When it comes to the Tribune’s coverage of our city’s governance, you only get what you pay for

Commentary by Gerry Barker

Editor of Guelph Speaks

June 26,1017

Recently our twice-a-week paper published an editorial saying, the press will not be intimidated. Really, Tribune, look inwardly when you pontificate about press intimidation. Your newspaper is the print parrot for the city administration and its influence has been bought and paid for.

Your corporate owners give journalism a bad name. The Tribune organization is geared to sell advertising and fill in the gaps with soft material usually promoting self-serving causes, including that of the city administration. Yes sir, the Tribune will not be intimidated.

Guelph deserves a real newspaper not a pretender.

When the city pays the Tribune to promote its causes employing so-called “City News” pages that is a subservient example of the advertising department running the content of the newspaper. The tail wagging the dog, so to speak

The kicker is that the citizens are paying an estimated $400,000 a year to purchase space for “City News” content to subsidize the owners, Metroland Publishing, a division of TorStar.

Last year, the Tribune refused to even cover the deep, independent analysis of the city’s operational and capital budgets. When the author, Guelph resident Pat Fung, CPA, CA, revealed the high costs of overhead compared to peer cities, the Tribune refused to even print a story about it. The editor said the staff did not have the time to check the facts.

For the record, the “facts” were taken from the city’s own Financial Information Reports over a four-year period plus those of other cities and the BMA management consultant’s review of city operations.

There is nothing new about that excuse in order not to rile the city administration.

The paper then refused to accept an ad to detail the Fung report. At first accepted it, then refused to publish it.

Tribune readers were never informed of the Fung report details.

So the paper decided it didn’t want any support or commentary about this revealing report that affected citizens. Despite censoring the Fung Report, eventually it led to many key senior officials leaving the city.

This is how the only major print media in Guelph controls the message emanating from One Carden Street.

But you didn’t read in the Tribune why the management people were leaving the city.

Among them, City Solicitor Donna Jacques resigned. Chief Administrative Officer (CAO), Ann Pappert, resigned May 26, 2016, ten days after co-signing a devastating report indicting of the Guelph Municipal Holdings Incorporated (GMHI), in which she acted as Chief Executive Officer for four years. Former Chief Financial Officer Al Horsman left in August 2015. Even the present CAO, Derrick Thomson resigned shortly after release of the 2015 Sunshine List but was reinstated following Ms. Pappert’s resignation.

But this developing story in which the top staff jobs were being vacated, along with a number of lower-level managers, received scant coverage in the Tribune.

This past week we learned of the audit performed on GMHI and Guelph Hydro by a top accounting firm, KPMG, revealing losses of $161.480 million. It included two senior unsecured debentures in which GMHI owes $103.450 million and has failed to pay the interest for two years on the greater of the two loans.

Yet the full report of the audit was carried on the city’s website for anyone to see.

Did Tribune readers learn about this in the week the news was released? As the saying goes, the Tribune doesn’t have time to check the facts. It was a professional audit covering 2015 and 2016.

Are Tribune readers informed of the multi-million losses by the city waste management department in the past eight years? Or why senior managers have left?

Did readers learn of the Rizzo Brothers deal to bring Detroit recyclables for processing in Guelph? Did they learn that an extra shift was hired to process the materials? Were they told that the deal collapsed and cost the city $1.5 million? Fuhgeddaboutit.

Has the Tribune revealed the number of homes in the city where garbage and recyclables are not picked up by the city? Our home is situated in Guelph Waste Management’s no pick-up zone. The delicious irony occurred this week when we received a colorful folder that explained how to sort our garbage, which bins to use and other useful information about pre-sorting and handling our waste. Trouble is, we were never issued bins.

For the 14 years we have lived in Guelph the city has refused to pick-up our waste. Our small community of homes must pay a private contractor to do the job. In all those years, council and staff have refused not only to service our street but also refuse to reduce that portion of our taxes that include waste services.

The Tribune ignores this travesty of responsibility that affects an estimated 6,000 condo and homes in the city not serviced by the waste management system.

Why doesn’t the Tribune write about the closed session meetings of council including one held December 10, 2015 in which four top managers were awarded $98,202 salary increases?

Three months later, the citizens were informed about these increases when the provincial Sunshine List was published showing the salaries of all public servants in Ontario earning more that $100,000 a year. This information is provided by the city but the citizens were not informed..

Did the Tribune interview citizens and, more particularly, members of council to investigate and report this story? Did the paper analyze the data in the Sunshine List pertaining to Guelph?

Why are the taxpayers being forced to pay for city advertising in the Tribune? What other newspaper has a deal like this? We are paying the paper to publicize the narrow interests of the city, not necessarily those of the citizens. Now put that together with the highly controlled news coverage of the paper that relies on city press releases and controlled interviews with employees.

The history of the failed GMHI program was barely covered in the Tribune, yet the investigation of the growing evidence of huge financial losses was presented starting in mid 2015.

Then along came the leak of some 53,000 confidential city emails to the lawyer representing the fired former Chief Building Inspector, Bruce Poole. The electronic news source, Guelph Today, broke the story on a Friday but we didn’t read about in the Tribune until the following Tuesday. The Tribune may have put the story up on its website but the newspaper readers did not see it until four days later

In fairness, the Tribune only publishes Tuesday and Thursday each week. When the Mercury daily was operating in theory, it would have published the story the next day’s Saturday edition.

So we are a city of 131,000 people without a daily newspaper just the ad-laden twice a week Tribune. Advertising is a form of news that is useful to many readers.

But when the owners of the Tribune do not use part of that advertising revenue to cover the real news, then Guelph does not have a progressive, responsible print media

The real danger is a newspaper should be a permanent record of the events in the municipality in which it has exclusive print coverage

By skipping complex and important events and relying on the municipality’s slanted communications that frequently leaves out important aspects of the city’s

administration. The nuances of news events are rarely explored and reported.

Sadly, the Guelph Mercury Tribune has reflected a narrow point of view that does not fulfill the news needs of the citizens. It does cheerfully accept their tax dollars to publish non-news devoid of substance or interest.

Final point, The City of Guelph has 13 employees in the communications department. That’s more than twice the number of editorial employees at the Tribune.

No wonder this is the paper we get. That brings up the old adage: “You only get what you pay for.”

