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
|Councillor||Dan||Gibsonemail@example.com||519-822-1260 x 2502||519-827-6407||519-822-8277|
|Councillor||Andy||Van Hellemondfirstname.lastname@example.org||519-822-1260 x 2503||226-820-5073||519-822-8277|
|Councillor||James||Gordonemail@example.com||519-822-1260 x 2504||519-827-6481||519-822-8277|
|Councillor||Phil||Alltfirstname.lastname@example.org||519-822-1260 x 2510||519-827-6579||519-822-8277|
|Councillor||June||Hoflandemail@example.com||519-822-1260 x 2505||519-822-8277|
|Councillor||Mike||Salisburyfirstname.lastname@example.org||519-822-1260 x 2512||519-827-7398||519-822-8277|
|Councillor||Leanne||Piperemail@example.com||519-822-1260 x 2295||519-835-1136||519-822-8277|
|Councillor||Cathy||Downerfirstname.lastname@example.org||519-822-1260 x 2294||519-827-8390||519-822-8277|
|Councillor||Mark||MacKinnonemail@example.com||519-822-1260 x 2296||519-829-6285||519-822-8277|