Application to the Ministry of Municipal Affairs
Requesting an audit of the City of Guelph’s finances and operations
As per the Municipal Affairs Act R.S.O. 1990, Chapter M.46 Part II
September 12, 2013
Please note that this document is almost three years old and does not include the Urbacon city Hall law suit settlement and associated costs that have yet to be revealed.
Under part II section 9 (1) we, the 162 undersigned taxpayers, request a Provincial Municipal Audit of the City of Guelph’s finances and operations. Our concerns are the management of the city has resulted in exponentially increasing liability to the taxpayers now and in the future.
In our collective opinion we cite the following:
- In the past four years, when figures were available, the City of Guelph expenditures exceeded budgets by a total of $24,771,000. The amounts were: 2012; $10,750,000; 2011; $5,783,000; 2010; $2,581,000; 2009; $5,657,000. In our opinion if the trend continues, these figures will exacerbate future liability to the taxpayers and the corporation.
- Further, the audited financial statements for the City of Guelph in the comparison year did not compare to the figures of the previous year. For example, the 2011 statement showed 2010 expenditures of $309,198,000 while the previous audited statement showed a figure of $305,482,000. This is a difference of $3,716,000. Similarly, 2009 shows a difference of $3,668,000. In our opinion, expenditures exceeding budgets year after year produced by the required annual audit, does not imply confidence in the accounting numbers.
- The above data points out some of the imprudent financial decisions and management by the City of Guelph.
- The current administration created a municipal holding company of which the chief revenue component is Guelph Hydro. In the current year, the holding company, controlled by the Mayor and her cohorts on council plus two independent directors, approved a $2,995,000 dividend that was 96.7 per cent higher than previous years. Despite an income decline of 44.1 per cent to $1,057,000. The result was a 179 per cent payout ratio as dividends exceeded earnings. In our opinion, this withdrawal does not meet corporate standards of risk/reward and is a misuse of public funds.
- A non-budgeted and undocumented item that appeared in the 2011 and 2012 City of Guelph annual reports was used to boost revenues. In 2012, a $20,744,000 entry labeled “contributed subdivision assets” was stated while a similar item in 2011 totaled $9,901,000. Neither was in the budget. In our opinion these non-cash entries only serves to embellish revenues.
- A report dated April 10, 2012, from the finance department labeled “Unaudited Operating Variance Report” stated that the total enterprise budget had a favourable variance of $4,304,000. Please note that this occurred three months past year-end. Yet in the Guelph audited Annual Report dated June 27, 2012, the expenditure variance was a negative $5,783,000. On the revenue side, the variance was $39,495,000. Neither figure was remotely similar to that presented to Council. In our opinion this does not instill public confidence in the City of Guelph accounting methods.
- The reporting of financial data to taxpayers lacks clarity and accessibility. In our opinion, posting a 300-plus page 2013 budget document on the city’s website is not sufficient or accessible to most taxpayers.
Legal matters facing the city
- As of March 11, 2013, there are 16 court matters reported in the Litigation Status Report. In addition, there are 16 outstanding Ontario Municipal Board hearings. There are 23 insured matters to be resolved. In our opinion this represents a potential unfunded liability to taxpayers. (Current Litigation Report in attached as appendix A)
- An example was the city’s attempt to leave the Wellington Dufferin Guelph Public Health Unit. The resulting court case was lost but the legal costs incurred were never revealed. In our opinion this was a politically motivated attempt to opt out of a Provincially mandated Health Unit and failed to publicly disclose the cost to the taxpayers. Until the court case was settled, Guelph council’s representatives refused to attend WDG Health Unit meetings for many months.
- In our opinion, in 2011, the city breached its 55 per cent of current budget capital spending limit. Under the self-imposed limit, the 2011 debt ceiling was $94 million. Instead the debt rose to $121 million.
- In our opinion, taxpayers are concerned about city announcements of proposed capital spending projects including: A $73 million downtown library to be operational in 2017; a $37 million south-end recreation centre and then propose to spend $16 million to expropriate an existing commercial centre and convert it to a new riverside park.
- In our opinion, the capital and operational spending in Guelph’s downtown has created a vacuum preventing needed spending on projects in other parts of the city. For example, the proposed south-end recreation centre, to be built in an area where there has been substantial residential development in the past ten years, is proposed in the long-term capital plan.
Figures released by the city audit in 2012 showed that civic employee’s total compensation costs were 88 per cent of the city’s property tax levy.
- From 2008 to 2012. Guelph civic employees received total compensation increases of 31 per cent. In 2008, the city spent $124.8 million on compensation. In 2012, it spent $163.6 million. In our opinion this was triple the annual inflation rate during the same period.
- Between 2006 and 2012, during the period controlled by the present administration, City of Guelph employee’s costs increased by 68.1 per cent. Or 10.9 per cent per year. During the same period, the comparable employee cost increase of its peer group included: The City of Kitchener, (35.3 per cent), The Region of Waterloo, (42.8 per cent), the City of Cambridge, (29.6 per cent). It represents a 41 per cent increase in employment costs over the peer group.
- In our opinion the Guelph employee costs are excessive, in view that the population of the city grew by 5.8 per cent in the same period.
- Reference: Presentation to Guelph council by taxpayer Milton Burns November 29, 2012 based in city administration reports and the Ministry of Municipal Affairs FIR report, schedule 42 (Copy attached).
- Between 2006 and 2011, the city has had four individuals performing as chief financial officers. One of these was a deputy treasurer in the financial department who was responsible for managing the city finances for more than a year, following the dismissal of the previous CFO. Another candidate lasted one week on the job. The current CFO was hired in July 2012. In our opinion, this has resulted in a lack of taxpayer confidence in the management of the city’s finances.
Failure by the city administration to provide taxpayers the opportunity to comment on operational decisions, involving major capital spending of waste management projects.
- In our opinion the building of a $33 million organic waste processing facility (OWPF) without revealing details of the construction, operational costs and contractual obligations, represents a breach of fiduciary responsibility of the city council.
- The question arises as why the processing capacity of the facility, as approved by the Ministry of the Environment, is six times the wet waste needs of the City of Guelph.
- In our opinion selling the right to 20,000 tonnes of the facility’s capacity to the Region of Waterloo, without revealing the operating costs, has not served the taxpayer’s interests.
- In our opinion, City Council, without informing taxpayers or consideration of the accessibility to collect waste from all residences, awarded contracts totaling $15 million to install an automated bin-based waste collection system.
- This system is not available to 6,400 condominium residents due to the city refusing to pick-up waste in these developments. This represents 13.6 percent of the 47,000 Guelph households being forced to not only pay taxes for waste collection, but also pay private contractors to remove garbage. In our opinion, this is not fair to those homeowners affected.
- Terms of a contract with the Lystek Company of Cambridge that processes human waste to store and dispose of city treated solid sewage sludge have not been revealed. In our opinion ths fails to detail safe disposal.
In our opinion, the present financial and operational situation in the City of Guelph will provoke future tax liabilities that cannot be corrected in a short time frame. Among these, is the growth of staff, defined pension and sick leave liabilities under OMERS and employee associations, of which the majority of civic employees are members. This will adversely affect the municipality’s budgets for years to come.
- Considering that in 2011, 52.2 per cent of city revenue was derived from property taxes, plus another 20.9 per cent in user fees, we request an independent audit of the city’s finances and operations to examine taxpayer exposure to current and future liabilities.
Respectfully submitted by the attached list of those supporting this petition.