By Gerry Barker
August 10, 2016
I had the opportunity this past weekend to speak with a seasoned Canadian economist and retired senior banker.
I wanted some independent feedback about the way our city is being managed and why it appears that there is little attempt to seriously curtail runaway operating costs. We have been consumed by a culture that has wasted millions of dollars without measurable success.
The road to recovery lies only with cutting operational costs. The fact that two neighbouring cities, Kitchener and Cambridge, whose operating and capital costs are 50 per cent lower that Guelph’s, points to the need for reduction of those costs.
That includes, reduction of staff and realignment of responsibilities; chopping funding of special interest projects and lobbyists; capping salary and wages and benefits for two years; kill the CEI and District Energy project; reduce operating subsidies to Guelph Transit, the Sleeman Centre and RiverRun theatre; cease the bicycle-lane expansion allocation; resolve to challange the unfair University of Guelph’s property tax deal that pays $75 per student per year. It even fails to reflect the effect of inflation since inauguration in 1987.
After outlining what I saw as a city in a management and financial crisis, I was asked to give a summary of events that have caused expenses to exceed revenues on a sustained basis for nine years.
So here goes:
The Guelph Civic Museum
* The first occurred in 2007 when council voted to spend $12.7 million to renovate a convent that had been written off by the Diocese of Hamilton in 1997. It was located next door to the Church of Our Lady and not on public land. Senior government grants of $6 million were sought and approved. It was five years before the building was reopened. The final cost, according the city, was $16.7 million, $4 million over the original estimated cost. Touted as a tourist attraction, the administration has not revealed the operating costs or attendance figures for five years.
Explosive growth of city employees’ numbers
* Next came that growth of staff from some 1,250 full-time equivalent employees in 2006 to more than 2,100 today. The staff is the greatest expense to the city costing in 2014 more that $159 million. The 2015 Sun Shine List reveals the senior staff is in the top 95 to 99 percentile of salaries paid to employees with similar or the same job in other cities. In fact, Mark Amorosi is listed as the highest paid Deputy Chief Administration Officer (DCAO) in Ontario. The numbers include generous taxable benefits.
The 2015 city financial figures have not been revealed as the Financial Information Report, as required by provincial law, has yet to be completed by the city’s finance department. This report is normally available by mid-June each year. Keep in mind that we have not had a General Manager of Finance and Treasurer since last March. DCAO Mark Amorosi announced recenrly that financial analyst, Tara Baker, has been named Chief Financial Officer but is currently on maternity leave and will not take over until next year. Apparently a job search was conducted by a head hunter but the decision was made to promote Ms. Baker from within. This decision means the city has been without a CFO since November 2014. The man responsible for this is DCAO Amorosi who took over managing the city finances in November 2014 when the last CFO, Al Horsman, was transferred to Waste Management and Environmental services.
The Waste Management Innovation Centre
* Then, The Farbridge council voted, in closed session, to build a $34 million organic waste processing facility. It was part of a multi-million dollar rebuild of the waste disposal centre on Dunlop Road. Again, capital costs and operational costs were not announced. A recent internal audit revealed there was a $270,000 annual operating loss of the waste management facility. The organics facility was overbuilt and the city had to seek raw materials from the Region of Waterloo and others to fully utilize the facility’s capacity. The finished compost product distribution and revenue remains a secret.
To this day, it is unknown about the contract details of Maple Reinders, that built and operates the organic plant.
City doesn’t pick-up your garbage but charges it on the tax bill
* Then there are the estimated 6,000 residences and businesses, because of their location and access, who don’t have their waste picked up. The city spent $15.5 million buying a bin system that requires special trucks costing $150,000 each to pick up the bins. It costs up to $7,000 each to repair these vehicles that frequently break down. The public was never consulted and it remains a coffee-shop discussion of who really benefited?
The claims, by waste management, of a 68 per cent diversion of waste materials to the landfill are exaggerated and untrue. Remember all those homes and businesses that pay private contractors to remove their waste, where does it go? It is shipped to the landfill. Indeed, it is indicative of the bad communication optics of a secretive and fact-twisting waste management administration to justify the means.
The Detroit connection
* A deal was struck to import recyclable material from Detroit for processing. Additional staff was hired to handle the increased volume but the deal blew up because the quality of the Detroit recyclables failed to meet specifications. The General Manager of Solid Waste Management, who negotiated the deal with out a business plan or contract, left the city. The loss of this operation was more than $5 million.
If you build an underpass, duck!
* The city decided to rebuild the area of Wyndham Street under the CNR mainline overpass. Once completed, it was discovered the clearance failed to allow commercial trucks with trailers to go under because the trailer height would hit the underside of the bridge. Today nothing has been done to correct this and the engineer in charge has left the city.
The Urbacon fiasco
* In 2008, the city fired the general contractor of the new city hall project. The result was a long, drawn out legal battle culminating in 2014 won by Urbacon Buildings Group Inc. The final tab for this was $65 million, some $23 million over the original contract price. The mayor was defeated along with some of her council. Our reserves took a $5.7 million hit.