 

 

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Audit of GMHI and Guelph Hydro reveals $161.483 million losses by the municipal holding corporation

By Gerry Barker

June 22, 2017

What follows are highlights of a devastating audit by KPMG of Guelph Municipal Holdings Inc. (GMHI) and Guelph Hydro. The audit revealed a total of $161.483 million that was wasted by the Farbridge administration’s secret and abortive attempt to force the city to make Guelph self-sufficient in terms of electricity and other spin-offs.

One of the most startling statements concerned two senior unsecured debentures taken out by GMHI totaling $103.612 million as of December 31, 2016. The largest, due 2030, was for $65 million and no interest of the debenture has been paid for two years, increasing the principal due by $8.612 million. The other debenture is for $30.000 million and is due 2045. Both these obligations carry interest rates of 4.012 per cent and 4.112 per cent respectively.

The source of these debenture loans are described in the audit as the CDS & CO. As both are unsecured, the loans were made because of the City of Guelph’s ownership of GMHI and Guelph Hydro. It is difficult to imagine any financial institution committing $95 million without the assurance of repayment by the city. Regardless, the loans are unsecured. One can only conclude that a corporate relative within the city’s corporate family guarantees the liquidity of GMHI. The audit revealed that a $20 million credit facility has been arranged for GMHI but the source is not revealed. As of December 31, 2016, there has been no draw down on that facility by GMHI.

The balance sheet of GMHI shows assets of $230.596 million of which $162.653 million is composed of property, plant and equipment. Conversely, in my opinion, many of these assets are depreciating and failing to provide adequate cash flow to allow GMHI to continue to exist. The real liabilities of 163.474 million closely match the value of the total assets. The inclusion of shareholder equity of $67.122 million, according to the audit, is enough to match the total assets of $230.596 million to balance the books

In my opinion, the shareholder’s equity, and that’s you and me, is virtually worthless because there is not enough cash from operations and assets to allow redemption of the shares. This enterprise is so intertwined between various city-owned corporate entities that disclosure is inevitable.

This party needs wrapping up ASAP to avoid future cost blowouts.

This misguided project has been held up by the ability of Guelph Hydro to be the bank for GMHI. A search of the mysterious issuer of $95 million in debentures has been unsuccessful so far.

This audit reveals just how serious this experiment was mismanaged; how Guelph Hydro, wholly owned by the city, was sucked into the blind ambition of a mayor determined to turn the city into a world-class leader in power self-sufficiency.

It turned out to be a dismal, waste of the public’s resources and abuse of the public trust.

The audit performed by a respected auditing and financial management firm, KPMG, cost $2.8 million in 2016 and $2.5 million in 2015. These two audits totaling $5.3 million, were the cost of measuring the financial details of the failed projects initiated by the Community Energy Initiative (CEI) promoted by the former mayor as far back as 2007.

Here’s a note from the auditor’s report concerning fraud risk: “The audit team rebutted this presumption due to: “The majority of revenues are driven directly from the purchases of hydro with little judgment over revenue recognition required by management.”

Yes I know, I had trouble following that comment.

From 2011 to 2014, former Chief Administrative Officer of the city, Ann Pappert, served as Chief Executive Officer of GMHI. One would conclude in that position, both the former mayor who was chair of GMHI and Ms. Pappert would be in a position to know about the degree of “judgment over revenue recognition required by management.”

Keep in mind that this entire operation was cloaked in secrecy. It only started coming out of the closet when the GMHI CEO and CFO, Pankaj Sardana, reported the costs of poor planning and management of GMHI and its partner Guelph Hydro (GH).

May 16, 2016, Mr. Sardana and CAO Pappert both signed the document that revealed the estimated loss of GMHI to be $26.6 million. Ten days later Ms. Pappert resigned.

The utility’s operating arm, Guelph Hydro Electric Systems Inc., included the wholly owned Envida Community Energy Systems that was virtually broke. It owed $11 million to GMHI with no ability to even pay the interest of the debt. It had been involved in establishing the rooftop solar arrays on a number of public buildings; the setting up of the District Energy Nodes linked to the cogeneration system to supply hot and cold water to selected buildings.

But it was interrupted by the defeat of the former mayor in the October 2014 civic election by Coun. Cam Guthrie. It started an investigation about the role of GMHI and the link with Guelph Hydro. Now, a year and a half later, the truth is known about the cost of $161.403 million.

The unraveling of the GMHI and Guelph Hydro axis started shortly after the defeat of the former mayor.

The audit examining GMHI/Guelph Hydro operations for 2015 and 2016, commented:

“The district energy segment has continued to experience negative cash flows which are projected to be insufficient to recover the carrying value of the related assets.

In four years, the GMHI management failed to recognize their primary District Energy scheme was failing to meet profitability. Yet they kept spending public money of future large-scale projects including building two large natural gas-powered electricity generators in the city to achieve power self-sufficiency.

“Management has assessed Envida’s district energy property, plant and equipment for impairment and evaluated the cash flows associated with the Hanlon Creek Business Park, Galt District Energy (Sleeman Centre), and West End Community Centre. Based on value-in-use net present value calculations, management has determined that the carrying value of all the nodes are fully impaired.”

We now learn according to the audit, that there were not just two District Energy Nodes (pumps) in the Sleeman Centre and Hanlon Creek Business Park but a third in the West End Community Centre. The impaired value of the three is $12 million.

“Further, based on the obligations for contracts in place and the related estimated unavoidable costs of meeting the obligations exceeding the economic benefits to be received by approximately $50K annually over the life of the contracts, a provision has been recorded for $540,000 (18 years).”

This is another example of financial mismanagement by GMHI based on false assumptions.

“Management’s cash flow projections were based on the business plan for the segment for the upcoming years. Their analysis took into account factors including the remaining contract periods for agreements in place with current customers (approximately 18 years), history of revenue and expenses to date, and the useful lives of the equipment. Further, based on current plans and direction from the Board, the analysis includes only minimal additional investments required to service current customers.”

Why then did the experience and track record of the GMHI Board and that of Guelph Hydro, make so many devastating mistakes that have resulted in the loss of millions of public funds?

The audit statements include an estimate of future employee benefits totaling $10.297 million. Again, the citizens of Guelph will be paying for this for years.

