When personal greed and ambition supersedes responsibility

By Gerry Barker

September 19, 2016

There have been two events that have destroyed any semblance of public trust of senior administration staff and majority of council. And the Urbacon $23 million debacle is not one of them.

These events have bubbled to the surface since the 2014 civic election.

The first event is the 2015 secret salary increases awarded by council last December to four of the most senior city staff. The increases were approved by council in closed session and were not revealed until March of this year when publication of the Provincial Sunshine List of all public servants in Ontario earning more than $100,000 was revealed.

Because the salary increases were approved in closed-session, the question now is which councillors voted to allow the huge bumps in pay?

The Sunshine list contained more than 400 civic employees in Guelph earning in excess of $100,000 a year. The most interesting was the $37,591 increase awarded to former Chief Administrative Officer (CAO), Ann Pappert for 2015.

When asked about this 17.11 per cent increase for the CAO, Mark Amorosi, Deputy Chief Administrative Officer (DCAO), head of Corporate Services, said the reason was the CAO did not receive any increase in 2014. In fact, she did receive a modest increase of $5,052. So Mr. Amorosi lied and for good reason.

A case of double dipping

Amorosi actually paid himself two increases in 2015. The first was in November 2014 when the senior management was reorganized within three weeks of the civic election, creating the new position of DCAO. The new title increased his salary to $182,761 from $176,400 in 2013 to cover his new responsibility. This turned out to be exactly the same job he was performing before the civic election and senior staff reorganization.

Then came the December 9, 2015 closed-session meeting that gave Mr. Amorosi another $26,868 increase or 14.7 per cent. This brought his 2015 salary to $209,629.

As for CAO Derrick Thomson who joined the staff in 2014 as Executive Director of Operations, his intial salary was $173,720. In 2015, his salary as a DCAO, jumped by 19.48 per cent or an increase of $33,834 and a salary of $207,554

Talk about a meteoric rise. As the new CAO, Mr. Thomson’s new salary level will not be known until next March when the 2016 Sunshine List is published. In addition he received a taxable benefit of $6,472.

In our present economic circumstances, why does Amorosi, the man in charge of reviewing and approving staff salary increases, believe those increases are fair considering the competitive positions in other municipalities? . Is he out of touch will reality??

Did I mention that Mr. Amorosi is responsible for city Finances and Human Resources? Did he use his position to better his personal income? He also receives an additional $6,472 in taxable income apparently to cover his travel expenses because he lives in Hamilton.

We get a CFO who is on maternity leave until next year

A month ago, Amorosi announced that he appointed a junior financial analyst in the finance department as the city’s new Chief Financial Officer (CFO), General Manager of Finance and Treasurer.

Now I happen to know that Amorosi hired a headhunting firm to search for a CFO. I also know of one highly qualified candidate who was rejected by the headhunter.

Instead, we have Amorosi’s third attempt to control the city finances using subordinates to carry out his reckless management decisions. The first lady lasted about two months. The second lady left last March after a year on the job. The advertised position represents the third choice in the past 22 months.

Last month, Amorosi announced that Tara Baker won the CFO job but won’t report for duty until next year as she is on maternity leave. So much for spending money advertising and hiring a head hunting firm, when an allegedly suitable candidate was sitting right in the city finance department.

The fact is that the city has been without a CFO for 22 months as Amorosi has acted in that capacity. If and when Ms. Baker is able to return to work, that gap will increase to 27 months with Amorosi in charge of city finances.

Ann Pappert was the second senior officer of the city staff to resign in May. Deputy Chief Administration Officer Derrick Thomson resigned and that left just DCAO Mark Amorosi, remaining of the senior staff members hired by the former Farbridge administration.

Thomson was persuaded to return to the city as CAO replacing Pappert.

One of his first announcements was the nine-year capital spending plan has a shortfall of $170 million after only one year of operation.

Comforting words from the man in charge of finances

Amorosi quickly announced: “The city was in sound financial condition.” He lied.

If anyone should know about city finances it should be Mark Amorosi. He has control of the city finance department that has not had a General Manager of Finance and treasurer since last March when Janice Sheehy left to take a job in Peel. He also oversees Coun. June Hofland, the robot chairperson of the finance committee, for the past four years.

The Fung Report on city management paints a smeared picture of financial incompetence that has shoved Guelph’s operating expenses to a point of being 50 per cent greater than either Kitchener and Cambridge.