* In 2015, four senior staff members awarded themselves with salary increases ranging from 14 to 19 per cent. The CAO, Ann Pappert, received a $37,000 increase making her the highest paid CAO in cities of comparable size in Ontario. DCAO’s Al Horsman, Derrick Thomson and Mark Amorosi also received large increases. Council, in closed session, approved the increases Dec. 9. The only way the increases were discovered was when the Ontario Sun shine List of employees making more than $100,000 revealed the huge increases. The man who engineered these increases was Corporate Services DCAO Mark Amorosi, who controlled Human Resources and city Finances. Two of the four senior management employees, Al Horsman and Ann Pappert have left the staff. DCAO Derrick Thomson, received a 19.4 increase in 2015. He was in the process of leaving the staff after accepting a job with the Town of Caledon when he accepted the CAO position in Guelph. His previous experience as CAO was in the town of West Lincoln in the Niagara wine country.
The Guelph Storm deal
* This recent development revealed that the city was a partner with the privately- owned Guelph Storm Hockey Club. The new deal guaranteed the Storm use of the Sleeman Centre for ten years. This was a deal that was made despite the past four years of the Sleeman Centre losing $249,000 a year. Ms. Clack in her previous position as General Manager of Culture and Tourism, was responsible for the Sleeman Centre. It is incomprehensible why the city would negotiate a new ten-year agreement with the Storm that would result in even higher losses. The question remains is why the city is subsidizing a public facility for a private corporation’s exclusive use?
We the public have no idea about the terms of the old Storm contract or details of the new one. We can tell you that three individuals own the team with the chairman, Rick Gaetz, who also is chairman of the Ontario Hockey League (OHL) executive committee.
It would appear that newly minted DCAO Colleen Clack, as lead negotiator for the city, agreed to lower the percentage of the city’s share of receipts. This was because the team owners said that the financial arrangement with the city was one of the costliest in the 20-team OHL. Was this a case of the lambs being led to the slaughter?
Again, no figures were produced to confirm this claim. There was no business plan presented to council, just a request to lower the city’s share of the revenues. Council approved the new deal. Again, the public was not informed of the details that were their right to know.
Community Energy debacle
* In five years, this secretive operation has spent an estimated $37.1 million on two District Energy Nodes to supply power to the grid and hot and cold water to a small number of clients near the Sleeman Centre Node pump and the Hanlon Creek Business Park Node. It is losing money each year in operation. Just to repay the $8.7 million it cost to install the Nodes will take an estimated 70 years to complete.
Yet the Bloc of Seven on council voted to extend the system until next March. This is due in part to the Bloc’s steadfast support of the former mayor’s pet project. The consultant’s fee alone is estimated to be between $130,000 and $160,000. The operator of this broken scheme is Guelph Municipal Holdings Inc. (GMHI) who, along with Envida Community Energy, has no financial capacity to continue the project for another nine months. Did I mention the $68.5 million being carried on the city’s books as an impaired asset? It will become a liability as the value of the note drops. This was an accountant’s way of dressing up a liability developed over the past five years. It involves GMHI and Guelph Hydro and is a manipulation of funding off the books, financing this part of the Community Energy Initiative.
For details, check out the July 18 Guelph Speaks post on the city staff report.
Firing the Building Inspector
* When Chief Building Inspector Bruce Poole complained to senior management that the city was not applying for building permits on more than 50 city projects, he was fired after 30 years of service. He has sued the city for wrongful dismissal and $1 million compensation.
A brief analysis of a rogue corporation
After I outlined what I believed to be the inter-connection of Guelph’s problems, my friend shook his head and said there is a serious management problem in the city’s administration. He spent the next hour going over the points I raised and said it appears the city is being either run by incompetents or accountants. Possibly both. There is, he went on, an apparent dearth of senior management skills and seasoned judgment.
Further, he pointed out, the Guelph governance is poisoned by politics, those who have a point of view that is tainted when applied to the municipal level. Some of these projects should have never been financed using the municipal tax base. He pointed out, because the revenue stream cannot handle ambitious, expensive projects when the city relies chiefly on property taxes. Some of the initiatives undertaken require senior government action because of greater sources of revenue not available to municipalities.
Here we are ten years later, dealing with a civic government that is experimenting with environmental and energy issues that have cost citizens dearly and were not successful.
My friend and expert says the city needs new, independent senior staff to effect real change and bring costs under control through best management practices.
It is now apparent that we are getting the same kind of service from the same people who created this crisis of management and misguided financial actions starting some nine years ago.
It is aided and abetted by a majority of Leftists, members of council who have disregard for the interests of the public but regard only their own self-serving interests.
Two members of the Bloc, Councillors June Hofland and Karl Wettstein, should resign for their abject failure to report the aspects of the GMHI operations while sitting as directors of GMHI. They were there for four years and, to this day, have never acknowledged or have been interviewed as to what went on or the role they played. They received a special payment for their service on GMHI.
So much for loyalty to their constituents, transparency and accountability.