Why Did GMHI send $1.5 million to the city each year, (total $9 million) when it consistently lost money?

How can GMHI or the city afford to repay that $103.612 million in debentures owed to CDS & CO, the lenders?

Who are the owners of the CDS & CO?

With the shareholders equity of $67.122 million be written off in the years ahead, impairing the city’s ability to carry out the ten-year capital-spending plan?

CAO Derrick Thomson has already stated the capital plan is $170 million short to provide for major capital projects, including the South End recreation centre, new downtown Library and infrastructure demands.

Is the real goal of the Strategic Options Committee (SOC) charged with seeking candidates to sell Guelph Hydro or merge it with another utility, or to raise capital to recover the losses incurred by GMHI?

When will those councillors who served on the GMHI board of directors plus another independent member now serving of the SOC, be held accountable for what happened?

The audit documents can be found on the city website under the heading Agenda June 28.

It is the most shocking report that I have ever witnessed in my years of journalism. The secrecy resulting in an abuse of power should be a wake-up call for all citizens. The council should be held accountable to maintain the public treasury and never allow this to occur again.

This makes the $23 million cost overrun construction of the new city hall look like penny ante compared to the $161.403 million spent on this rape of the public purse.

The audit is first step. Now we know what happened, What is need is an independent investigation into how it happened and the impact on the citizens. More important, question those responsible and make them accountable.

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Guelph Speaks achieves a record 30,579 viewers

By Gerry Barker

June 19, 2017

Last week Guelph Speaks experienced the largest number of viewers in its seven-year history. From Sunday June 11 to Saturday June 17, there were 30,579 views of the blog. Most were from the following post made September 3, 2015. We were frankly stunned at this huge response to a Guelph Speaks posting especially concerning a column that was posted 22 months ago.

The analysis of what occurred was that a number of the Internet search engines found the piece in the GS Archives containing 880 postings, resulting in the unprecedented response. The views came from all over the province with some beyond our borders. It tells us that the Liberal government and its leader Kathleen Wynne are facing widespread disapproval of the Premier and her administration. In fact, her current approval rating has shrunk to just 12 per cent across the province according to the latest poll.

In my opinion, even though the provincial election is a year away, moving a government to attain a 40 per cent vote majority of the result or even managing winning enough ridings for a minority government, is highly unlikely. The ABW (Anyone But Wynne) syndrome is now fully engaged. No amount of throwing the people’s money at fake promises will save the day.

Two events may affect the result next June. The Premier may resign but it’s highly unlikely as calling a leadership convention to replace her takes time and resources. The other is Ms. Wynne calls a snap election but her record leading the province is so tarnished it would backfire.

The fate of the Liberal government will affect the outcome of the vote in several Liberal ridings including Guelph. Currently held by Liz Sandals, President of the Treasury Board, in the Liberal dominated legislature and close friend of the Premier, the Guelph seat will be difficult to retain under present circumstances.

There is the old expression that old governments along with old soldiers never die, they just fade away.

On a personal note: This expression was an adaption of the widely quoted comment by General Douglas MacArthur, in 1951 to the U.S. Congress following his firing as Commander in Chief of the United Nations forces fighting in Korea. I was a young Lieutenant completing my training as a Royal Canadian Amoured Corps officer listening to the General on a rickety radio. I am now just another old soldier but not quite ready to fade away. GB

 

Ontario Liberals now tax you after you die

By Gerry Barker

Originally Posted September 3, 2015

Here’s a new, not so nice tax called the Estate Administration Tax (EAT) that the Wynne Liberals slipped through, effective Jan. 1, 2015 and no one (in 2015) is talking about it!   The EAT was originally introduced by the Mike Harris government but the Wynne Liberals have drastically modified it to make it more difficult and onerous for the survivors of any deceased Ontarian.

Basically, your survivors and executors have to report the value of all your stuff, valuables, cars and trucks, second homes, boats, RV’s, right down to the exercise bicycle in the basement.

It is yet another roadblock to discourage real growth in Ontario joining the other job killers and evaporating prosperity. Here are some examples of how the Ontario Liberals have mismanaged the Ontario economy: We have the most expensive electricity rates in North America; a new jobs- killing Ontario pension plan; the most expensive alcoholic beverages in North America; sky-high gasoline taxes; supply management agriculture boards that have driven basic food prices to excessive levels; an integrated sales tax of 13 per cent on all goods and services with minor exceptions.

Yes the province even charges the HST on the cost of your funeral.

The province charges the HST on the electricity you use.

The HST is charged on a number of consumables including vehicles, non-prescription drugs, clothing, and items that most people would describe as food or a derivative.

When does the Premier stop her relentless quest to bail out a province she and her predecessor created that is now carrying an $8 billion deficit? Her finance minister claims the Ontario budget will be balanced by 2017.

That runs counter to what her federal Liberal leader is saying. He wants to remove the Harper government’s balanced budget legislation and go to deficit financing to fix the country’s infrastructure.

These two leaders are currently working together to elect federal Liberals in Ontario, but don’t seem to be playing from the same page. Update: Prime Minister Justin Trudeau won the 2015 Federal Election winning 183 seats in Parliament.

For all the details of this new tax grab, go to the link below where the government explains it or you can read the comments from funeral directors printed out below in layman’s terms, or both. But be forewarned, it’s scary stuff.

Our Wynne Liberal Government presumably has to find a way to repay the billion dollars they gave the construction companies not to build the gas-fired hydro plants and subsidizing wind/solar power projects, the Orange air ambulance fiasco, the E-health record keeping program that cost millions, and other boondoggles they created.  The aptly named EAT even has local Funeral Directors seeing red.

Here’s the skinny of Kathleen Wynne’s latest play to extract more money from taxpayers, even after they’re dead.

The current EAT tax rates

  • $5 for each $1,000, or part thereof, of the first $50,000 of the value of the estate, and
  • $15 for each $1,000, or part thereof, of the value of the estate exceeding $50,000.

Note: There is no estate administration tax payable if the value of the estate is $1,000 or less.

