The financial strangulation of Guelph

In October 2006, a revolution occurred when voters elected Karen Farbridge as mayor and 10 councillors who, for the most part, slavishly voted the mayor’s agenda.

The mayor artfully mobilized this group of single-minded activists and left-wing advocates of social change. A major player in this reform was the Guelph Civic League under the leadership of James Gordon, the NDP candidate defeated in the October provincial election. In 2006, experienced NDP organizers were imported to set up the campaign that would sweep this majority into power.

The stunning defeat of all but two of the previous council (one other, Laura Baily, passed away shortly after the election) allowed the second-place candidate to get the seat. This set up a four-year term of a virtual dictatorship orchestrated by Mayor Karen Farbridge. She was mentored by three people: Former Coun. Cathy Downer, retired executive Ken Hamill and the Mayor’s husband.

Now, five years later, the city faces a financial crisis that has seen a maxed-out debt limit, a slow growth of assessment that averaged 1.3 per cent per year, and a major depletion of reserve funds. The most notable was redeeming the $30 million loan to Guelph Hydro to help pay the bills.

Predictably, the pet projects of this majority of council surfaced quickly. The first was moving the civic museum to the derelict 145 year-old Loretto Convent, all in the name of preserving a heritage building. The final cost is still unknown and shrouded in secrecy. Best guess it will come in about $20 million because of change orders and design alterations needed to reinforce a wonky foundation.

Construction started in 2007 and the building has yet to open.

One cause promoted by the Guelph Civic League in 2006, was the repudiation of the so-call Big Pipe to bring water to Guelph and other major communities from Lake Erie. It was one of the big lies in the 2006 election promulgated by the Gordon followers. It was effective enough to scare middle of the road voters.

Then along came the $47 million waste management and collection deal. It represents another Farbridge and Environmental Executive Director Janet Laird’s monument to make Guelph the envy of waste management in Canada.

If the Guelph Library Board even wants to figure out why their new downtown library was never completed, they can drive down Watson Road and see the reason why.

The folks in the south side of the city can do the same as their proposed recreational centre was shelved because the money was spent elsewhere.

It’s hard to explain why $5 million was spent to acquire two properties adjacent on Wyndham Street. Those commercial buildings are in the process of being demolished and turned into a $125,000 parking lot … the antithesis of the granola and bike crowd.

Let’s talk about the new city hall and justice centre. The Kate Quarrie-led council cut the deals to build the badly needed civic centre. This council depended on staff and did not monitor the construction. Hundreds of change orders were issued to the contractor and the result was many delays in completing phase one … the new city hall.

Former Chief Administration Officer, Hans Loewig, fired the contractor without consulting council, although the Mayor was aware. The inevitable occurred and the contractor sued for breach of contract. Once the staff move into the city hall, work on the converting the old city hall into a courts building started. Because of the delays and the need for expediency, the job was on a cost plus basis … a contractor’s dream.

Wait! It gets better. The head of the Guelph Civic League tells the world that every new house needs “a front porch.” This becomes the mantra of the majority on council and Farbridge mentor, Ken Hamill. The announcement is made that a skating rink and water feature would be added to the front of the new city hall. Cost estimated to be $2.1 million. The staff report that it will cost the city $1.2 million to maintain the “front porch”.

Mr. Hamill said he would raise the money by private donation through a group known as the “rink rats”. The campaign proceeded and the money rolls in but it is not revealed from whom or how long it will take..

Among the donors is the Downtown Guelph Business Association (DGBA) that commits to spend $200,000 over five years toward the project. Problem is that the members were not asked. It was a unilateral decision of the board of directors.

So these Carden Street businesses are forced to be part of the building of the so-called front porch of the new city hall or Market Square, as it is euphemistically called, after suffering for years with continuing construction in front of their businesses.

The sum of all these parts is that your city has a cash problem.

But here’s the skinny. The city is facing three major lawsuits. Urbacon, the original contractor of the new city hall is suing for $12 million. The County of Wellington is suing for support of social responsibilities, that’s $4 million. Then there is the pending wrongful dismissal of chief financial officer, Margaret Neubauer. The alleged defamation of her professional standing could amount to multi bucks.

To make matters worse, the newly hired Chief Financial Officer lasted one week on the job before resigning.

The irony is that Hans Loewig, the CAO of the city since 2007 is gone. He walks away from these lawsuits and financial shortfalls, in which he was directly involved, retiring to Arizona.

Finally, there is the impending judicial determination of whether Guelph has to contribute $10 million toward the proposed WellingtonDufferinGuelph Public Health (WDGPH) headquarters to be built on University of Guelph-owned lands on Stone Road.

The city has asked the province to separate from this health unit and the province has said, through Guelph MPP Liz Sandals, that’s not going to happen. Also the province will not contribute to capital costs of the public health organization. The province pays 45 per cent of the operating costs of the public health unit.

In October, a judge denied the injunction obtained by the city to halt the proposal. In effect the WDGPH is free to proceed.

The bottom line is that an unbudgeted liability along with the impending lawsuits places the city in a financial minefield.

The staff suggestion to sell the streetlights to Guelph Hydro for $7 million is ludicrous and one commentator described it as voodoo economics. The city owns Guelph Hydro. It just passes more debt onto Guelph Hydro to solve its own financial mess.

The opposition in council has a tough role to play in this malaise, one not caused by them but must be solved on behalf on the citizens of Guelph.

Otherwise the financial strangling of our city will continue.

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3 Comments

Filed under Between the Lines

3 responses to “The financial strangulation of Guelph

  1. Paul

    It is even worse than you suspect. The sale of Street Lighting to Guelph Hydro will accomplish two things for this Cash starved and overspending Council.
    First it will raise more than $7 millions for the overspending Mayor and her faithfull group of 7. Guelph has more than 12000 street lights
    You don’t believe me? Guelph Hydro numbers the installations sequentially, so find the last pole installed and see what the number on it is. They are all labeled.
    On top of this, the City does not keep any records. They pay the Utility to do this.
    So on top of the Capital sale price, close to $3 millions a year will be transferred tto the Utility ratepayers and the offsetting amount will be overlooked in the Tax supported budget and squandered away every Year on some useless project like the Museum. By the way, are people aware that if the Library had been built in 2009 as planned, the existing Library would have been more than adequate for the Museum and much better suited to its purpose, You don’t believe me? Read about the car that overturned on Cork street today. that is the steep Hill by the new Museum.. Not to mention the saving of $16 millions which would have reduced our massive City Debt of close to $120 millions. Yes it is up there.

    • Paul:
      Right on! I only hope the city electorate wake-up to how their city is being eviscerated by the gang of eight Farbridge supporters. Massive debt and dysfunction among staff has contributed to a situation in which the Ministry of Municipal Affairs needs to send in assessors to examine the books and manage the staff. This is truly a serious situation. GB

  2. Thanks for all your efforts that you have put in this. Very interesting info. “Knowledge of what is possible is the beginning of happiness.” by George Santayana.

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