By Gerry Barker
August 1, 2016
This week Deputy Chief Administrative Officer (DCAO), Mark Amorosi, announced the appointment of Tara Baker as Chief Financial Officer of the administration. Under the management of the city’s finances, Mark Amorosi has overseen the most cathartic waste of public funds endured in recent memory.
So, in making the announcement of Ms. Baker he proclaims: “I have great confidence that she will provide strong leadership and continue to strengthen the city’s solid financial foundation.”
Ms. Baker is currently on maternity leave and is expected to return next year. Amorosi decides to promote a junior in the finance department so why did he hire a headhunting firm? He doesn’t say exactly when Ms. Baker will be taking over so that gives him more time to manage the city’s finances.
He’s being moderately sarcastic with the last part of that statement about the city’s “solid financial foundation.” That’s Amorosi code for the citizen-guaranteed taxes and user fees is the the ATM machine that never quits. It’s something right out of Mad Magazine — “What, Me worry?” – Alfred E. Neumann
This is not Amorosi’s first rodeo. He’s been in charge of the city finances for 20 months. During that time he was the key player in the great Salary-Gate episode that saw the former CAO, Ann Pappert, receive a $38,000 increase for 2015 and Amorosi and Thomson plus former CFO Al Horsman receiving 12 to 19 per cent increases.
Talk about helping yourself and not telling anyone.
And they never told anyone until the Ontario Sunshine list let the cat out of the bag last March when it identified every public employee earning more than $100,000. At least Ann Pappert had the courage to resign, why won’t Mark Amorosi?
Who can forget the Community Energy fiasco perpetrated by Guelph Municipal Holdings Inc. (GMHI) in partnership with Guelph Hydro costing an estimated $37.1 million? Deloitte, the city’s hired consultants, agreed with the staff report that only an investment of $60 million can make the two District Energy Nodes profitable. When asked about their fee, Deloittle said it will cost between $130,000 and $160,000.
Did we really need to pay that money when the staff, in detail, reported the financial situation with GMHI and where the money went? It was classic Amorosi to order an independent consultant in to review the situation. For the $210,000 a year we are paying Amorosi we should, in this case, expect a staff report to suffice in explaining the debacle to the citizens. No. it’s called protecting your behind by using a paid third party to do the deed.
Capital plan is underfunded by $170 million
Even his boss, Chief Administrative Officer, Derrick Thomson, says there is no money to carry out the nine-year capital-spending plan that is currently underfunded by $170 million.
We know that Amorosi hired a headhunting firm to seek a CFO. So why was a financial analyst in the city finance department chosen to be General Manager Finance, CFO and Treasurer? Why was it necessary to hire consultants to make that decision?
The city finance department has experienced a revolving door of financial managerial staff since the senior staff reorganization that occurred within a few weeks of the civic election on October 2014. Ms. Baker is number three.
Al Horsman was shifted from finance to replace the retired Janet Laird to waste management and environmental services. But he left last August for a new job in Sault Ste Marie. Amorosi got his hands on finance in November 2014.
This past two years has been a nightmare to residents. First, there was the Urbacon ruling that resulted in CAO Ann Pappert revealing that the new city hall project cost $23 million more than the original $42 million contract. Then it was revealed that the maze of some 97 dedicated reserve funds had been tapped too often because of failure of city management to balance the books as required by provincial law. Instead, the management consistently over-spent their own budgets and used money from the various reserve funds to balance the city books.
Auditor warned about using reserve funds to balance the books in 2011
They administration was warned in 2011 by the city audit firm Deloitte and Touche, that using the reserves to balance the books was a bad practice. That did not stop the practice.
Since the civic election, property taxes have increased by 7.41 per cent; water bills increase 4.11 per cent; and electricity bills by 15 per cent. That doesn’t count the increases in user fees.
Nor is the unusual financing of renovating the downtown police headquarters. The Farbridge council passed a budget of $34.1 million in August 2014. It was financed by $14.8 million of borrowed money; $3 million from a police capital reserve fund and $16.3 million to be repaid by future development fees to be diverted to pay for this police project.
Talk about a small down payment! It will take years to pay for this and the risk is high depending on development fees that have yet to appear.
The interest on the $14.8 million is calculated at 2 per cent over five years and is estimated to be $29,600 a year, not including reduction of principal. What happens when interest rates increase? The lender gets the chance to boost the interest rate. We are not talking about tomorrow or the day after, we’re talking probably 10 years to pay off that loan.
Karen Farbridge and former Police Chief Bryan Larkin convinced the council and the Guelph Police Services Board (GPSB) that this renovation was badly needed. Yes, again their figure was supported by a study conducted by KPMG, Why, did the GPSB, eight months before August 2014, state that $13 million would be needed to renovate the headquarters building?
Along comes the Community Energy Initiative that stunned the public
This became a legacy issue for both Larkin, who resigned in July 2014 and the former mayor. There was a little help from Coun. Leanne Piper who supported the proposal both at GPSB and city council.
It was the last major Farbridge spending before losing the election. But there is more. Not quite, as it has now been revealed. For almost five years, the former mayor had personally chaired an off-the-books corporation called Guelph Municipal Holdings Inc. The plan was to create and execute a Community Energy Initiative that featured District Energy Nodes downtown and at the Hanlon Creek Business Park.
These Nodes consisted of pumps fired by natural gas that were hooked up to a grid of thermal underground piping that delivered hot and cold water to buildings nearby. The Nodes were also supposed to deliver power to the Hydro grid bit that requires more investment.
All this planning and execution was done behind closed doors. There was no public participation, no environmental assessment or a business plan. That’s where Guelph Hydro came in as the former mayor’s board amalgamated the Hydro operations that the city owned through GMHI.
Today, GMHI has no financial capacity. The Guelph Hydro subsidiary, Envida Community Energy Corporation, also has no money and owes GMHI $11 million.
The bottom line resulted in a $37.1 million loss
Bottom line: It has cost $37.1 million so far and there is no money available to finance keeping the system going. So when DCAO Mark Amorosi says the city finances are on a solid foundation, maybe he should turn over the books. Turn them over to someone who is experienced and independent and preferably not with child, to straighten out the financial mess that has been created under his watch.
Finally, Coun. Karl Wettstein has again distinguished himself by stating that the in future, the investment in the Community Energy Initiative should be on a “firmer basis and be predicated on a strong business case.”
Gee! Why didn’t he consider that when he sat on the GMHI board for five years and witness it descend into financial chaos?
This foolish comment is coming from a man who received a stipend for sitting on the Board of GMHI and never said a word about it. He cloaked himself in the Farbridge procedural rule that nothing may be revealed to the public that is discussed in a closed-session.
He betrayed the trust of the people who elected him, the public at large and his own conscience, if he has one.
Karl, you should resign. But that would take guts, right?
As for Mark Amorosi, it’s time to move on