The estate administration tax is calculated on the total value of the estate. For example, for an estate valued at $240,000 the tax would be calculated as follows:

  1. $5 per thousand for the first $50,000 of the estate = $250
  2. Plus $15 per thousand for the remaining $190,000 of the estate
    • $240,000 – $50,000 = $190,000
    • $190,000 X $15 = $2,850
  3. For a total of $3,100 ($250 + $2,850) payable to the Minister of Finance. The EAT act demands that the executors or appointed representatives must complete the EAT return within 90 days.

This does not include estate probate fees on the $240,000 estate value, used in this example or any taxes due on capital gains on investments owned by the deceased

In order to comply with this new death tax, the estate appointed representatives are forced to consult with the following professionals: Financial advisor, registered appraiser, lawyer, funeral director, insurance broker, the Municipal Property Assessment Corporation, the estate banker. Most of whom charge a fee for service in preparing the Estate Administration Tax returns. Those fees alone, depending on the size of the estate, could run into the thousands.

Yes, and the return, when filed, must be accompanied with payment in full.

Licensed Funeral Directors Tim Baragar and Jeff Neuman are sounding the alarm bells over a tax program that they say will make life difficult for estate representatives in Ontario.  Baragar makes it clear that his service does not end at the cemetery.

He and Jeff Neuman do their best to help families obtain pertinent documents and ensure that a loved one’s affairs are in order.

Sounding the Alarm

And that’s why Baragar and Neuman are sounding the alarm bells over the newly changed tax that took effect on Jan. 1, 2015. Its timelines and penalties are something these Funeral Directors think everyone needs to be aware of.

The newly changed tax program that Baragar finds frightening requires an executor to assess, appraise and value any and all property owned at the time of death on a tight timeline. This EAT appraisal includes anything that is not passed directly to a spouse or passed through joint ownership. Assets that are being gifted to charities also need to be included in the valuation. The tax is then calculated and needs to be paid immediately to the Province of Ontario as a deposit.

Baragar explains it this way – when a loved one dies and you are named as the executor of the estate, you apply for a Certificate of Appointment of Estate Trustee and then you have only 90 days to file your Estate Information Return. As soon as you file you have to pay the tax as a deposit. And if you don’t file, there are serious consequences.

According to the Ministry of Finance, “estate representatives who fail to file an Estate Information Return as required, or who make false or misleading statements on the return, may be found guilty of an offense and, on conviction, are liable to a fine of at least $1,000 and up to twice the tax payable by the estate or, imprisonment of not more than two years or both.”

Has Ontario become a police state?

This is aconcern to Mr. Baragar.  “It is completely unreasonable for the Ministry of Finance to expect this reporting within 90 days of the trustee beginning their role,” Baragar says. “Just getting print outs and information from banks and investment companies takes a lot of time. My biggest concern is that quite typically the trustees are often family members or close friends of the person who has died. So this simply isn’t a matter of completing a task that the Ministry of Finance merely views as a new source of income, it is a very emotionally demanding and time-consuming job. Couple that with the added stress of dealing with the loss as a family member or close friend, and it can make this role very upsetting and emotionally draining.”

And to be clear – the valuation can’t be a guess. The Province requires that you be able to back-up what you’re filing so if you’re not sure what the current market value is of taxable posessions, for example, it’s up to the executor to hire someone to do an appraisal.  There is even a link on the Ministry’s website to the Appraisal Institute of Canada.

And once you appraise, value and file you still have to be sure that nothing changes. If you made a mistake or if you missed something you have to immediately contact the Ministry (within 30 calendar days) and make all the necessary corrections.

“For our Government to threaten these individuals with charges and penalties is absurd,” Baragar says. “We pay tax when we earn our living. We pay tax when it generates income within an investment. We pay tax when we pull it from that investment, so this same money certainly shouldn’t be taxed again within the boundaries of someone’s estate.”

Enough is enough.

 

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NO SALE: Is the city selling Guelph Hydro to recoup losses by a previous administration?

By Gerry Barker

June 12, 2017

Part Two: Selling the crown jewel of Guelph

When will the Mayor tell us the truth about why we are spending thousands to sell Guelph Hydro in the next 12 months?

It is one of the most expensive and devious plans to capture the equity of Guelph Hydro that has an estimated book value of $125 million. On the surface, when reading through the 48 pages of plans and goals of the council-appointed Strategic Options Committee (SOC), it would have you believe this is the right thing to do.

Council appointed five people to represent the city in selling Guelph Hydro. The committee lost two members between October and April. Included was co-chair Pankaj Sardana, CEO of Guelph Hydro, who was replaced by the Guelph Hydro board chair, Jane Armstrong. A public representative, Ron Puccini, stepped aside to be replaced by Douglas Auld.

Chief Administrative Officer Derrick Thomson remains, as co-chair of the SOC. Is Mayor Guthrie an ex-officio member of this committee?

Before going any further, this is a sale of all or parts of Guelph Hydro. To dress it up as a merger is mere window dressing. Perhaps that’s why Mr. Sardana was removed from the SOC because he warned about the sharing of responsibilities as a result of a merger, does not have a successful track record. History in Ontario has shown that local community-owned electricity distribution system mergers don’t always work well because of the cultural clash between the parties of the merger.

We should mention that the SOC plan points out that the Province has encouraged the consolidation of small (Provincial designation) municipally-owned power distribution systems to create more efficient systems across the province. This is NOT mandated but suggested.

Why the push to amalgamate local power distribution systems? The McGuinty and Wynne governments granted juicy 20-year overpayments to corporations to produce solar and wind turbine renewable power. Now it has attracted interest in corporate ownership power distribution systems. These deals have cost power consumers millions and left Ontario having the highest cost of power in the country.

“It isn’t easy being green,” Kermit the frog.

Without hesitation, the beneficiaries of these deals include both Liberal provincial governments and those corporations that have benefitted from their largesse.

One of the members of SOC said that the distribution of power is changing, predicting that most homes in the future will have electricity storage units in their garages, powered by solar panels. The cost of this is astronomical for most people. Why the rush to sell off Guelph Hydro, lose any semblance of control and costs as it now it provides economic benefit to the 53,000 current customer base?

Those self-sufficient storage units have a definite future but are only cost efficient for the wealthy among us. It will take years to become a common reality.

But it is a prime rationale among an element of civic leaders who foisting their opinions, were bolstered by outside consultants including the core of the SOC.

