Nova Scotia

Province orders SWSDA bank loan payment

The provincial government has ordered eight Nova Scotia municipalities to pay back more than $500,000 in bad debt accrued by a now-defunct regional development agency.

Premier Darrell Dexter has ordered eight Nova Scotia municipalities to pay back more than  $500,000 in bad debt accrued by a now-defunct regional development agency.

The South West Shore Development Authority folded last year  owing more than $2 million. A part of the debt was a $594,000 Royal Bank of Canada loan guaranteed by the municipalities — a loan guarantee they had no authority to sign, it was later determined. 

The municipalities have until June 15 to return the money.

The Royal Bank had been demanding the municipalities honour their guarantee and Municipal Affairs Minister John MacDonell said the order irons out a legal wrinkle that had prevented them from doing so.

"We are of the view they have an obligation they should pay. If they felt they didn't have authority, then this ministerial order will give them that," he said.

No help for other creditors

It does not help SWSDA's other creditors, such as Garian Construction of Tusket, Yarmouth Co., which is owed nearly $400,000.

"There may be a line up of other creditors, but municipalities hadn't signed guarantees to back loans to those creditors," MacDonell said.

Darian Huskilson, the mayor of Lockport, said the ruling was a relief because his and other municipalities needed the ministerial order to compel them to repay a debt he said they never should have agreed to in the first place.

"We weren't aware at the time, obviously, that it was illegal for us to guarantee, but we still made the guarantee," he said.

Some of the SWSDA's assets were put up for sale this week and last month. The federal and provincial governments agreed to spend $130,000 to help municipalities wind down the operation.

MacDonell said he could take steps if the payment isn't made, including fines of up to $10,000 and the dismissal of the councils involved.

Premier Darrell Dexter has said there will not be a financial bailout from the province.

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