Monthly Archives: December 2015

Your GuelphSpeaks Weekender

By Gerry Barker

Posted December 6, 2015

This week:

* Some 2016 budget questions that need action and answers

With only three days left, the council will decide the final 2016 city budget Wednesday night. Here are some questions and issues that will be discussed.

ITEM: The proposed staff cuts to Guelph Transit services and increase in fares

 To an outsider, that’s most of us, there is a serious management and union staff problem. The union is adamantly against any cuts or increased fares. Their spokesman, American Transit Union’s (ATU) president, spoke at length about how the system should be changed.

The Questions: Has he exchanged the union’s point of view with management?

Has the management/labour partnership crumbled as the union attempts to run the system for its own self-serving reasons?

Has the absence of common sense dialogue evaporated at the expense of the users? Why did the city senior staff not consult with both sides before proposing the cuts and fare increases in the staff recommendation to council?

This strategy has backfired big time and the result is an ever-widening gap between the union and management.

The responsibility lies with senior city management

The outcome? Bet the transit cuts and fare increases will not be approved for the 2016. This will boost the property tax rate on this one line item.

ITEM: How does the staff propose to replenish the $8.96 million Urbacon settlement charges it took from three unrelated reserve funds?

This is an important consideration that any management would maintain as a priority, before announcing it wants to hire an additional 12 full-time equivalent employees in 2016

When the General Manager of finance and city Treasurer attests that the city system is running lean as possible, it implies that she hasn’t been around long enough to understand the unparalleled growth of staff in the past eight years. Of all people, she should be alarmed at the cost of staff that is 80 per cent of the property tax levy and is the largest single source of city revenues.

The staff prepared two proposals to council. The first estimated an increase of 1.58 per cent in property taxes. The second, titled appropriately “expansions” included some of the following:

Corporate services, $450,000 for service rationalization; Information and Access coordinator, $86,800; GIS program manager, $127,600; Gasoline Tax realignment, $500,000; Manager of Corporate Assets, $157,400; Analyst Asset Management, $120,000.

Why do we need more staff?

Senior staff has offered no public explanation why these staff increases and projects are needed. It remains a continuation of the Farbridge administration’s ability to do what and when they wanted and without public input. Although council did get an earful from the protesting Transit workers at the recent public budget meeting.

Both the BMA report commissioned by council and the financial analysis done by Guelph citizen, Mr. Pat Fung, CA, CPA, chiefly agree that Guelph’s operating costs are 50 per cent greater than either Cambridge or Kitchener.

Why doesn’t the staff recognize this? With the base proposal of 1.58 per cent, plus the killing of the transit proposal with an impact of .72 per cent, it boosts the tax increase to 2.3 per cent. Then add in the expansion proposals costing 1.25 per cent and the property tax increase is, Tah Dah! 3.55 per cent. Does that have a familiar ring to it? That’s the same rate increase, as 2015.

Adding the two budgets approved this year, council’s first year in office, is it possible that the new council will vote to approve a total property tax increase of 7.10 per cent?

The FMA report specifically spelled out that the reserves were seriously underfunded describing the situation as a “cautionary red flag.” Does the senior staff not listen to what its own consultant is saying?

This serious financial problem does not need further explanation. Staff and Council need to put this city budget on a strict diet to equalize operation and capital costs in line with Cambridge and Kitchener. The days of complaining that those two cities are part of a regional government and therefore have lower operating costs, are over. It’s a two-tier system in which taxpayers pay city operating costs plus their share of regional costs. Mr. Fung incorporated the two tax levels in his analysis.

In Guelph’s case, the time has arrived to start the financial cleanup of the grandfathered high costs created by the previous administration.Start by cutting operating costs with this budget.

 

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The Ontario Liberals have rigged your power charges and there is more to come

By Gerry Barker

Posted Decenber 5, 2015

Ontario’s Auditor General, Bonnie Lysyk, reports that  Ontario users of power were overcharged by more than $37 billion in eight years. This is a stunning analysis of a utility that has been mismanaged by the Liberal government under Dalton McGuinty and Kathleen Wynne who were in charge.

Frankly, we believe Ms. Lysyk before Wynne or McGuinty. This is part of a huge series of mismanagement events by the present Liberal government headed by Kathleen Wynne.