Here’s a sample of what the SOC is planning:

SOC RECOMMENDATION:

  1. THAT the Strategies and Options Committee (the “SOC”) of Guelph Municipal Holdings Inc. (“GMHI”) be directed to conduct further discussions, engage in further due diligence, and prepare preliminary business cases to assess potential mergers between Guelph Hydro Electric Systems Inc. (“Guelph Hydro”) and potential merger partners.
  2. THAT the SOC continue its communications and community engagement to inform its work.
  3. THAT the SOC report back to Council in early fall 2017 with the results of further discussions and due diligence, communications and community engagement and a preliminary business case, including recommendations regarding next steps.

            The four phases leading to selling Guelph Hydro

The SOC plan is divided into four phases. Following the June 13 meeting, the next phase is Part 3 to be reported to council in October, or thereabouts.

Here’s one of the reasons citizens should be concerned. Two members of the SOC, in my opinion, have a conflict of interest.

Note in the recommendation above that the SOC is the offspring of the Farbridge Folly that created Guelph Municipal Holdings Inc. (GMHI). We now know that it cost citizens close to $100 million, so far. This appears to be a desperate attempt by the Guthrie administration, to convince citizens to support the sale of Guelph Hydro. We say: NO SALE!

Getting back to those two SOC members. The former mayor appointed Mark Goldberg as an independent member to the GMHI board of directors. Did Mr. Goldberg support the GMHI projects that lost $26.6 million? What is he doing on the SOC? Is he part of the salvage crew out to sell a profitable, locally owned Hydro Distribution system to cover up the total failure of the Community Energy Initiative (CEI)? It is now clear that the former mayor sold the merits of the CEI to an unsuspecting public. Then buried its operations in closed sessions of the board.

Or, let’s hear from SOC member Guelph Hydro Deputy Chair, Robert Bell, who in answer to a question by Coun. James Gordon about how the public feels about the sale of Guelph Hydro replied that he was an expert in mergers and acquisitions, (M&A) and knew more about it than the general public.

That arrogant answer confirms the takeaway that this is a contrived set-up to sell the publicly-owned Guelph Hydro in part or all-in, to pay off the debts of previous administrations.

Well, those two men, for different reasons, seem to have their minds made up.

This is a very serious political play in which, with respect, may result in Mayor Guthrie’s ongoing support for the sale, being figuratively bitten in the derriere come Election Day. His fair-weather friends on council could blame him for either the success or failure of the Hydro sale proposal. As he is Mayor, it’s a lose, lose situation no matter what happens.

It’s not too late to regain the support of the majority of the public by disassociating himself from continued support of the sale.

Here is the SOC schedule of how we can say bye-bye to Guelph Hydro before the next election.

SOC says: “If, in the fall, Council directs the SOC to pursue the next phase of the process, details about potential merger partner(s) will be shared with the public. At that time, the SOC will seek public input on the proposed merger. More public and stakeholder engagement will occur to generate that input.”

GS Comment: Just how are the SOC and its partners Guelph Hydro and City Council going to inform the public during this “process?” There is a ground swell of objection among many citizens that this phase is not going to sell. So far the attempts to communicate this to the real stakeholders, the citizens of Guelph, has been an abject failure. But read on to see the proposed timetable of selling the utility.

SOC says: “Phase 1 (Complete)

“Explore options; begin community consultation, present findings and recommendations to Guelph City Council in early 2017.

SOC says: “Phase 2 (March to June)

“Scan the industry for potential merger partners. Consider publicly-owned utility companies likely to provide value to Guelph Hydro customers, the City and the community.”

GS Comment: Phase 2 is the topic of the June 13 meetings including a closed session of council starting at 4 p.m. and the public open meeting at 6:30 p.m. at City Hall. Let’s get this clarified. Guelph Hydro supplies electricity to 53,000 customers. No one in this city or Rockwood is without power. This should make them the stakeholders in this plan. The City of Guelph owns this utility and history shows that the citizens want to continue owning it. The SOC should conduct a poll by an independent polling organization to measure public support for selling Guelph Hydro. The result may save citizens the cost of pursuing this project.

SOC says: “(June to fall) If City Council votes to explore further: engage specific targets, develop a preliminary business case and financial analysis, outline impact on shareholders rate payers, discuss governance, compare to maintaining full ownership, and make recommendation to City Council.”

SOC says: “Phase 3 (fall to winter)

“If Council decides to pursue a merger: enter into memorandum of understanding, announce the parties involved, continue community engagement, begin exclusive negotiations, conduct financial, legal, operational and regulatory due diligence, develop merger and shareholder agreements, finalize rate impact and make recommendation to City Council.”

GS Comment: And during this phase when does the public have its say? Where is the business plan underlying any proposal?

SOC says: “Phase 4 (late 2017 to 2018)

“If City Council approves the transaction: submit a MAADs (?) application to the Ontario Energy Board (OEB) for approval, develop implementation plan and establish leadership and governance of the new utility. Following OEB approval the transaction would close, the parties would enter into the shareholders’ agreement, and the merger would be given full legal effect.”

GS Comment: Just in time to create a huge issue in the October 2018 civic election. This is an attempt to wrap up the before the election and deny the public the right to dissent.

            Recommended next phases of developing the sale:

SOC says: “Given the potential cost of developing complete business cases with multiple parties, the SOC recommends developing preliminary business cases with the most promising candidates and making a recommendation to Council in early fall 2017. This approach is a cost effective way to provide Council with more information while being fair and respectful to potential merger partners.”

GS Comment: The Guelph Hydro board affirmed the recommendations made at the outset of this report at its May 29, 2017 board meeting. None of them were elected to represent the public’s interests. So, why now? Why is this plan being presented to the citizens who are not collectively in favour of selling Guelph Hydro? Here’s more of the sale plan.

Value for the City of Guelph
SOC says: § Realizing the best financial return and overall value.

GS Comment: Again what is the real purpose of this proposal? Is the city in such financial shape that we have to sell Guelph Hydro to pay for the financial mismanagement of the past ten years? Is it fair to say that if Guelph Hydro is sold that it can recover that “impaired” asset that it loaned GMHI and now sitting on the city books, can be recovered? One would believe that had to be a condition of any sale.
SOC says: § Supply electricity efficiently and cost-effectively.

