Who were the enablers and what did they do to lose $26 million?

By Gerry Barker

May 22, 2016

It isn’t too difficult to figure out now that the former Farbridge administration, on its misguided zeal to impose a radical and expensive underground energy system, was enabled by an assortment of civic staff and elected officials.

Official written statements released by the Chief Administrative Officer, Ann Pappert, and co-signed by Pankaj Sardana, Chief Financial Officer and Chief Executive Officer of Guelph Municipal Holdings Inc (GMHI); Chief Executive Officer of Guelph Hydro Electric Services Inc. (GHESI) and Envida Corporation.

Their statement included the following admissions. There is $17,937,244 in “tax losses” being carried on the books of GMHI. If you do your own income taxes you know that a tax loss is generated only by a real loss. It can only be used to offset capital gains. Thinking about this, don’t hold your breath.

Then the two district energy pumps and equipment cost another $8.7 million. The total loss is $26,631,224. It was revealed that some $3 million reduced the cost of the two district energy units. Where did that money come from? And the cost of those pumps was some $12 million, not $8.7 million as the Mayor stated.

Folks, the CAO told council that district energy is still in play. How can that be? The Godmother of GMHI must know that the company has no money and has consistently lost money for five years. Is the CAO expecting a financial resurrection of a dead dream of the former mayor, her friend and mentor?

A day of reckoning is reaching warp speed

During the presentation by Mr. Sardana to the members of council who represent the citizens as shareholders of GMHI, he was frank. Essentially, the concept of the Community Energy Initiative (CEI) and the two district energy units was poorly planned and executed.

Asked about what analysis was done before the plan was launched; the CEO replied, “If we now had done it again, we would never have embarked on it.” Mr. Sardana replied. He was not involved with the original planning of the CEI and the two district generating units.

His knowledge and expertise paints a picture of careless planning, sloppy execution, record keeping, and lack of oversight. Most of the execution of the plan was done in secret and off the city books. You didn’t have to read between the lines to understand how this happened over such a long time.

I contend that there were enablers that force-fed this now discredited and costly exercise down the public’s throats.

The path leading to a failed initiative was enabled by a segment of councillors and staff who were bound by secrecy.

Let’s take the present city council. Three members of the Bloc of Seven were supporters of the CEI along with the former mayor, Karl Wettstein, Leanne Piper and June Hofland. They not only knew what was happening but also as members of the GMHI board, enabled the process. For example; they had to know about the millions in so-called dividends paid to the city by GMHI. Did they not realize that those dividends came from borrowed money from GHESI and its start-up donation of more than $20 million paid to Envida Inc?

Did these three councillors deliberately neglect their fiduciary responsibility to their constituents? Of course they did, in the name of misguided political expediency.

The other four members of the present council’s Bloc of Seven, were all rookies including James Gordon, Phil Allt, Mike Salisbury and Cathy Downer; the last two had previous experience on council. They were not involved in this debacle that started in 2011. Also newcomers Dan Gibson, Mark MacKinnon and Christine Billings were not aware of the GMHI financial disaster. None of these councillors were involved when GMHI was started up in 2011.

But, the members of the Bloc of Seven, all supporters of the policies of the former mayor, are now caught between the rock and a hard place … support or shut up?

It remains that one of the chief enablers of this operation is CAO Ann Pappert. She had to oversee the operation as the first CEO of the city-owned GMHI. It’s her job to track the money and ensure that it is properly budgeted and accounted.

Another major enabler was the former Chief Financial Officer, Al Horsman. he was there when the CEI went south in terms of financial disaster, He was shifted in November 2014 when the suffen reorganization of the senior staff management occurred in the final days of the Farbridge administration. He took over environmental services including waste management, planning and engineering. It is now obvious he realized that finances were in disarray due to the Urbacon fiasco and the raiding of reserves to pay for the lawsuit settlement. He had to also know what was gong on over at GMHI.

Mr. Horsman left in August 2015 to take over as CAO in Sault Ste Marie.

The enabler superstructure began to crumble

After Horsman’s transfer, Deputy Chief Administrative Officer, Mark Amorosi, took the city financial department under his Corporate Services responsibilities. Since November 2014, the City of Guelph has not employed a qualified Chief Financial Officer. Since then, two general managers of finance, hired by Amorosi, left the city.

The last one, Janice Sheehy, also figured out what was happening under Amorosi’s leadership. She left last March after a year on the job. The Region of Peel hired her.

It is easy to understand that Amorosi was in on the failed GMHI experiment and enabled it to continue losing money for five years. He was a Farbridge loyalist who supported her CEI baby, no matter what the cost, as it now turns out.

Then there were the minor league enablers who were believers in energy sustainability, reduction of the use of fossil fuels and pedaling your way around the city on your bicycle.

