How can you trust those empowered to run our city?

Posted January 29, 2013

It started when the Kate Quarrie council approved a contract with Urbacon Building Group Corp.  to reconstruct the Carden street property occupied by the City of Guelph. The contract including razing most of the former memorial arena, construction of the new city hall on the site, and converting the old city hall into a provincial court complex.

The price to do all this was some $42 million.

Then, along came the 2006 election and a new council, led by former Mayor Karen Farbridge took office.

Farbridge supporters, elected on the promise “to put Guelph back on track” dominated the new council.

Among the new council’s first action was to restore the Loretto convent located on Catholic Hill and convert it to a new Civic Museum. The price started at $12.7 million and during three years of construction the price rose to almost $15 million.  The problems encountered in restoring the pre-Confederation building drove up the estimated costs. During the four-year construction there were additional costs, not included in the original budget, but were absorbed from general accounts.

But that was penny ante compared to the looming Carden Street construction of a new city hall.

In 2010 Urbacon was fired for failure to meet completion deadlines. This resulted in a lawsuit by the contractor demanding $19 million because, it alleged, the city authorized change orders that added on to the original contract.

Here’s the dilemma the judge faces in the trial being held in Brampton. Was Urbacon negligent in fulfilling its commitment or was the city guilty of overwhelming the contractor with change orders that prevented completion on time?

After the Urbacon firing, the city hired two contractors, Alberici Construction Ltd and Collaberative Structures Ltd,  to complete the city hall and the old city hall renovations that was part of the original $42 million contract.

The city has never told the taxpayers what those contractors were paid and on what basis? Were the contracts fixed or cost-plus? Were there performance bonuses paid? This is basic to determining what the new city hall really cost. Urbacon sued the city and the city countered with a $5 million suit.

Underlying all this is the external and internal legal costs. The trial now underway is scheduled to take five weeks.  Last fall an attempt to mediate the dispute failed to reach a compromise. More legal costs down the drain.

What taxpayers have to ask is why so many change orders altered the contract? Who decided to make design changes? Who authorized them? Was council in the loop during the time of all these changes? Were the changes priced before sending to Urbacon’s construction organizer? Has the city done a fiscal autopsy to determine what happened and why?

Hopefully some of these questions may be answered in the next few weeks as the trial proceeds. The outcome at this point cannot be predicted, as there is substantial testimony and evidence yet to be presented.

Regardless, the convent restoration and the new city hall project were mismanaged from the get-go. If this had occurred in private business, heads would have rolled before any trial was held and a deal would have been cut to settle.

It is an unhealthy aspect in public organizations that the bills will be paid by the taxpayers regardless of sloppiness, dysfunction or stupidity.

The current administration seems to believe that all its problems can be solved with litigation. It’s great for the lawyers who are continually being asked to bail the city out of its screw-ups and mistakes.

A case in point was when city lawyer Derek Schmuck told  witness Tony Murphy, Urbacon’s former senior project manager: “Nobody was putting a gun to Urbacon’s head to take the contract.”

What? Witness Murphy was only testifying on the period when he was in charge of coordinating the project with the city,. He had nothing to do with awarding the contract as Schmuck suggested. Is Schmuck testifying or asking a question?

Look at it this way: If Urbacon wins judgment; our new city hall could cost more than  $70 million. Or more, if the cost of the two contractors hired to complete the Urbacon contract is revealed.

The underlying problem is there are few checks and balances overseeing these  multi-million dollar projects.

As usual, the taxpayers are kept in the dark.

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2 Comments

Filed under Between the Lines

2 responses to “How can you trust those empowered to run our city?

  1. geo

    No government Federal, Provincial or Municipal should be allowed to build anything without making the full cost of the project, to the penny, public.

    • geo: In Guelph the controlling majority of council use kitchen economics: Spend now and the money will come. News flash, it didn’t come but that does not stop the spending. The city’s credit limit is maxed out. We’re overloaded with staff and excessive perks, have made commitments to spend millions on a 93,000 square foot downtown library and new riverside park.To keep the 2013 budget under 3 per cent, they asked the staff to make trims in costs during 2013. This is the same staff that proposed an 8.5 per cent property tax increase for 2013.Yeah, like that’s going to happen. Oh yes, they stopped the Christmas tree removal program saving $22,000. Is this any way to run a $400 million corporation?

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