GS Comment: Isn’t that what is being delivered today?
SOC says: § Contribute capital funds for reinvestment.

GS Comment: Ah! The truth is starting to come out. What reinvestments are they talking about? Is it reduction of debt? Paying down the Police Headquarters $34 million renovation? Providing $400 million for the aging infrastructure? There is no shortage of projects but because of the financial mismanagement, the cupboard is essentially bare.

It is welcome news that the city has finally hired Trevor Lee, an experienced professional who has the financial accreditation to bring responsible order to our city’s finances. The evidence exists that successive councils relentlessly continue to jack up property taxes and user fees to cover up bad management and questionable decisions.
SOC says: § Support long-term community planning and economic development.

GS Comment: There has been little effort to address the high overhead costs of running a city. What has this sale got do with economic development? How will it create jobs and at the same time protect Hydro employees? How can citizens be assured of cost controls if the utility is sold or merged? How much has this proposal cost year to date? Who is paying those costs? What operational guarantees are included in this proposal that affect all Hydro customers?

What does the SOC mean when it says it will engage in “open, honest communication with community and industry stakeholders?” This and past administrations have a terrible track record of operating in closed sessions without transparency and accountability doing the public’s business. The record of the previous GMHI board of directors conducting its business in an open and accountable fashion is a sick joke.

City councillors Karl Wettstein and June Hofland were members of the MHI board for four years and today accept no responsibility for the financial disaster. SOC member Mark Goldberg is another former GMHI board member who has never commented publicly about his role on the board.

A good place to start is opening all SOC meetings to the public. Making all electronic communications pertaining to the sale among SOC, its consultants and members of council available to the public. The one exception is discussions regarding proprietary information of bidders.

Regardless, in my opinion, this proposal was tried in 2008 and was rejected by a majority of council including supporters of the former mayor. I see no reason why this won’t happen this time. Sorry, NO SALE

Frankly, city council approved this methodology of selling Guelph Hydro. It’s time for a serious rethink of the project.

Now council owes the citizens a specific reason for creating this proposal to sell Guelph Hydro. That includes full financial disclosure of the costs and benefits to the citizen stakeholders.

This is only Act One of the Theatre of the Absurd

Until that closes, we still say: NO SALE.

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How the city plans to sell Guelph Hydro, something that Farbridge failed to do

By Gerry Barker

June 8, 2017

Today it’s Part One. Monday Part Two will be published

Nine years ago, former mayor Karen Farbridge attempted to convince city council and citizens to merge Guelph Hydro with systems in Hamilton and St. Catharines. The mayor had a comfortable majority of followers on council, so what could go wrong?

Well, it did as council turned it down. It was the only time I can recall that the mayor lost a major battle. Looking back, it occurred only because the people almost unanimously rejected the proposal and the councillors heard them. It was a rare occasion where the people had the final say.

The mayor needed the money that a sale of Guelph Hydro would provide. The first priority was to pay the $22 million toward the federal and provincial government’s special infrastructure plan. Under the plan, Guelph would pay one third, as would each of the senior governments. Some $66 million was approved and spent on a variety of shovel-ready projects in the city.

But the mayor’s plan almost failed because of the citizen’s revolt against selling Guelph Hydro. Instead, the mayor, who sat on the Hydro board of directors, notified the board that council was calling a $30 million note that Hydro owed the city. That solved the city’s share of the infrastructure plan and there was a little left over that was spent on a time clock in the Sleeman Centre and $2 million building bicycle lanes on Stone Road between Edinborough and Gordon Streets.

This all happened in the first three years of the Farbridge administration.

Shortly following her re-election in November 2010, the mayor set up Guelph Municipal Holdings, Inc. (GMHI), a corporation wholly owned by the city. The mayor was chair of the company and controlled the board of directors by naming four councillors, Lise Burcher, Todd Dennis, Karl Wettstein and June Hofland. Two independent directors were appointed.

The company had assets including Guelph Hydro and the Guelph Junction Railroad. GMHI sent a dividend of $1.5 million to the city each year. The last known total was $9 million before the roof fell in with the revelation in May 2016 that GMHI had lost $26.6 million and had never made a profit.

With a startup in late 2011, in five years, little was known about its operations as the meetings were held in closed session.

In addition to the losses, there was a large loan taken out of Guelph Hydro for $65 million that was described by former GMHI Chief Executive Officer, Pankaj Sardana as impaired. In the 2015 city financial statement the loan was listed as $69 million as there had been no repayment by GMHI. That loan is now on the city books listed as an asset. This will eventually have to be written off.

GMHI spent money on solar panels on some public buildings, two gas-fired District Energy pumps, costing $11 million to supply hot and cold water to a handful of downtown and Hanlon Business Park buildings. It was an abortive co-generation scheme to use the pumps to pump the water in underground pipes to the buildings and generate electricity.

For four years, GMHI worked in the dark led by the former mayor and former Chief Administrative Officer Ann Pappert.

The campaign to sell the city’s most valuable and profitable asset

Next Tuesday, June 13 starting at 6:30 p.m. city council, as GMHI shareholders, representing the citizens of Guelph and will hear a review of the project to sell Guelph Hydro by mid-2018, before the city election in October. Prior to the meeting, council will meet in closed session to discuss the all-important details of the project, far from the madding crowd.

Last October, council approved commencing an investigation by the Strategic Options Committee (SOC) composed at the time of Chief Administrative Officer Derrick Thomson as chair, CEO of Guelph Hydro, Pankaj Sardana as co-chair, and Robert Bell, Hydro board member,.Two citizen members, Mark Goldberg and Ron Puccini were also named.

According to the Energizing Tomorrow website, only Mr. Goldberg and Mr. Puccini live in Guelph.

There are no elected representatives on this committee. There are two individuals, Mr. Sardana and Mr. Bell who are closely associated with Guelph Hydro.

So, we can conclude that this operation not only includes the SOC but also Guelph Hydro Electric Systems. The Board of Directors of Guelph Hydro Electric Systems included: Ms. Jane Armstrong. Ms. Judy Fountain, Robert Bell, Bruce Cowan, Ted Sehl, Rick Thompson and Ms. Jasmine Urisk.

Under no circumstances am I suggesting that these folks were complicit in the GMHI financial disaster.