Their beliefs have some foundation. The problem on this case, is blind ambition, which is not matched by the ability to pay for it. Under the eight-year leadership of Ms. Farbridge, it’s the reason why Guelph’s property taxes and electricity rates are among the highest in the country.

The operating and capital costs of Kitchener and Cambridge are 50 per cent less than Guelph. That difference comes out of every Guelph citizen’s pocket either through property taxes, user fees e.g., excessive charges for electricity, water, and storm drainage, even parking on major streets.

Now, the staff is proposing a ten-year special levy to finance acutely needed renovation of the city’s aging infrastructure. They propose, to place a surcharge on property owners of two per cent, in addition to the regular tax liability each year, starting in 2017 … if council dares to approve it..

With losing millions in mismanagement, the property tax levels have reached the breaking point. There is no evidence that the present CAO-led management team is unwilling to reduce operating and capital costs. The costs of operating the city are way out of line with a bloated staff that is demoralized and in some cases inefficient.

Only a change of staff leadership will bring true reform. Its byproduct will reduce the suffocating multitude of tax burdens prevailing on the citizens. There is a dire need to conduct an independent review of the governance rules installed by the previous administration. These rules are stifling the work of council including accountability to the taxpayers.

The staff management people that floated this tax levy plan are the same bunch who enabled the failed CEI debacle.

As for Karen Farbridge, she knew full well that her grandiose CEI would stall the needed work to fix the city’s proven infrastructure shortfall. That wasn’t glamourous enough for her ego and legacy.

But her legacy remains in tatters and is still being propped up by seven members of council who disregard their sworn duty to the people who elected them.

Karen would be proud.

As a public service, GS is listing the members of council and their contact points including their city-supplied phones, fixed and cell, email address and fax number. The more people contacting their representative the more they will become awarw of your concerns about mismanagement and financial losses sustained in the past five years..

Between Urbacon and CEI, those loseses are more than $49 million.

email                                    Office                   Cell            Fax

Mayor Cam Guthrie mayor@guelph.ca 519-837-5643 519-822-8277
Ward 1
Councillor Dan Gibson dan.gibson@guelph.ca 519-822-1260 x 2502 519-827-6407 519-822-8277
Councillor Bob Bell bob.bell@guelph.ca 519-803-5543 519-803-5543 519-822-6152
Ward 2
Councillor Andy Van Hellemond andy.vanhellemond@guelph.ca 519-822-1260 x 2503 226-820-5073 519-822-8277
Councillor James Gordon james.gordon@guelph.ca 519-822-1260 x 2504 519-827-6481 519-822-8277
Ward 3
Councillor Phil Allt phil.allt@guelph.ca 519-822-1260 x 2510 519-827-6579 519-822-8277
Councillor June Hofland june.hofland@guelph.ca 519-822-1260 x 2505 519-822-8277
Ward 4
Councillor Christine Billings christine.billings@guelph.ca 519-826-0567 519-822-8277
Councillor Mike Salisbury mike.salisbury@guelph.ca 519-822-1260 x 2512 519-827-7398 519-822-8277
Ward 5
Councillor Leanne Piper leanne.piper@guelph.ca 519-822-1260 x 2295 519-835-1136 519-822-8277
Councillor Cathy Downer cathy.downer@guelph.ca 519-822-1260 x 2294 519-827-8390 519-822-8277
Ward 6
Councillor Mark MacKinnon mark.mackinnon@guelph.ca 519-822-1260 x 2296 519-829-6285 519-822-8277
Councillor Karl Wettstein karl.wettstein@guelph.ca 519-763-5105 519-822-8277
 
 
 
 
 

 

 

 

 

 

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15 Comments

Filed under Between the Lines

15 responses to “Who were the enablers and what did they do to lose $26 million?

  1. Joe Black

    Bet ya they have nice sports cars?
    What do you expect look at Vic and Clair road new traffic light they’re erecting 4weeks still no light ,look at Elizabeth st second summer under construction other districts the road would take a half summer.

  2. Louis

    I blame the left wing councilors, they are like Farbridge can’t manage money or a good financial plan

  3. Andre

    This is ridiculous. $49M and we could have had the downtown new library or the south end rec centre. How does Amorosi, Sardana or Pappert get to keep their jobs? Surely this must be grounds for termination with cause. As for the Councillors – Piper and Wettstein have continuously publically supported how great these projects are and look at them now and what waste these councillors placed on future generations. I can’t wait until those councillors come knocking on the door for votes.. we will remember.

  4. Capricorn

    Piper, Wettstein and the rest of the seven will continue to support this and will downplay the problem. They choose the narrative that says money needs to be spent on climate change and benefits will not be seen right away, so the losses won’t matter. They will not acknowledge the fact that no one wants to sign up for this , and, because it was built too big, it will never survive. They pushed for something they shouldn’t have and , in so doing, ruined the chance of the city actually having a district energy project that does work. Unless there’s public pressure, these things will continue to happen. They have a strong support group in the community and, unless the message gets out to the rest of the public, who would be angry if they were aware of the secretive waste, nothing will change.