My wife and I looked at our July/August Guelph Hydro bill that covers power costs and were astonished to see we paid a net $506.52 after the $56.28 “Clean Energy Benefit” rebate.

Now this doesn’t include the water portion of the hydro/water bill.

Home sweet home costing $1,500 a year for power.

We are just two adults living in a 2,800 square foot home and our hydro bill was 29.6 per cent higher in May and June compared to last year.

In all the years we have lived on this planet, we have never had a two-month increase in the use of power billed in this statement. Maybe we were power gluttons and we were using too much power at the wrong times. Nope. The highest usage was in the off-peak period in which we used 1,831.25 Kilowatts costing $146.50.

Now that’s the period from 7 p.m. to 7 a.m. In 12 hours we’re asleep for 8 of them. The power during that period draw is for the airconditioner, standby power for appliances and two fans for distribution of air in the home.

We have a natural gas water heater, gas fired furnace and fireplace, gas dryer and gas barbeque.

So where is the money going?

So, we checked with some friends about the differences they experienced between the July and August Guelph Hydro bills from the same period the two months before. The comparison is for the base power cost not including the HST. Here is a snapshot of our survey.

Barkers – two persons – Net increase: $119 = 29.6% increase

Home A – single person – Net increase: $92 = 28.7% increase

Home B – two persons – Net increase: $113 = 36.8% increase

Home C – single person – Net Increase $66 = 23%increase

Home D – two persons – Net increase: $82 = 29% increase

Home E – two persons – Net increase: $79 = 61.4% increase

Home F – two persons – Net increase: $111 = 27.7% increase

Home G – two persons – Net increase: $101 = 51.3 increase

The surging price growth of power in Ontario           

In this brief survey there is a similar pattern of substantial increases in the cost of power. In our case, there was a slight per KWh increase over the same billing period in 2014. The summer of 2014 was much warmer than the recent July/August period. Since that time we have monitored two billing cycles and our electricity cost has remained in the same range. These past four months, our electricity bills have remained steady at about $125 per person per month, or on average, 20 per cent higher than 2014.

Now the government has announced a $17 billion retrofit of the six Bruce nuclear reactors. Next comes another multi-million dollar retrofit of the Darlington reactors.

With the gradual sell-off to private investors of Hydro One, it has already been announced that new management is planning to consolidate the 74 small municipal power distribution systems. Read that buy them out. A leading candidate for consolidation, Guelph Hydro is controlled by a separate corporation called Guelph Municipal Holdings Inc (GMHI). Guelph Hydro is municipally owned, it means that the board of GMHI can accept an offer to sell the utility. But it must still be ratified by city council, the majority of which will support the sale.

What’s Guelph Hydro worth? Probably the utility has a book value of at least $150 million. That’s why the former chair of GMHI, mayor Karen Farbridge, manipulated control in order to sell it and use the money to fund her past and present agenda. That was before she was defeated at the polls.

This is causing province-wide distress

Before you have a heart attack over all this, let’s look at the back of the hydro bill where the explanation of charges is found.

The first is for electricity. It is the cost of power supplied to us and is subject to competition. Well, what does this mean to we power consumers? The province has made deals with a number of corporations to develop sustainable energy sources that range from windmill farms to hydroelectric generators to nuclear power to solar power arrays.

Many of these privately-owned generation operations have been awarded 20-year contracts guaranteeing a KW rate that exceeds what the Ontario Power Generating Corporation (OPGC) charges municipal untilities. That’s why we receive this “Clean Energy Benefit.” If the OPGC charged what they pay those mostly privater clean energy suppliers, our power bills would be through the roof.

How does the Wynne government expect to attract business and manufacturing to Ontario with these sky-hight electricity costs?

If you can’t use it, give it away

There’s another problem. Ontario is awash with power with all these private deals it has made. You cannot store power so the province sells its surplus power to U.S. jurisdictions at less than cost. But we are still paying for it.

So consumers are left holding the bag. Just think about the decision to charge the HST for electricity, an essential service that we, in this northern hemisphere, cannot exist without.