There does not appear to be checks or balances or direct oversight of this potential disposal of the most valuable asset of the city’s assets. Also, the public has had little to say since formation of the SOC. Granted, council must have the final say but its members are not directly involved in this exercise being handled by the SOC and its advisors, a consultant and a Toronto law firm.

It also comes as a surprise that there are certain members of Guelph Hydro Electric Systems who had exposure to GMHI financial disaster that cost the city $26.6 million. These include Jasmine Urisk, Ted Gehl, Jane Armstrong, Judy Fountain and Robert Bell.

Mr. Goldberg of the SOC served on the GMHI board of directors. Mr. Sardana, co-chair of the SOC, was formerly CEO and CFO of GMHI.

Then came an announcement. Mr. Sardana was replaced as co-chair of SOC by Hydro Board chair Jane Armstrong and Mr. Puccini resigned to be replaced by Douglas Auld.

On Monday, June 12, look for Part Two that details the strategy to complete the sale of Guelph Hydro by mid 2018

In the meantime, here is an unedited portion of the 48 pages publish on the city website, of the proposal to be approved June 13 by council acting as shareholders of GMHI.

As determined in Phase 1, Ontario’s energy landscape is changing, and mid-sized utilities like Guelph Hydro are looking for better ways to:

  • Meet customer expectations;
  • Take advantage of modern technologies;
  • Cover costs of delivering safe, reliable electricity service;
  • Fund local infrastructure maintenance and upgrades; and
  • Prepare and respond to more frequent and severe storms.

I draw your attention to item four – Fund local infrastructure, maintenance and upgrades.

So do we sell a profit-making asset to fund years of neglect of city infrastructure?

I don’t believe this for one minute. As I will explain in the next part of this two-part series, the proceeds resulting from the sale of Guelph Hydro will be primarily used to pay down the accumulated debt of GMHO and the $69 million note owed to Guelph Hydro.

We have never been informed if GMHI spent that loan money and on what?

There are so many questions needing answers.

Part Two will analyse and comment on the nuts and bolts process of moving ahead with this sale of Guelph Hydro.

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The day Donald Trump declared war on Canada and our Allies around the world

By Gerry Barker

June 5, 2017

Last Thursday afternoon in the White House Rose Garden, President Donald Trump denied global warming and dropped out of the Paris Accord to protect the planet.

The United States became the third county in the World to exit the non-binding treaty joining Nicaragua and Syria out of 187 countries. What Trump did not know is that the U.S. is locked into the Accord until 2020. He may not be in office when that happens.

His mealy-mouthed explanation, loaded with lies, hall-truths and pandering to the Trump core of some 120 million Americans who still believe that he is their man in Washington.

Trump told the audience that he represented all Americans and was acting in their interests. He claimed the Paris Accord would cost millions of lost jobs and his duty was to protect those jobs. Another Pinocchio moment for the Donald.

The assembled trained seals attending the long-winded speech applauded at the specific applause lines.

Friday, the reaction by world leaders was devastating and America lost its soul from a leader who was described as a “malignant narcissist” by a group of psychiatrists. He is one who fails to recognize right from wrong because he believes he knows better than anyone else. In the world of expert mental examination, that could be labelled as sociopathic behavious.

So, first he attacked the North American Free Trade Agreement, NAFTA, stating he would abolish it because it was taking jobs from Americans. Then switched gears and said he would negotiate the 37-year-old treaty,

The president snuggled up to the 55,000 coal miners in West Virginia, Kentucky and Tennessee, stating there is a great market for coal in America. This is a deluded explanation to give false hope to those individuals who have no other experience but to work in unsafe and dangerous mines. Where is Trump going to send the coal? The market is rapidly declining as power plants and industry convert to a cheaper and less polluting fuel, natural gas and other rebewable energy sources.

Why doe he keep claiming that the coal mined in those states is clean and will not affect the environment? And, who cleans the coal and how?

I guess when you spend a life in Trump Tower in downtown Manhattan you wouldn’t know climate change from a Volkswagen … further why should you care?

Just latch on to those deposed people married to a dying demand for their product. Then exploit them by promising to wipe out all the environmental protections regulations to meet their needs.

It is a monumental exploitation of people who have no advocate except this misinformed Manhattan elitist who believes he is some political Messiah.

He is a hardcore denier of climate change as is his new Secretary of Environmental Protection Agency, Scott Pruit. This man is from Oklahoma and one would believe that he would understand the effect of climate change on his state that endures tornados and wild weather. Yet, has he travelled to other parts of the world where the effects of climate change are disturbingly apparent? The Arctic and Antarctic are points of the beginning of Mr. Pruitt’s re-education.

Following the President’s repudiation of the Paris Accord, Mr. Pruitt was so elated that he dined Thursday night at one of the most exclusive and famous French restaurants in Washington to celebrate his ignorance of the planet’s exploding climate problem.

You can take the man out of Oklahoma, but you cannot take Oklahoma out of the man.

So how does this affect Canada?

This past week, despite Trump’s promise to re-negotiate NAFTA, his trade negotiators slapped a border tariff on Canadian softwood lumber shipments to the U.S. For 15 years the American softwood lumber manufacturers have attempted to prevent Canadian competition. Their efforts have been dismissed by the arbitration panel composed of officials on both sides of the border as a mechanism of the treaty.

This didn’t stop the Trump administration. So much for renegotiation as promised by the President.

Next week that process will begin. We now know that the Canadian supply side management system of dairy, poultry, beef, pork, and eggs will be attacked by the U.S. trade reprentatives. The President blamed the Canadian system for 50 employees getting laid off in Wisconsin as his decision to renegotiate NAFTA. The truth is that American dairy farmers are over-producing and the president blamed the Canaian supply side management of dairy production as the cause pf the Wisconsin workers being fired.

It is in this atmosphere of ignoring facts and failure to understand how government works that has led to global condemnation of the Trump Administration. He is a core isolationist and ignorant of how the U.S. government is composed of three branches: The Executive, the Congressonal and the Judiciary. There are ongoing chaotic operations in the White House where even the chief butler left.

Trump’s penchant for tweeting his errant thoughts places staff members in awkward and impossible positions when the media questions the operations. Now the press secretary, Sean Spicer, is holding only audio briefings with TV camera’s not allowed.

