Mayor Christian Provenzano is asking for face time with Brian Denega of the Toronto office of Ernst and Young, the court-appointed monitor overseeing the restructuring of Essar Steel Algoma.
The city has already spent $275,000 on lawyers trying to collect $26 million in property taxes owed by the steelmaker, but the mayor is taking the unusual step of directly approaching the monitor to press the city's case.
Yesterday, the Ontario Superior Court agreed to hear the city's arguments on May 10.
As SooToday reported on Wednesday, the city filed a court affidavit this week warning that it will be forced to take "draconian" measures to stabilize its finances at the end of June if the property tax bill isn't paid.
On Monday, City Council will be asked to approve an additional $100,000 for the legal team pursuing the city's claim.
"There has been no indication that any taxes will be paid at this time," says chief administrative office Al Horsman in a memo to city councillors.
"The city is at a critical juncture. Reserve balances have maintained the cash flow and city operations for the last 19 months of the restructuring but recent developments do not lend to an imminent exit from the Companies' Creditors Arrangement Act," Horsman says.
"The city’s reserves cannot continue to carry the balance owing, which is equivalent to 25 per cent of the annual tax levy, going forward. At this critical phase it will be imperative that the city’s restructuring lawyer provide expertise and guidance on the non-payment of Essar Steel Algoma property taxes."
"As well they need to continue to monitor the proceedings and steps taken by other stakeholders, all of which is expected,often with short notice, to become more intense and active."
"The city’s lawyers and staff needs to be prepared to file court materials on short notice, seeking clarification or providing its response to any filings that may impede its priority status. Finally, there may be ancillary works or responses required from the city to any proposed agreement or steps taken by parties to the CCAA proceedings," Horsman says.
The following is the full text of an email sent to Ernst and Young by Mayor Christian Provenzano this week:
Mr. Brian Denega,
Ernst & Young Inc.P.O.Box 251,
I will make myself available to meet with you, at your convenience, to discuss this matter further.