    • Capricorn: The underlying problem with the adherents of the so-called progressive faction in the city is to explain how in eight years in office they managed to rarely met a deadline for a project and it never came in on budget.

      Here is some examples picked from the GS archives: * The Civic Museum was some $5 million over budget and two years past completion date.
      * The floor in the Farmer’s Market that exceeding estimates by $140,000 and officials refused to permit any cooking apparatus in the building without ventilation.
      * Building a $34 million composting facility that was six times the needs of the city wet waste production. To this day the operation is shrouded in secrecy as to operating costs and ongoing contractual arrangements with the builder of the plant, Maple Reinders.
      * Rebuilding Wyndham Street under the CNR main line bridge under which large commercial vehicles were unable to use without hitting the bridge.
      * Building a new city hall and converting the old one into a provincial court resulted in a $23 million cost overrun.
      * Spending an estimated $5 million on major roads in the core of the city on bicycle lanes resulting in increased traffic congestion.
      * Spending some $26,631,244 on the failed Community Energy Initiative without public consultation.
      * Spending $34 million of renovating the downtown police headquarters despite the original police services request was only $13 million.
      * Among these expenses costs are the millions spent in consultant fees and legal costs spent in the past eight years.
      * The greatest expense of all is the cost of the city staff that consumes 80 per cent of the property taxes levied.

      If you ever want to know where a ton of your money went, these were some of the reasons there was no new downtown library, reconstruction of the Baker Street parking lot, the south end recreation centre and reconstruction of Gordon Street choke point between Wellington and Stone Road

  5. Rena

    What I find even more amazing is that the Ministry turned down a request of an audit that Grass Roots Guelph lobbied for on behalf of the residents.
    Interesting how things come back to haunt us. If this does not motivate public outrage I don’t know what will. Ann Pappert should bow her head in shame and slink out of Guelph.

    • Rena: Apparently Ms Pappert has hired a lawyer to represent her interests. My info is her lawyer will only talk to city lawyers.This is either an exit negotiation or more tax money going down the drain. Reminds me of a favourite tune:”What’s new? How is the world treating You?”

  6. Laura

    According to the December 31 2013 GHC report envidia went from a profit of .6 million in 2012. to a loss of 2.5 million in 2013. on page 29 there is mention of a November 2013 lawsuit filed for $2 + 1 million against the GMH. I wonder if that has been settled yet? Also in 2013 they received “an investment grade A credit rating”.all their annual reports on line if you do a goggle search. The report mentions that dividends were paid yo the city of 3 million in 2012 and 1.5 million in 2013.

    • Laura: Thanks for your comments. The 2014 GMHI annual report said it sent a dividend of $1.5 million to the city and it totaled $9 million since 2011. It also stated that GMHI last $2.8 million that year. Coupled with that bogus investment grade credit rating in 2013, it is plain to see the books were cooked. The current CFO/CEO of GMHI told the shareholders (city council) that the losses totaled more than $26,237,244, composed of $8.7 million for the district energy pumps and $17,937,244 in “tax losses. This mess can only be unraveled by an independent forensic audit. There is an audit being conducted but we have not been informed who is doing it. It will be presented to the shareholders at an open meeting June 13, according to the latest information. Perhaps then the truth will be known.

  7. Laura

    The electric generating plant at the east view landfill site never managed to collect enough landfill gases to meet the OPA contract or pay for the plant itself. It is my understanding that one of the 2 generators had been shut down now. ? Another loss of revenue for the GMHI

  8. Tony

    If I was her I would hire a lawyer as well. This onion has a lot of layers left to peel and a lot of tears left to shed.
    Everything was done with the mayor and councils support i’m guessing will be the standard reply.

    Just a side note; a former councilor wrote in the tribune attacking the mayor for wanting to kill this. I am guessing this former councilor had no clue what was going on, didn’t care or was so blinded by their ideology that the rest of us could go fly a kite(to put it kindly).

    This is what happens when government wants to get into the private sector. It’s bad news for the taxpayer.
    If this was such a great idea and great thing for the community then why was it hidden behind all these closed doors?
    So many acronyms (companies?) to try and remember and figure out which did what. The money must have been flowing back and forth on a daily bases. It probably moved so many times NO ONE could keep track of where it was going and what it was going for.

    • bostoncollie

      The Gang of Seven are busy foisting another acronym upon us, GEERS. Appearing to have not learned any lessons from the past, they vote to proceed without a trial period, and a year earlier. Can a City that is broke, in a Province that is broke, be financing home renovations over 20 years? Isn’t that what banks are for?

    • bostoncollie: I guess it’s another case of giving us the gears.

  9. DAVID BIRTWISTLE

    Tony:Further to your last sentence you might add “…nor couldn’t care less!…”Property taxes should be out this week or next-bet you can’t wait:-(

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