We Canadians must be very afraid of this man whose sociopathic ego has no bounds and, make no mistake his actions will spill all over our country as both Canada and Mexico attempt to re-negotiate NAFTA.

It’ll be tough dealing with a president who fails to understand that Canada is American’s biggest trading partner and visa-versa. Nor does he understand the impact of his border tariffs and its predictable increased costs to American consumers.

When it comes to telling whoppers, he is indeed the king.

 

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The three cheesy political moves designed to suppress your vote in 2018

By Gerry Barker

May 28, 2017

There is an interesting parallel comparing the controlling antics of the Bloc of Seven dominating city council and the Walt Disney classic “Snow White and the seven dwarfs.”

Before beginning our tour de fromage, keep in mind that for every action there is a reaction.

We all know who Snow White is in our comparative exercise. If you don’t, send me a self-addressed envelope and I will reveal who it is. We are going to play a little game when it comes to the seven dwarfs. I’ll name them and you mentally attach the names of these councillors who act and resemble our players in this exercise in political shedding of the Cheddar.

Here is the list of the Disney Seven. Make your choice beside the appropriate dwarf.

Doc                        Reader’s Choice

Happy                   Reader’s Choice

Dopey                    Reader’s Choice

Bashful                 Reader’s Choice

Sleepy                   Reader’s Choice

Sneezy                  Reader’s Choice

Grumpy               Reader’s Choice

I know, a couple of them are easy to identify with current members of council’s Bloc of Seven. But there is one other character in this bubbling pot of political fondue. The unelected defacto leader of the Bloc of Seven, Susan Watson, led the attack to stop Online voting by importing an Assistant Professor, Aleksander Essex, from the University of Western Ontario. He informed council that it should not proceed with Online voting because it lacked cyber security and trust. More on this later.

If you just arrive in town from a trip to the Moon, here is the scoop on the Bloc of Seven and how they lost their Snow White in the Kingdom of Guelph’s forest.

With a couple of exceptions, the Bloc votes on most issues as a group. The exceptions include the recent defection of Cathy Downer who voted for Online voting and retaining the operational Committee of the Whole (COW) system.

There have been three key occurrences involving the Bloc that were offensively planned to stop progress of the business of council. All three were self-serving and cheesy politics rolled into one gigantic cheese ball.

The infamous walkout by the Bloc of Seven

The first was the walkout January 25, 2016 by the majority of Bloc councillors to thwart a meeting to discuss the Guelph Municipal Holdings Inc.’s (GMHI) disastrous failure.

Well here’s the skinny. We believe the closed meeting was to discuss a personnel matter, a legal reason. When the Bloc of Seven did a head count, they were outnumbered 6-5 because two of that group were absent.

But let’s hear Phil Allt’s response: “You will have to trust that this rather simple message is of importance to all Guelph residents. By denying a quorum we were defending the integrity of the city as a corporation and staff.”

No, Mr. Allt, you and your colleagues were complicit in covering up the most serious mistake of the previous administration ever recorded in the history of the city. We learned in May 16, 2016 that the GMHI losses over five years was $26.6 million and an impaired loan of $65 million provided by Guelph Hydro, a wholly owned utility by the city and controlled by GMHI.

Aside from the Allt explanation, it wasn’t until May 16 that the truth and details were revealed. Did Mr. Allt take back his pious worded stated four moths earlier? “By denying a quorum we were defending the integrity of the city as a corporation and staff.”

Ah, the essence of Blue Cheese permeates that statement

Whistle while your work

The next Havarti experience by the Bloc of Seven came when a straw vote was held in a COW meeting last month to reaffirm allowing Internet Online voting in the 2018 civic election. Prior to that vote, Susan Watson expressed her disapproval of the Online voting. Two weeks later, she trotted out the Assistant Professor who specializes in cyber security and Internet voting to bolster her position.

Essex is not a resident of Guelph and dumbed down the Bloc of Seven to believe it was too risky to use in 2018. This was stated despite the fact that 13,000 residents voted online in 2014 without any threat, loss of privacy or security. Also, 97 Ontario municipalities use Online voting, Unfortunately it failed to impress the deniers and the system was cancelled by a 7-6 vote.

You don’t have to look further than British Columbia where the final outcome of the May 4 Provincial election is still not confirmed. The province does not have electronic or Internet voting. This is what happens when your election system has not caught up with the 21st century.

This motion to defeat Oline voting was an orchestrated effort by the Left on council to suppress voting. The denial affects hundreds of Guelph citizens who are disabled, the elderly and those whose schedule denies their vote.

The only conclusion is that the Left saw Online voting as a threat to their re-election.

Crackers anyone?

The latest power move by the cheesy Bloc of Seven was to kill the new council operating system called the Committee of the Whole. Last fall council voted to approve the system with a 12-0 margin. It eliminated the individual committee meetings thereby opening the process of government to allow transparency and accountability.

So here comes the Limburger part. The Left noticed that two supporters of the COW, Councillors Cathy Downer and Andy Van Hellemond, were absent and quickly called for a vote that killed the COW by a 6-5 margin.

Before the cheesy crowd could exalt over their victory, the City Clerk, Stephen O’Brien, offered the option of suspending procedures and re-voting the issue. The concerns of councillors emerged when they discovered there was no alternative immediately available. The vote had the effect of dismissing the staff recommendation to retain the COW.

Following a break, a second vote was taken with only Coun. Leanne Piper opposing.

Following the meeting there were some interesting comments made by those who voted to eliminate the COW.

Coun. Gordon said: “The first (vote) was a signal, the second was maintaining our democratic process until we can reassess.’

He went on to claim that, “it has a lot of problems, it’s ineffective, it’s confusing.” He added that it doesn’t matter if this committee made things easier for staff. “That’s not our job.

James, that being the case, why did you vote for the COW systemlast fall? Is it your plan to reassess the COW before the next election? Your bench mate Phil Allt agreed with you saying that the “highlight was public confusion as one of the biggest issues.”

There they go again, the breeze brothers defining what their job is. If what they say is true, who’s confused here, you two or your constituents? Your job is to help and inform your people to understand the issues.

Holding regular closed session meetings does not help public clarity of city business.

Please pass the Camembert and crackers.

 

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