The back door taxing of your power and water, a Farbridge legacy

Posted March 6, 2015

When former Mayor Karen Farbridge lost her bid to sell off Guelph Hydro to a consortium of Hamilton and St. Catharine’s public utilities, it was time for Plan B.

Unfazed, the mayor convinced her council majority to call a $30 million note owed to the city by Guelph Hydro. The Mayor needed money and lots of it in 2009 because the city had concluded a $67 million cost-sharing stimulus deal with the Federal and Provincial governments. Guelph’s share was $22,250,000. When the dust settled the city’s real cost was $28 million due to a number of add ons not covered in the original tri-governmental agreement. Such items as $2 million for the Stone Road bicycle lanes, the $750,000 time clock in the Sleeman Centre and sundry other projects.

It was like Christmas around the new City Hall in 2009 that was completed following the September 2008 firing of the original general contractor, Urbacon Buildings Group Corp. Staff had moved into spanking new digs.

Unseen behind the scene was the multi-million dollar waste management plans to create a world-class waste management system. Or the $10 million south-end emergency services building to house police, fire and EMS equipment and personnel. The cops hated it. The fire and EMS staffs were often at loggerheads. In short, it was a failed experiment to unify public safety operations under one roof.

Instead, we are getting a $34 million renovation of the police headquarters downtown.

So there was money being spent everywhere in the city. The trouble was that the accounting of public money was suspect by many folks who analyzed the city’s financial reports. A respected financial analyst suggested that it appeared that the city was using two sets of books. The civic activists group, GrassRoots Guelph, exposed serious accounting errors and omissions in the official Financial Information Reports, sent annually to the provincial government.

Then along came Plan C. Why not tap into the cash flow of Guelph Hydro? Remember that Guelph Hydro collects fees from power customers as well as water users.

In 2011, shortly after the mayor’s re-election, the decision was made to form a separate corporation, controlled by the city, to manage city assets such as, Guelph Hydro. The mayor chaired the board of directors of Guelph Municipal Holdings Inc. (GMHI), supported by four council colleagues. plus two independents.

By quietly absorbing Guelph Hydro, with an understated book value of $66 million, the mayor was in a position to sell the utility. Her position was based on provincial government suggestions that smaller municipal transmission organizations should be amalgamated for efficiency

In 2012, Guelph Hydro paid a $3 million “dividend” to GMHI. $50,000 was retained by GMHI while the remaining $2,950,000 was transferred to the city treasury. In its annual report for 2013, GMHI received another $1.5 million as a dividend. The figures for 2014 have not been announced.

Ontario Municipal law forbids the taxation of vital public utilities including power and water by municipal governments.

It would appear that we are being taxed for power and water through a scheme to bend the rules using a separate corporate entity to mask taxing those utilities.

Before her defeat, the mayor outlined plans to expand GMHI and formed Envida Community Energy Corporation and a plan to spend $20 million to build a downtown thermal underground heating and cooling system.

Also plans are afoot to form a real estate corporation to buy and sell city assets.

The staff has proposed spending $246,000 in the 2015 budget to hire two senior asset management staffers.

While Mayor Guthrie replaced the former mayor, he is not the chair. Only he and Coun. Karl Wettstein serve on the GMHI board. The board members and staff are not elected.

While this may have been seen as a good idea five years ago, it remains an expensive and growing staff redundancy. It is probably illegal to convert so-called dividends into taxes of vital services. It remains to be revealed exactly what business and assets this off-balance sheet organization has accomplished in its four years of existence.

We do know that we have been nicked for an additional $4.5 million so far paying our power an water bills.

Talk about double dipping the taxpayers.

 

 

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2 Comments

Filed under Between the Lines

2 responses to “The back door taxing of your power and water, a Farbridge legacy

  1. Shane

    Gerry this is very interesting information !! Can you direct me as to where you found this information please ? I would like to look more into this . Also do you know any legal action that can be taken ? I find these things completely disgusting and just wish we can start fighting this nonsense

    • Shane:This is a compilation of information gathered from public records in the past eight years. The important point is the dividends paid through Guelph Hydro to the Guelph Municipal Holdings Inc. Where that money went is not included in the GMHI two annual reports for 2012 and 2013. Over the years I have written 594 posts commenting on Guelph civic politics plus other areas of interest. The Guelphspeaks viewer numbers are proof that people hunger for the facts and operations of our city. Collectively, they made their feelings known last October regarding the leadership of the city administration. Welcome to our blog.

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