When the Mercury gets it wrong, it’s a whopper

Posted June 29, 2015

Headline in the Saturday Mercury: “Firing City Hall Builder will cost $8.1 million”.

The impression the paper headline leaves is that the entire cost of the Urbacon firing was $8.1 million.

Actually, near the end of the story another $6,635,000 paid to Urbacon by the city to settle the lawsuit making the current grand total $14,736,321 and still counting.

The downside of all this is that the public will never know thr true cost of the Urbacon firing because of sloppy and careless bookkeeping over the past nine years. The degree of political interference during this period grossly attempted to cover up to convince the people it was not a serious error in judgment.

First, the administration blamed former Chief Administrative Officer (CAO), Hans Loewig for unilaterally firing Urbacon. Then, just before the trial, he disappeared, never testified and has never been heard from since.

His succesor, Ann Pappert, said that under the city’s CAO bylaw, Loewig had the power to act on his own and terminate the Urbacon contract. Mayor Karen Farbridge and her majority of council supporters never admitted responsibility for the firing.

How it all started

Stepping back a bit, Urbacon Buildings Group was hired in 2006 to build a new city hall on the site of the former memorial arena and convert the old city hall into a provincial offences courthouse. The contract was for $42 million. In 2008, the city ordered Urbacon, the general contractor, off the job chiefly because it failed to meet completion deadlines.

Urbacon sued the city for $19 million for wrongful dismissal. The city countersued for $5 million. The city sued Aviva Insurance Company of Canada to pay the bond that covered non-completion of the work. That was settled recently with the city paying $100,000 to Aviva. A five-week trial in 2013 conducted by Justice Donald MacKenzie found the city guilty of wrongfully dismissing Urbacon in March 2014.

At the time, then Chief Financial Officer, Al Horsman, joined the apologetic discourse saying the settlement can be accommodated within the city’s current financial means. His definition of “settlement” was not defined. Remember, 2014 was an election year and the affair was in high gear as the Farbridge administration scrambled to cover up the Urbacon details and fallout.

It turned out to be a colossal misrepresentation of the facts done deliberately to protect the election campaign of the Mayor and her council supporters. It was classic manipulation of the true picture of the cost of this multi-million dollar mistake.

The full cost of this bumbling exercise having all the earmarks of a very public bad dream, is that the citizens still don’t know the full cost of the Urbacon debacle 14 months after Justice MacKenzie delivered his verdict. It should be noted that Justice MacKenzie, in his judgment, ordered that all settlements and costs were to be completed by October 2014.

Legal costs smack-down

In a recent city press release, CAO, Ann Pappert, mentioned the city’s legal costs of the trial are $2,300,484, including the legal fees apparently paid to Derek Schmuck, the hired gun from Hamilton, who represented the city in its two trials.

Two you say? Yes, there was another related lawsuit over the city’s abortive attempt to have the damages portion of the Urbacon trial postponed until after the civic election. That was denied.

What is still missing from the Urbacon accounting?

We have yet to be told the costs of hiring two construction companies to complete the city hall and renovate the old city hall into a provincial offenses court. Both these projects were part of the original $42 million Urbacon contract.

How does the city account for also coughing up some $4 million to pay off the city hall subcontractors who placed liens on the new building after Urbacon was thrown off the job.

For some five years, there is the untold cost of city staff working on behalf of the Urbacon lawsuit to prepare the legal arguments. How much did the city pay lawyers and consultants, inside and outside the city staff, to support the city’s failed contention that it had the right to fire Urbacon?

CAO Pappert commenting on the new revelation told the Mercury: “The city has been keeping a running accounting of the city hall project that goes back nine years and includes the predesign work, the contraction and administration costs, legal costs and settlements.”

Then she says she is satisfied with the running accounting of the project. “I am comfortable with what I am seeing, “she says adding, “ but what I’ve asked for is a third party auditor to look at our accounting and make sure it is up to snuff.”

Nope, it’s not raining here

Snuff? Pappert then admits the city has not tracked how much internal staff time has been spent on Urbacon. She states “I don’t think they (the administration) anticipated a rainy day fund for Urbacon.”

The Farbridge administration didn’t bother because they thought they would win the lawsuit.

That was only one of checks and balances ignored in this whole affair.

Funding this new Urbacon audit will come from an existing contingency budget, Pappert says, not revealing the cost or who will do the work. The CAO said that she brought in the Deloitte construction division and asked it to review the way the city exercises complex capital issues. Note, Deloitte Touche from Kitchener, are also the city auditors.

Be careful what you put in the refrigerator

Talk about slamming the refrigerator door shut when the cheese gets too rank for consumption.

The Deloitte Construction crew investigating and recommending capital spending protocols, have lots of projects to examine, including the Wyndham Street rail underpass, the Farmer’s Market renovations, the restoration of major roads including adding bike lanes and reducing vehicle lanes, the cost of the Waste Resource Innovation Centre on Dunlop drive, the Baker street proposal, the new downtown library, and the South End recreation complex. They should also examine the money spent by the Guelph Municipal Holdings Corporation to control environmental developments and Guelph Hydro.

Ah yes, there are many issues to be studied on how it should not be done … Urbacon anyone?

As for Ms. Pappert’s role in this costly, ill-fated odyssey, the outcome may be her Waterloo as CAO of the City of Guelph.







Filed under Between the Lines

5 responses to “When the Mercury gets it wrong, it’s a whopper

  1. Jerry

    Hi Jerry
    You missed mentioning the big payout Ludwig got to keep his mouth shut and disappear?.

  2. Guido Sartor

    I appears that the city issues press releases and the Mercury prints whatever they say. When I read their articles I have difficulty just to understand all the fancy titles that city staff have, makes IBM look like a corner store.
    Unless we do the following we may never get the right answers.
    Is there any chance that another petition could make the province realize that a totally neutral third party needs to do an audit of our financial situation.

  3. Len H.

    Her Waterloo will likely be another great payout to disappear. Guelph must lead the league in hush hush buyouts. Including, unfortunately some pretty good people Farbridge wanted out. Does the name Kennedy come to mind?

    • Len H. Perhaps there will no no big payout. Her contract ends in October and if it is not renewed, she should not be entitled to a golden parachute because she was not fired. The devil, of course, is what were the terms of her contract?

  4. geo

    She is a close personal friend of her Royal Highness.
    She’ll never have to work again.

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