The Rural Municipality of Lac Du Bonnet northeast of Winnipeg violated the Municipal Act by writing off $48,973 in back property taxes owed by a tourist camp that had run into difficulty, Carol Bellringer said in a report. The Municipal Act only allows such writeoffs under specific circumstances, such as a change in ownership.
Council did not even formalize the writeoff, Bellringer added.
"All tax cancellations must be authorized by a resolution of council. In this case, there is a resolution authorizing council to enter into an agreement with the camp. But it does not say that any taxes will be cancelled," the report states.
It also says that the municipality failed to follow rules governing the construction of a ditch in 2010. The ditch was poorly built and failed within months, but instead of holding the contractor responsible, the municipality filed for compensation from the province's Emergency Measures Organization.
As well, the municipality allowed a former reeve to be in a conflict of interest by acting as the community's building inspector at the same time while in office, Bellringer wrote.
The council also ignored rules for awarding contracts by not opening up some work for public bidding and accepting late bids.
"We could not tell if municipal contracts were awarded fairly."
Deputy reeve Bob Bruneau said he hadn't yet read the report, but had seen an interim version provided by the auditor.
Bruneau said he believes there is merit to some of the findings, but suggested that many of the complaints were from a small group of disgruntled citizens.
"All it takes is a few people to stir the pot."
Council got legal advice that the former reeve was not in a conflict of interest, Bruneau said.
As for the tax writeoffs for the camp, Bruneau said they allowed the municipality to collect at least some of the money owed and kept the business owner going.
"If we forced him out of business by foreclosing on him, the (municipality's) elected body would not have got a penny out of him. Not a penny."
The auditor's report calls on the Manitoba government to monitor the municipality to ensure changes are made.