And now the province has started to sell off Hydro One, the vital backbone of power distribution throughout Ontario. It’s like taking pennies off a dead man’s eyes. The Wynne government is going sell 60 per cent of Hydro One to private investors because they are desperate for money. The net will be less than $6 billion and will be gone in a flash to be spent on more Liberal programs including funding the new Ontario Pension Plan.

It is possible that Guelph Hydro will be sold within the next 24 months. That has the potential to be a $150 million bonanza that was planned by the former mayor when she created the off-balance sheet, Guelph Municipal Holdings Corporation. This corporation now has more than 125 employees and lost $2.8 million last year. It did manage to send a dividend of $1.5 million to the city as a dividend. That money came from the Guelph Hydro treasury. To me, this is an illegal tax on electricty.

The use of electricity was never meant to be a cash cow for the government

Next, let’s look at the regulatory fees ($18), delivery (143.40), and debt reduction ($21.02). Using our bill, it adds up to $182,42 or 57.79% of the actual cost of the electricity, ($315.64).

The final charge is for the 13 per cent HST that taxes all the above-mentioned costs on your bill.

And what do we get in return? The 10% Ontario Clean Energy Benefit that doesn’t even cover the HST charge.

These billing period increases are the price we pay for a life sustaining basic necessity. In the same bill your water charges are included but there is no HST charged for that life sustaining necessity.

Now Hydro is moving to monthly billing and the water bill will be split off and billed separately.

The government’s management of these essential services has been appalling. No wonder Ontario has the highest electricity prices in North America.

Feel free to comment on this guelphspeaks article. Make your opinion known.

 

 

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How the 2016 budget public input meeting became a night at the opera

By Gerry Barker

Posted December 2, 2015

It’s easy to understand the dilemma the city staff and council face each budget year. There is a multitude of special interests ranging from the sublime to the ridiculous.

Witnessing a fiery and forceful lecture from the president of the Guelph and District Labour Council, demanding more services, more jobs paying union rates and higher taxes and user fees, became a throwback to the days of the dirty 30’s. Janice Folk-Dawson told a questioning councillor that she doesn’t mind a 5 per cent property tax increase for 2016 so long as council approved her organization’s demand to continue Labour’s vision of entitlements.

In contrast, Pat Fung, a Chartered Accountant and Chartered Public Accountant, presented a thorough and documented presentation that showed that Guelph’s capital and operating costs were 50 per cent higher than either Cambridge or Kitchener. Mr. Fung analyzed the city’s own BMA consultant’s report on operations along with the Financial Information Reports filed annually as mandated by the province.

This basis formed his detailed presentation that the city was paying too much for services and capital expenditures compared to its two neighbour municipalities. His findings are indisputable evidence that the city is facing a major financial crisis unless it reduces spending.

Here are some excerpts from his report:

Quote from the city website:

“The 2016 budget challenged the City to find additional efficiencies in an already lean organization. By critically reviewing each line item, departments were able to reduce their individual asks (requests) to support the overall 1.58 per cent increase,” says Janice Sheehy, city treasurer. “The recommended budget meets the community’s and City’s needs for 2016 while remaining affordable; however, with such a low tax increase we were not able to account for all increased demands placed on the organization from growth.”

* Mr. Fung’s reply: I do not understand how the city can say the organization is already lean when the BMA Report clearly shows our servicing costs per capita are higher than average. Indeed the 2015 operating and capital budgets on a per person basis are 50% greater than our neighbours Kitchener and Cambridge.

Pat Fung responds: I find it unacceptable that the Office of the CAO would submit a budget that shows a 1.58% tax increase by using cuts in transit service to arrive at that number when the Office of the CAO knows full well that transit services are a lightning rod and reductions here will likely not happen. Then the real increase in taxes will be somewhere more than 2.3% when expansion costs and final adjustments are added into the final property tax rate. That resulting figure will be adjusted when the revised assessment figures are added on.

* 2015 budget capital and operating per person based:

City 2015 Operating and Capital budget combined % different than Guelph
Guelph $3,859  
Kitchener $2,588 49%
Cambridge $2,525 53%

Difference from average: $1,300 X population 120,000 = $156 million.

*   There are staff recommended expansions for roads including 6 fulltime equivalent employees (FTE) and a contract costing a total of $902,000.

