By: Sylene Argent, Local Journalism Initiative Reporter, Essex Free Press

Council for the Town of Essex has decided what to do with the $21.9M in proceeds it received through the 2025 sale of E.L.K Energy to ENWIN Utilities and its parent company, Windsor Canada Utilities.

During the July 20 meeting, Council decided $15M will be put into a new E.L.K. Legacy Reserve, while nearly $7M will be distributed to support current capital projects.

In terms of how to handle estimated investment income and allocations earned from that $15M E.L.K. Legacy Fund moving ahead, Council voted to annually allocate 70% towards the Asset Management Plan – replacement for core assets only; 10% for new capital; and to reinvest distributions at 20%. That was slightly altered from staff’s recommendation.

“Tonight marks an important milestone for the Town,” Essex CAO Kate Giurissevich said as she presented the first public report following the closing of the sale of E.L.K. Energy Inc. to ENWIN.

“This public report provides a complete picture of the outcome of the transaction, the full financial results, and recommendations to preserve the remaining proceeds for the long-term benefit of the Town.”

Giurissevich explained the Town acquired full ownership of E.L.K. in 2009, purchasing shares from former part-owners Lakeshore and Kingsville for just over $13M, originally purchased as a long-term municipal investment.

Over the years, she said the investment didn’t perform as originally anticipated. Only around $666,000 was generated over the 18-years Essex owned the utility. Giurissevich said that represents an average annual return of .28percent, which is less than what the Town would have received had the funds been held in the bank.

Recognizing that financial return, the Town began working with KPMG in 2021. In 2022, Council directed that a comprehensive strategic review would be created to examine all available options. That included maintaining ownership of the utility, pursuing other partnerships, a merger, or a full sale.

That ultimately led to the sale to ENWIN in 2025.

“In other words, this was not a decision made lightly by this Term of Council, and it wasn’t based on a single opportunity. It was the result of several years of thought, independent advice, and analysis,” Giurissevich said.

The Town realized around $21.9M in net proceeds on this investment through the sale.

Council has already directed just under $7M towards immediate Capital priorities, which includes a portion of the Town Hall expansion ($2.56M), a portion towards Fire Station 3 ($1M), and a portion towards the Essex Sports Field project ($3.3M).

Town administration recommended the remaining $15M be placed into a newly established E.L.K Legacy Reserve and invested through a long-term investment strategy designed to preserve the capital, while generating recurring investment income that can be used to fund the existing infrastructure gap, Giurissevich said.

This recommendation transforms what was once a relatively low-performing investment into a permanent municipal financial asset, she added, adding this will allow the Town to support infrastructure renewal throughout the years as well as future Capital priorities, ultimately reducing the burden on taxpayers.

Director of Corporate Services, Kate Rowe, walked Council through key considerations as it pertains to the investment policy.

In addition to the details Giurissevich provided, Rowe recommended that a portion be reinvested annually, so the fund can continue to grow.

Rowe recommended applying 70% of annual earnings to the Town’s Asset Management Reserve, 15% for new capital projects, and the remaining 15% to be reinvested.

Annually, Town staff will report on the results of the investment portfolio.

The overall annualized return on investment is 6.47% upon disposition. The conservative estimate is 4%.

The Report to Council notes that based on current market conditions, annual investment income is conservatively estimated at around $600,000. This creates a recurring source of non-taxation alternative revenue.

Nick Poulias, Investment Advisor for Hobson Chahal Poulias Advisory Group, spoke of the investment portfolio that was designed to ensure that the initial investment is protected for many years to come and can fulfil its annual obligation of returning a comfortable return of 4% annually on the invested amount, given the current market context. It is also about ensuring plans are compliant with the Municipal Act.

He said it is about creating a fully diversified portfolio, where all the eggs are not in one basket.

This is a generational opportunity for the Town, Poulias said. A portion of the interest will be used to subsidize Asset Management Reserves and other capital spending needs, while also ensuring a portion of those dollars earned are provided the opportunity to compound over time.

“It allows us not to just have that $15M growing on an annual basis; it is ensuring that a portion of the interest that is earned is then reallocated back into the portfolio,” he explained. That could see that $15M increase over time.

In answering Deputy Mayor Rob Shepley’s question on if the conservative 4% estimated return was calculated after fees are paid, Rowe said the fees were included to capture the true cost of the investment.

Shepley fully supported the recommendations.

“This is one of the most important financial decisions this Council is probably going to make,” Shepley said.

Essex has benefited from being a host of the landfill and its associated tipping fees, and those revenues have allowed the Town to invest in the community. Waste has been reduced, including due to the organic Green Bin program. While it is positive environmentally, the tipping fee revenues the Town has relied upon will likely decline over time. To him, the formation of the E.L.K. Legacy Reserve could not come at a better time.

He strongly supported the 70% annual investment earnings going towards the Town’s asset management, but would prefer it go to core-only assets. He encouraged Council to consider whether the remaining 30% should be invested back into the fund, rather than spent on new capital.

He made that a motion, saying that will reduce the burden on taxpayers and will open up other opportunities for the Town.

That would allow the funds to grow to help offset inflation pressures, grow its purchasing power, and ensure it remains a true legacy for the future, Shepley said.

Councillor Rodney Hammond was in favour of the investment strategy, yet believed the Town did not make any money by purchasing and selling the company.

Councillor Kim Verbeek said beefing up the Asset Management Plan is important. In the years she has been on Council, this plan is one of the most fiscally responsible acts she has been part of. She was proud of the team for making this brave step.

She did not support Shepley’s motion.

In answering Councillor Katie McGuire-Blais’s question on what safeguards have been put in place to prevent future Councils from spending the principal $15M, Director Rowe said through investment policy, the funds are designated to act almost as an endowment.

In speaking to Shepley’s motion, she still wanted to see some funding go into an account for capital endeavours. She was willing to reduce that to 10% from 15%.

Councillor Jason Mayti agreed with Shepley, and also wanted to restrict the Asset Management funding to core assets only. He would like to put the full 30% back into reinvestment. He supported Shepley’s motion.

Councillor Joe Garon liked the idea of tying revenues to core assets only. He wanted to stick with the funding model administration pitched.

Councillor Brad Allard liked administration’s funding model, as it seemed right to equal out the tax burden.

In a recorded vote, Shepley’s motion to put 30% into reinvestment, with 0% into new capital, and 70% to support core-only asset management plan replacement, Bondy, Shepley, Matyi, and Hammond were in support, while Verbeek, Allard, McGuire-Blais, and Garon were opposed. With a tied vote, the motion was defeated.

Shepley then entered a new motion, asking to put 20% into reinvestment, with 10% into core new capital, and 70% to support core-only asset management plan replacement. In a recorded vote, the motion passed unanimously.