The City of Sault Ste. Marie has reached an agreement in principle on Essar Steel Algoma's past and future property tax obligations.
In an announcement this afternoon, Mayor Christian Provenzano and Chief Administrative Officer Al Horsman said the tentative deal was cut with the term lenders who've kept Algoma operating since it first entered insolvency protection in November, 2015.
The agreement is subject to final approval from Ontario's Superior Court of Justice and City Council, and also on whether the term lenders can successfully lift Algoma out of its Companies' Creditors Arrangement Act (CCAA) proceedings.
The agreement covers property taxes owed by the steel mill before and after it entered protection from its creditors.
"While the terms of the agreement in principle will remain confidential until the matter is brought before council in open session, the city can confirm that it is fair to the proponent, respectful of the rest of the community’s taxpayers and allows the city to maintain services at current levels," today's announcement said.
A letter sent on Wednesday by Mayor Provenzano to the court-appointed monitor overseeing Algoma's restructuring goes further, indicating that no tax increases will be needed if the deal becomes reality.
"I can confirm that City Council is satisfied with the agreement in principle and is confident that that if the city receives the funds due to it in accord with the agreement, we will not have to decrease services or increase taxes as contemplated by the city's motion materials filed to date," the mayor said.
Provenzano said that the city has developed a "constructive and productive relationship" with the term lenders.
At the same time, the city doesn't want to prejudice any future negotiations it may need to conduct if the court approves an additional bidder for Essar Algoma, or if the term lenders are unable to obtain ownership and control of the steelmaker, he said.
The mayor said he appreciated the recent effort it took to resolve Algoma's tax issues with the city and indicated he looks forward to conclusion of the the company's larger insolvency process.