It’s time to close Mark Amorosi’s city cheque book

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

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12 Comments

Filed under Between the Lines

12 responses to “It’s time to close Mark Amorosi’s city cheque book

  1. John Valean Baily

    Alfred E. Neumann. !

    John Valean (Val) Baily FBA Member Sent from my iPhone (416)619-0230, &, (519)546-2902

    >

  2. Rena

    Once again we are being let down by the people we have put our trust and money in. When will this ever stop?

  3. Tony

    I’ve followed this guy for a number of years. Watching him on tv and reading what he has to say in the papers. I think I’ve commented on him a number of times on this blog.
    He always has an reason/excuse for everything that has been done under his watch. Overtime, budgets, raises, …………….(note there are lots of dots)
    I do wish he would move on or be moved on. I think he is a lightning rod from the last administration and all that was wrong with it. He need not worry. I’m sure. there are people at city hall past and present that will give him glowing letters of recommendations. Some other city would love to have him.

  4. Glen

    Gerry: your “wretched ink stained” scratching, above, once again raise questions begging to be answered by members of council and the administration. Perhaps the new CFO was chosen (by someone who has no professional accounting designation) from an “insider” position to keep from having a critical outside newcomer who might ask some basic budget and reporting questions. After all, with a transparency flak on city staff, why should any more information as to the dire financial straits of the city be made public?
    The $37 million (so far) Community Energy Initiative / District Energy boondoggle that took place as some past & present members of council (whose names appear on GMHI documents) sat on the GMHI board whilst the fiasco of flushing taxpayers hard earned dollars down the crapper was unfolding raises some questions about those people. How can they look at themselves in the mirror in the morning as they brush their teeth (or put in their dentures)? They should all be ashamed of their actions and those still on council should should do the decent thing and resign immediately. Mind you, if they had any clues about decency, they wouldn’t have let the waste of funds take place.
    Why are these perpetrators being supported by fellow bloc of 7 councillors who seem to feel holding anyone responsible is a witch hunt? Lack of back bone is endemic with them!

  5. Rena

    Glen please let me know when you get your letter from Cam threatening you with legal action as you have now disparaged a City employee.

  6. fairpensions09

    These annual salaries suck but the pensions based on 70 % of those salaries are paid forever. Ead Top 10 at city will take home over $40 M in lifetime pension

    http://m.guelphmercury.com/news-story/2746374-guelph-residents-warned-to-watch-pension-costs-of-its-city-employees

    Always read your newsletters

    Thanks

  7. Laura

    Why on earth would Amorosi leave or be pushed out now? Mayor Guthrie moved quickly to replace Ann Pappert with Derrick Thompson, who is best buds with Mark Amorosi. He won’t fire him or make him do anything different. Derrick Thompdon then moved quickly to replace his old position with Colleen Clack. Absolutely no new blood was even considered for either $200k+ salaried position. everyone in my townhouse complex is convinced Mayor Guthrie is in cahoots with this in-breeding as he too has something to hide – giving the Storm $5million and hiringing Derrick Thompson are two of his decisions – Ann Pappert nor Karen Farbridge had anything to do with these. And this isn’t a good omen from Guthrie’s legacy because it continues the same wreckless pattern of wasting our money.

  8. Capricorn

    Laura, I share your concerns about no new blood on staff. I don’t know if the mayor is totally responsible for the choices….if I’m not mistaken, council must vote on the CAO position and there’s no way of knowing which way the mayor voted.The others are hired by their superiors, not council. Hopefully, someone will correct me if I’m wrong. If the group of seven councilors want to keep their support, they would have voted some of the choices you mention. The Mayor has no choice but to publicly support the choices, even if he’s not in favour.

    • Kristi

      From the various news articles on the topic the mayor was the one behind hiring internally and he wanted to move quickly. Don’t forget Mr. Thompson was leaving to go to his hometown of Caledon, so this happened pretty fast and according to the city’s website there was no council meeting until later when it was ratified in the back room. There were was no formal decision by council to strike a hiring committee or a recruitment process like Farbridge did when Ann Pappert was hired – which was something Leanne Piper and Kark Wettstein wanted but didn’t get. There was only a ratification of the offer made to Mr. Thompson. The gang of seven could have stopped it then, but didn’t. I’m not sure why the mayor wanted someone internal, and why he wanted to move quickly, but he now has to be held accountable for this decision and can’t blame the gang of seven.

  9. Steph

    The city hired a heading hunting firm for a senior post for finance only to hire internaly? According to the city’s own press release Mrs. Baker is a chartered accountant and was a manager already in the finance department – so it sounds like it’s a promotion for her. Let’s give her the benefit of the doubt, as time will tell soon enough, but there is a trend here that the city doesn’t want outsiders in senior positions. The mayor did blow his chance by hiring an internal CAO (who was originally hired by Ann Pappert when Farbridge was still mayor). So there must be something the don’t want fresh eyes to point out by keeping positions internal. Speaking of hiring positions – did we ever find out who replaced Colleen Clack’s old position as manager of the Sleeman centre or the senior operations manager that unfortunately died? And who ended up getting the parks and recreation job which was a revolving door when Derrick Thompson was the deputy? Wondering if these positions all went internal as well.

  10. Glen

    While the topic of hiring and head counts is being discussed, does anyone know what happened to the 35 people hired for the 2nd shift to process the Detroit recyclables that was stopped when the $2.6 million+ loss due to a faulty/non-existent business case was exposed? What is the probability that these 35 FTE’s were just absorbed into the unionized city labour pool?
    If so, what budget is paying for them? Just wondering.

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