We face a looming management crisis preparing the 2017 budget

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.

Salary-Gate

* 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.

 

 

 

 

 

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11 Comments

Filed under Between the Lines

11 responses to “We face a looming management crisis preparing the 2017 budget

  1. Laura

    Your banker friend hit the nail on the head – incompetent leadership. How many staff were pushed out over the last 10 years I recall the recent ones but the severance packages should be all tallied up for a figure it must be over $10 million and where are the alleged savings? And they seem to always promote from within continuing the cycle of bad management – this is the Guelph factor and the only way to stop it is to elect 12 new councillors as not one of them can say they respect the citizen taxpayer or have our best interest. The leftist bloc pushed their way for expensive social engineering and environmental pet projects as listed above, while the so called bloc of 5, wanting to get in the action, reward the owners of the Guelph Storm with a massive subsidy and the land developers of the condos at WC Woods downtown with a massive property tax waiver – both for the next 10 years, long after any of them will be around. Meanwhile us living within our means get stiffed with the bill to pay for all this stuff! They are equally bad and wasteful.

  2. Joe Black

    I corruption never stops here but to find it look at the top.

  3. Andre

    Incompetent managers that get promoted is the problem. Here is publically information to their own bio’s and all the city’s own press releases and news articles: Mark Amorosi was the HR manager, who was then appointed to Executive Director, (with a salary increase) and then appointed again to Deputy-CAO (with another salary increase). – Mark thanked us by provided us a track record of staff increases, being the architect of numerous employee severance packages and hiring contracts, a diversity strategy in words only, and a finance department that can’t keep an accountant on staff. Then there is Derrick Thompson who was hired as the Executive Director, then appointed Deputy-CAO (with a salary increase) announced he was quitting only to be appointed as our CAO (with another salary increase). – Derrick was originally hired promising us a private-partner to build and operate the arena in the south end, and thanked us, by not being able to keep a parks and recreation manager and surprised us with a $4M over budget cost for the Victoria arena renovations. Then there is Colleen Clack who was hired as the Manager of the River Run, than appointed to the GM (with a salary increase) adding the Sleeman centre, and museum, then appointed as Deputy-CAO (with another salary increase). – Colleen thanked us with a $4M over budget new museum that the Catholic church owns the land to, and was the chief negotiator to give the Guelph Storm an extra $5 M of taxpayer money. — Oh, did I mention that these were all appointments that did not actually have to compete with other candidates applying for the positions. Maybe if the city actually required every single position to have an actual job ad, and go through a job competition we would get better qualified people instead of this inbreeding and rewarding of incompetence. It may even surprise us, and we may also even get some employment equity for a change, and hire a visible minority or indigenous person in a senior position for once. – Where is that diversity strategy the city paid a consultant hundreds of thousands of dollars to write a couple years ago?

    • Andre: Great comments! The sooner we the people shed the cloak of complacency, the sooner we can turn up the volume and let our elected officials know that there must be change, particularly at the top of the administration. If they don’t listen, then they will face defeat in the 2018 civic election. The people acted in 2014 and defeated the mayor and some of her supporters. It can happen again.

    • Steph

      Now I understand the concept of the Guelph factor – we have overpaid and unqualified people managing our city that none actually had to compete and apply for their jobs. No wonder morale is so low in all those employee surveys and lower staff don’t respect the senior staff as they haven’t earned their right to be in their positions. Senior staff keep recommending stuff that is just wasteful or stupid and councillors agree with it. Case in point – I don’t know who is more out of touch with the people, the senior staff that proposed charging $5 for yard waste or the councillors who voted for it. Has anyone been to the dump lately to see the public uproar..
      I’m sure there are some qualified city employees – but the message here is if you want to work your way up, don’t look at the City of Guelph for it as their hiring practices are definitely not based on merit or performance – in fact you don’t really need to compete for that promotion , you just need to waste a lot of other peoples money, then just suck up to someone and get appointed.

  4. geo

    This has got to be the worst run Municipality in Southern Ontario. In the bang for your buck category we’ve paid for a 2016 Mercedes AMG S 65 and taken delivery of a 1985 Lada.

  5. Marc

    I have an idea, I think it’s time we start picketing on the public sidewalks in front of every councillors home and let their neighbours know how we feel of them, and just like they like to increase our taxes and inconvenience us with their waste and special projects, we can inconvenience them for a change. James Gordon would be proud of us, and we can thank him for showing us how this is done from his many years of activism – maybe he’ll even join us and bring his guitar for a good old fashion sit in.
    We can start with June Hofland and Karl Wettestein for their in-actions on the district energy/GMHI file. The following week, we can visit mayor Guthrie’s house and tell him what we thin of his new $5 grass clippings tax. A legal constitutional protest on public property is what this is about with no shenanigans.
    On another note – so much for getting rid of the fund- me Farbridge fiascos’ as we now have to fight the gotcha Guthrie giveways. We the people need to get back our city and stop this madness, and need to let our elected representatives know how their decisions are impacting us and demand accountability for all this waste and mismanagement.

  6. Great idea, tell us when and where, we will attend.

  7. Fred

    When I ran through the park today there were three city trucks with city employees sitting in them. They were still sitting there on the way back. Also on the way back two city employees picking up garbage from pails, sat in their trucks for 5 minutes at each pail. Taxpayers are still paying people to drive empty buses.
    It looks like people are ticked off about having to pay to drop off yard waste.
    Cam and council voted to nickel and dime taxpayers to pay for their extravagant mistakes and white elephants.

    • James

      Empty buses in Summer are normal here and in Toronto – people tend to use other modes of transportation in warm weather i.e. bikes. The subsidy the city gives GT is actually on pare with many other cities who do LESS service for that subsidy.

  8. Rena

    Probably the worst run City we have ever lived in, which is really sad as we thought it had so much potential. There seems to be a lack of intelligence and commen sense from City Hall that eminates right from the top down.

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