District and Credit Union seek resolution to issues

Trent Ernst, Editor

 

Relationships between the District and Lake View Credit Union have been getting tense over the last few months, but recent discussions appear to be leading towards a resolution.

Back in April, Kelly Longley, the new CEO of Lakeview Credit Union, came in to talk to council. At the time, he was asked for confirmation that the Credit Union would “stand with the town through this difficult period.”

Longley said a credit union is a partnership. He says the board is concerned and has empathy for the community. They don’t know what’s going to happen, and says they don’t want to close up shop and leave, but he said that Lake View is a business.

The answer was not interpreted as a strong commitment by council, who have been investigating the possibility of getting another financial institute in Town. At the same time, Longley says that if everyone in town used the credit union, it would be an easy decision, but many people don’t.

Council also expressed disappointment that there is no position on the board for a resident of Tumbler Ridge, and Councillor Caisley asked if it would be possible to have the board make-up changed so that one person would have to be elected from Tumbler Ridge.

At the time, Longley said it would be a board decision, and, according to a recent letter to the District, co-signed by board chair Jean Hicks, any member in good standing, whether from Tumbler Ridge, Chetwynd or Dawson Creek, can run for the board, and “LVCU will not be making a change to its bylaws in this area.”

Shortly after the meeting, the local branch manager was removed from his position. According to the District, the termination signaled a downgrade of services at the branch to a “remote branch.”

Longley maintains that there were other circumstances around the firing, and that the branch has not been downgraded, but says it is a personnel issue. “It is not inappropriate for us to discuss confidential matters…nor can we give the Credit Union’s version of the situation, which is different than the one being portrayed,” says Longley and Hicks in the letter to the District.

That said, the branch is currently being managed remotely, with a manager coming in from out of town on certain days to look after the branch.

Fuel on the Fire

In late June and early July, the District made the decision to move a portion of its funds from Lake View into an account with the Municipal Finance authority. This decision, says CAO and acting CFO Barry Elliott, was his and was not done punitively.

“The District, as a matter of responsible funds management, periodically evaluates returns on short-term investments,” writes Elliott in a recent press release. “At the time the reinvestments were made, the Municipal Finance Authority of British Columbia returns were averaging 15 basis points (approx. 15 percent) above LVCU’s high interest saving account.  As a result, the District has taken advantage of the higher rates of return on its short-term investments.”

Longley hints that this move might affect Lake View’s ability to stay in the community long-term. He says he wants to see the relationship continue, but in the Letter to Council, they write: “We want to bring it to your attention that it was the District of Tumbler Ridge and the Municipal Finance Authority that approached our board and CEO in 2000 to determine if LVCU was interested in opening up a branch in Tumbler Ridge because no other financial institution would and the RBC had recently moved out of the community. Commitments were made at the time in reference to the deposits of the District of Tumbler being held at the Credit Union because we opened a branch on July 1, 2001 for the benefit of the citizens of Tumbler Ridge.

“You need to know withdrawing such a large sum severely affected our business model in your community,” writes Hicks and Longley. “If you do not want us to leave, we need a viable business plan and that requires support from the District.”

Longley says that he doesn’t want to leave. “We’re hoping not to get there. We haven’t had that discussion. The Credit Union isn’t about pulling out of local communities, but at the same time, we have 12,000 members who expect us to do what’s best for all the members.”

On May 2, says Elliott, the District invited the Lake View board of Directors to a formal meeting, but to this date, he says, they have not responded to the request.

As part of the preparations for that meeting, he says, he was alerted to the fact that the short-term investment rates at Lake View were far from competitive. “Because LVCU had not formally responded to our meeting request, staff initiated a reinvestment of the District’s short-term investment that were currently being held in the District’s LVCU accounts.  “In the four month period that has elapsed since the funds were reinvested, the District calculates that it has already gained an additional $62,000 in interest on its short-term investments above the amount that would have been earned in the District’s main banking account at LVCU,” writes Elliott.

That’s fine, says Longley but he’s disappointed the District didn’t take the time to talk to Lake View. “They said they moved because of an interest rate, and that is their decision, but how come we didn’t get a chance to speak to this?”

Longley says that Lake View has been a good corporate citizen. “Since [2001] LVCU has been an active member of the community and provided financial support by donations, bursaries and scholarships to many groups and residents in Tumbler that would amount to over $150,000 over that time period. In the past year we provided a cash donation to the Geopark in the amount of $3000, donated $4500 to Grizfest to assist with the kids activities during the weekend, provided a four year bursary and one year bursary in the amount of $1000 per year, put on our annual Christmas Stocking raffle with the proceeds donated to a local charity and a number of other small donations of merchandise and or cash to other organizations that have requested our assistance.”

While the District maintains they have left “in excess of $1-million” at Lakeview, Longley says the withdrawal they made was large enough that the credit union didn’t have enough money to cover all their transactions, and had to borrow money to cover the shortfall. “ More than that, we can invest that money with other people in loans, etc. It’s a loss of opportunity costs.”

A softening of positions

However, things might not be as dire as they might first appear. On Friday, Elliott said he had a chance to speak with Longley, and both sides agreed that the “communication could have been better on both sides,” says Elliott. “We both have a part to play in where we’re at. Recognizing that, we are able to move forward. “

Elliott says he’s had discussions with Longley, and he is cautiously optimistic. “Everyone agrees we’re far better off to deal locally,” he says. “What we had was two sides showing a position. We’ve figured out where things are at. There’s a willingness around both tables to get together and resolve the issues and get the relationship on track. We’re going to come together and work it out. Everyone wants to deal locally, and at the end of the day, I’m hoping to have a joint news release between the District and Lake View.”