* Roads Cost per kilometre per BMA report:

Guelph $27,617
Average $11,847
Median $12,151

Road Cost per person per BMA report

Guelph $244
Average $99
Median $67

* There is a recommended expansion for parks including adding two Trails Technicians for $216,400 and other items costing a total of $521,000:

Parks cost per person per the BMA report:

Guelph $77
Average $59
Median $55

Difference from average: $18 X 120,000 = $2,160,000

  •  Waste management costs:

* With reference to the recent internal audit report on waste collection, there appears to be some difference between the internal audit report and the BMA report. The audit report says collection is “being conducted effectively and efficiently”.   Per the BMA report the costs per tonne and per capita are outlined below:

  Cost per tonne Cost per capita
Guelph $137 $29
Average $114 $10
Median $90 $9

Difference from average per capita: $19 X 120,000 = $2,280,000

* Fire cost per person per the BMA report:

Guelph $185
Average $165
Median $162

Difference from average: $20 X 120,000 = $2,400,000

Fire costs are yet another example of our City spending more than others. The Office of the CAO must drive spending down, not tax the citizens of Guelph for its excessive spending. When it comes to negotiating wages, people are always comparing wages to other fire departments. How about comparing fire costs to other cities to determine the budget.

  •  The Open government Action Plan:

There is a recommended expansion for the Open Government Action Plan costing $264,200 and 1 FTE. The governance costs per person are outlined below per the BMA Report:

Guelph $229
Average $104
Median $86
Cambridge $29
Kitchener $21

Difference from average: $125 X 120,000 = $15,000,000 or $24,000,000 compared with Cambridge. All proposed expansions could be funded from this area alone if it were at the Ontario average. Why is there a need for this position? What are the benefits?

Curiously, the Fung presentation was never mentioned in the Mercury report of the meeting.

The facts are there, so why doesn’t the staff do something about it?

These examples are factual and clearly demonstrate the need for restraint on the part of the administration. This does not seem forthcoming.

Just taking the cost of Guelph’s Operating and Capital costs for 2015, why does it amount to $156,000,000 more compared to either Cambridge or Kitchener? That’s the key question council and staff must consider before they tack on another inflated increase to property taxes and user fees.

When the staff budgeted is 1.58 per cent and then the recommended expansion of another 1.25 per cent we are at 2.83 per cent. This is before public and council reviews and adjusts the final figure. The gorilla in the process is the staff recommendation to increase transit fares and decrease weekend service. The betting is council will shy away from that proposal that will boost the final figure to more than 3.5 per cent.

Guelph Transit appears to be in dysfunctional distress, functioning under a system that is geared to routes with high traffic, i.e. the Gordon Street university corridor and a central hub system for all routes. When the low weekend ridership figures are considered, it makes it difficult for management to justify the cost. Chiefly because it’s bound by the labour contract with the American Transit Union including premium overtime. It’s no wonder the Transit spokespersons at the public meeting were so adamant about extending weekend service.

The large transit delegation indicated that the city staff used the threat of lowering weekend service, and increasing fares, to set up higher taxes when the transit cutback proposals will be dropped by a sympathetic majority of council.

To me, it seems that city taxpayers are already subsidizing the service by some $15 million a year, most of whom have never ridden the bus.

Perhaps renegotiating the University transit pass cost and offering incentives to the disabled and seniors may result in making the service less contentious and more accessible. Increasing the city subsidy, as an investment in better service, would indicate there is commitment to transporting those folks without vehicles, enduring poverty, who have disabilities and seniors.

When you think about it, Guelph has a seasonal transit system geared to serving the 20,000 students eight months of the year who pay a mandatory $150 for two semesters and receive an open-ended transit pass. That contributes $3 million to Guelph Transit.

Guelph’s BMA cost of roads is shocking. The only conclusion is part of the cost has to be attributed to the aggressive former council’s creation of additional bike lanes. Also, contributing is re-striping and reducing major road vehicle lanes to accommodate bike lane expansion. The program has caused increasing traffic congestion because of lane reductions on many major roads.

Driving around Kitchener and Cambridge there are few dedicated lanes for cyclists. Now the Guelph city staff is recommending that we spend $670,800 to clear bike lanes in winter. It’s time to put the brakes on the entire bicycle lane program until costs are brought into line.

