A bitter war of words has ensued over the origins of the District of Muskoka’s debt, the $100-million liability that now has one councillor calling for Gord Adams, the municipality’s chair, to resign.

Muskoka Lakes district councillor Stewart Martin says both Adams and Muskoka CAO Jim Green should step down from their positions for allowing Muskoka’s debt to get so out of control, and misleading council and the public about the severity of the situation.

“This has been fostering for a long time, but none of us knew it was this bad,” Martin said. “We (council) didn’t know we were getting into trouble.”

Martin cited the district’s decision to spend approximately $22.5 million on a sewage treatment plant in MacTier as a particular example of poor leadership.

The plant services an estimated 100 homes.

“I think I would say it’s Mr. Adams that got us here,” said Martin, noting that several years ago, Adams pushed to undertake a multimillion-dollar plan to connect all unserviced areas of Muskoka to municipal water and sewers. The plan was eventually cancelled under the direction of district staff, who said it was too expensive.

With the exception of the above project, Martin said senior administration consistently recommended that Muskoka proceed with water and sewer projects it could not afford.

Its current debt load now has many water and sewer users paying monthly bills of approximately $200, one of the highest rates in Ontario.

“(Adams) couldn’t have got us here without the co-operation of the senior staff . . . I hold the chairman and the CAO responsible,” Martin said.

The public, he continued, is becoming increasing upset over the lack of accountability at the district.

No one has taken responsibility for the current situation, he said.

“But that’s what happens when an administration stays in there too long,” Martin said. “Why would we want to wait another two years (for a municipal election)? We need to address this now, not two years from now.”

Martin said he believes council’s current proposal to create a fund to pay down the debt is misleading, because once debentures are issued for water and sewer projects, the municipality enters into a binding contract. The contracts cannot be broken early.

He said he fears the debt fund will ultimately be used to finance new water and sewer projects.

“You can’t spend your way out of debt,” said Martin. “You have to stop spending — something this administration doesn’t seem to understand.”

Stephen Cairns, Muskoka’s commissioner of finance and corporate services, confirmed that the district is locked into its water and sewer debentures.

Cairns, however, said more than $9 million in debentures are maturing in 2009, 2010 and 2011, meaning the district can either refinance or pay them off.

“That’s what I’m recommending we do with the debt fund,” Cairns said about the latter option.

Adams, meanwhile, called Martin’s comments “ridiculous.”

Council, he said, has always been aware of Muskoka’s expenditures. Councillors, including Martin himself, recommended the spending, he noted.

“Maybe Mr. Martin should resign for having been asleep at the wheel of council,” said Adams.

“If you go back and look at the minutes, I’ll bet (his) hand went up for every one of those votes (on spending). For him to come back now and say he didn’t know . . . maybe he should resign.”

Adams said despite the debt, Muskoka continues to have a good credit rating. It is still nowhere near its established credit limit, he noted.

“We are making wise investments into Muskoka’s future,” he said about water and sewer infrastructure. Martin, he continued, is “just trying to grab headlines.”

When contacted, Green declined to comment on Martin’s accusations.

District council is scheduled to discuss Muskoka’s debt during a special meeting Friday at Bracebridge Sportsplex.

The meeting will include debate on a debt repayment plan, which recommends dramatically increasing development charges, local improvement charges and overall contributions to Muskoka’s environmental reserve, which funds water, sewer and lagoon-related projects.

Adams said he is endorsing these measures, and hopes Muskoka will take an “aggressive approach” to paying off its debt.

He continued to express support for having all taxpayers share in part of the financial burden for water and sewer.

“Muskoka should take responsibility for Muskoka’s decisions,” he said.

“And if decisions are made on behalf of Muskoka, then all of Muskoka should be carrying the burden of those decisions. "

"Right now, we’re making decisions on behalf of all of Muskoka and asking a small percentage of the population to pay the cost of those decisions. And that’s not totally fair to them.”

Friday’s meeting will begin at 9 a.m.