of a 20-year, $1.5 million debenture it took to pay for the new chalet. That loan has a principal and interest payment of over $170,000 annually.
If DK Consulting doesn’t follow through on the purchase of the site following the three years, ownership will return to the county, along with any improvements made at the site.
Massey said current site issues are highlighted by drainage problems and a soft parking lot, with costs to get the facility usable for the summer pegged at around $500,000.
“It’s a winter playground and it’s a whole different set of circumstances for the summer,” Massey said.
“The parking lot was never designed to be a summer parking lot, for one thing. It’s very soft and when it rains, it’s like a mud bog.”
The reeve admitted doing the work on the county dime will be a tough sell to residents.
“In order for a private enterprise to be successful, it would have to be a year-round endeavour,” Massey said.
“The important question for Westlock County council to determine is would that be in the best interest of our residents? Would the costs justify it?”
Massey said crews rushed to get the facility ready for the ski season, which resulted in various deficiencies.
“When you do things very quick, they don’t necessarily work out the way you would like them to,” the reeve said.
If the parties can’t fix the current agreement, a new lease agreement might be required.
“There has been some suggestion to negotiate a new lease, which would mean breaking the old one,” Massey said.
The reeve noted his personal opinion would be to put the contract up for bid if the lease gets cancelled, but said it would be up to council.
At the same meeting, councillors were informed the municipality still owes $88,000 for work at the hill, including $63,000 in unbudgeted costs.
Councillors opted not to pay the bill and directed administration to continue to negotiate with the company, NCV Industrial.
“I believe serious negotiations have to happen,” said Savage.
The company has credited the county $3,500 for drainage issues — a figure councillors want to see increased.
Then-CAO Duane Coleman cautioned it might not be successful.
“We’ve spent considerable time with this vendor trying to get a higher amount,” Coleman said.
The invoice from NCV Industrial, the company hired to lift the chalet in 2015, included $63,354 worth of extra work, plus an outstanding balance of $28,605 from the initial contract.
According to a briefing to council, former CAO Peter Kelly approved the extra work and did not seek council approval.
Massey argued, however, the funds came from the 2015 budget, but failed to get carried over.
“We had a little over $100,000 we put into the budget for the completion of the ski hill, it wasn’t put back into the 2016 budget,” Massey said.
Not all councillors agreed.
“This is over what was to be spent, let’s get that straight,” said Coun. Ray Marquette.
Coun. Dennis Primeau also indicated that Kelly had spent more than what was in the budget.