Many Guelph roads and streets are in dreadful condition. Why the decision was made to widen and install bike lanes, curbs, sewers and sidewalks on Stone Road east of the entrance to the Arboretum remains a costly planning and engineering decision. The fact that the University owns the lands on either side of the new four-lane road and there is zero development of any kind makes one wonder where the priorities were.

It’s apparent that the eight years of the Farbridge administration has severely impacted on the city budgets as the Fung report details.

The numbers don’t lie so all members of council must realize the seriousness of the city’s financial structure. They, and staff senior management, must recognize why the high costs of operations and capital spending are much greater, per capita, than Cambridge or Kitchener.

When you make an omelet, you have to break a few eggs. That time has arrived.

Will you have cheese with that?

 

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Is the police headquarters project the new Urbacon?

By Gerry Barker

December 1, 1915

It does not surprise anyone that when the Farbridge council approved spending $34.1 million in August 2014 to renovate Guelph Police Headquarters, that it would actually cost more.

This week it was announced that the completion date has been moved to the winter or fall of 2018, a year later than planned. So the Guelph Police Services Board, (GPSB) overseeing this major project, received this information last September but waited two months to announce the delays.

Apparently, last year the board expressed concerns about exceeding the approved amount of $34.1 million and the consultant, KPMG, warned the overruns could exceed $5 million.

On December 9, the bids for completing the work must be tendered, four months later than originally planned.

The cause of this delay has been the redesigning of the original plans that were described by Deputy Chief Paul Martin as being “conceptual.”

So the plans that were chiefly sold to council by former Police Chief Bryan Larkin were “conceptual.” What was the basis of this concept? The GPSB hired consultants KPMG to develop a plan so that council would see how and where the money they were being asked to approve, was going.

In polite circles that might be described as being stupid and careless with the people’s money. And now it has taken a year to redesign the place.

This deception can be likened to General Motors announcing the retail price of a new concept car before the actual engineering and development costs are determined.

The question is who is in charge of this project? Is it the city planning and building staff? After all, the money is coming from the city. Or was it the GPSB and its officials? Whatever, the experience delivered by a superior court judge in the Urbacon lawsuit gives ample advice on controlling the project or failing to do so.

Is this project like the new city hall that managed to go over the original contract price by more that 50 per cent? The former mayor and Coun. Leanne Piper, the city representatives on the GPSB, were responsible for convincing council to underwrite the police headquarters renovation.

It now appears that the public was duped into believing that the price was right. As it turned out, most people were not fooled and defeated or forced out the mayor and a number of her council supporters.

But Piper was re-elected and is silent on her role in lowballing the anticipated real cost of the police headquarters renovation. Now it is revealed that the completion date has been moved up by a year.

Does this not have a familiar ring to it? Weren’t there more than 300 change orders issued during the new city hall construction that delayed completion? We now know that the general contractor was fired and it cost the city an additional $23 million because it lost the resulting lawsuit.

Because of a year of tinkering with the “conceptual plan” one has to wonder who has been paying for all this redesign work for the 13 months? Is it part of the original $34.1 million?

Because of the delay in requesting bids, that old devil inflation affects what the best-laid plans of Farbridge, Piper and Larkin who concocted to convince council to approve the project.

The consultant, whose warning that the project would cost $5 million more than the approved figure, was not revealed until this week. Right now, with the yearlong delay, the bids are going to surprise a lot of people. Would you believe more than $40 million?

In view of Guelph’s dreadful reputation of dealing with major construction projects, the bidders will build in a lot of insurance to protect their interests to avoid the shabby treatment the Urbacon Buildings Group Corp was forced to go through.

If she has any respect for the public’s interests, Leanne Piper should resign her position representing the city on the police board, and consider redemption for her role in the police headquarters project, the Urbacon affair and the Guelph Civic Museum cost overruns.

It’s the right thing to do.

What is the cost to citizens? The new City Hall, $23 million more than the contract price, Civic Museum, $4 million more than the contract price. The actual costs of the Police Headquarters renovation has yet to be determined and we won’t know until 2018, an election year.

 

 

 

 

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