A formal policy and by-law governing the use of $72.4 million Haldimand County Utilities Inc. (HCUI) net sale proceeds was presented to and ratified by Haldimand County Council in 2018. The policy & by-law regulates the management, uses, controls, transparency and accountability measures related to this significant asset.
When Council approved Hydro One’s proposal to purchase the shares of HCUI, a proviso was that the principal proceeds from the sale be preserved in perpetuity. Staff subsequently prepared a strategy that allowed the $72.4 million principal to be protected, while securely invested and generating significant annual income for ongoing municipal use.
The Policy outlines four types of permissible uses of Hydro Legacy Fund investment earnings, annually estimated at approximately $4 million (based on 5% rate of return), in the following order of priority:
1) Annual inflationary indexing of the principal net sale proceeds;
2) Contributions towards major assets/infrastructure that benefit Haldimand County;
3) Annual contributions to reduce the operating tax levy; and
4) Strategic economic initiatives/opportunities that are anticipated to have County-wide benefits through enhancements to local employment and Haldimand’s assessment base.
As a further safeguard, the By-law requires that the public be notified and consulted if a future Council wishes to amend or override any provision of the Policy. The By-law states that any such decision may only be considered at a public meeting, open to input from the public without the requirement of registering as a delegation, and with public notice given a minimum of four weeks in advance.
“The investment earning potential of the Hydro Legacy Fund is expected to provide a major source of revenue to finance future County initiatives. It’s extremely important that the Fund be protected and used for the continued benefit of taxpayers, and the policy and by-law have been enacted to serve as a safeguard,” said Haldimand County Mayor Ken Hewitt.
Karen General, General Manager of Corporate Services and Chief Financial Officer noted the importance of accountability and transparency with regard to the Fund’s management. “It’s imperative that the public has access to reports and is aware of how the Fund is being used,” she stated in her presentation to Council. As such, the Hydro Legacy Fund policy outlines a number of requirements related to reporting, including an annual update from the Treasurer containing: a review of the investment performance and earnings, an accounting of all Fund-related transactions and other pertinent information.
Further details about the Hydro Legacy Fund and background information can be found within the Financial Information section of the website.