Facing threat of personal jail time, fines and a loss of office, the Municipality of Shelburne grudgingly assented to the provinces order to pay their portion of the loan guarantee to the Royal Bank.
The deadline for the outstanding loan that was run up by the South West Shore Development Authority when they were in operation was for June 15, 2011.
While many of the eight municipalities that signed the loan guarantee in South West Nova Scotia caved in with payments when the province issued the order to pay, the Municipality was uncertain that was the right choice.
It was advised in an Ombudsman report that the municipalities not pay back the money based on Section 88 of the Municipal Government Act stating that no money should be borrowed by a municipality unless borrowing has been approved by the minister.
The initial loan guarantee was not approved by a minister.
“I am of the view payment of these loan guarantees would constitute another breach of the Municipal Government Act,” read the report.
But with so much at stake personally for each council member, the Municipality of Shelburne could not risk ignoring an order from a minister, explained CAO for the municipality Kirk Cox.
“Its an extraordinary situation,” said Cox. “None of us wanted to do it but the order forced the decision.”
The amount of $144,000 was paid to cover their portion of the loan guarantee.
Cox said that the money was taken out of the municipality’s reserves and it will not affect the tax rate or budget.
“It will mean that we won’t have much left over for unforeseen circumstances,” said Cox.