If you live here and own property, you know why our costs are so high. Check your annual tax bills and user fees including water and electricity. The city’s operating expenses have skyrocketed in the past seven years by 56.2 per cent compared to the Consumer Price Index of only 11 per cent.

The second costly event of examples of greed in high places, is the creation of the Community Energy Initiative. It was the brainchild of the former mayor who manipulated staff, city council and Guelph Hydro, to support her dream of establishing two District Energy Nodes. The pumps were located in the Sleeman Centre downtown and Hanlon Creek Business Park. The pumps are coupled to provide underground co-generation system supplying hot and cold water from each Node pump to nearby buildings and electricity to the provincial power grid.

At least that was the plan. Instead, we learned this year, specifically May 16, that the project was seriously flawed and unable to supply power to the grid as planned. The Chief Executive Officer of Guelph Municipal Holdings Inc (GMHI), Pankaj Sardana, said the business plan failed to obtain sufficient customers to be viable.

In fact, Mr. Sardana said the project should never have been started in the first place.

But they went ahead anyway blocking public input

The underlying reason for this was that all the planning and development meetings were conducted in closed sessions by the former mayor, chair of GMHI. The chair suppressed the public’s view. The silence was exacerbated by four city councillors who were on the board of GMHI and did not break the code of conduct as developed when the mayor was in office. These include Councillors June Hofland and Karl Wettstein and two who have departed, Lise Burcher and Todd Dennis.

The councillor’s code of conduct prevents councillors from revealing decisions and comments of closed sessions. However GMHI was a stand-alone separate corporation but secrecy of its operations prevailed.

But the senior city staff had to know what was happening at GMHI because CAO Ann Pappert was the CEO of GMHI for four years. Then there was Envida Community Energy Corporation, operated by Guelph Hydro. It was responsible for installing the two District Energy nodes and several solar panels installed on public buildings.

A city staff report in July showed that Envida owed $11 milliohm to GMHI. There was also the matter of $68.5 million, on the city books as an asset. The problem is that it is impaired; meaning the cost of carrying this asset exceeds the revenue, if any, so it gradually becomes a debit.

This situation could go on for years unless the $68.5 million can be written off, worse case scenario, or pay the interest due to maintain it as an asset on the city books.

The Bloc of Seven on council in July voted to keep the Community Energy Initiative operating until the first quarter of 2017. They disregarded the warnings of the Deloitte consultants and the staff that to keep it going, will cost an additional $60 million unvestment of our money.

The public pot is now empty

Mr. Sardana has stated that GMHI or Envida haven’t any money to invest in this failed project that so far has cost taxpayers $37.1 million.

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 to review the situation. Deloitte admitted its fees will range from $130,000 to $160,000 to report their recommendations.

This situation is showing little sign of correction.

Indeed, the city is now advertising for candidates to join the Community Energy Initiative public advisory board. There are several categories in which persons may apply. There are only four positions available for citizens.

Again it’s a move to give the appearance of thoughtful public contribution to the success of an initiative.

Except in this case there is no foundation. It remains a sinkhole of public money based on a flawed project that the majority in our city didn’t ask for or need.

The terrible situation is that it will cost the city several million dollars just to exit the Community Energy Initiative because of the contracts that were signed with suppliers and customers without any oversight by GMHI and Envida.

This is another expensive remnant of the Karen Farbridge legacy.

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5 Comments

Filed under Between the Lines

5 responses to “When personal greed and ambition supersedes responsibility

  1. Joe Black

    So much for having a Mayor maybe it’s time to withhold our final property taxes payment I doubt it will work anyway we Canadians lack a back bone .

  2. Eric

    I don’t think there is such a thing as an alliance of the bloc of seven any more. Bob Bell also voted to keep the energy initiative in July casting the 8th vote. We don’t know who voted for the salary increase as it was behind closed doors, but none of the 5 supposedly non-Farbridge supporters was willing to even speak up or introduce a motion to be more transparent about it or change the way they compensate employees in the future.
    Furthermore, after Pappert quit, it was current Mayor Guthrie and not the bloc of seven that wanted a quick internal replacement which Amorosi was actually considered for but Thompson got the job even though he was already leaving himself but was convinced to stay. We also know that more than seven councillors voted to charge us $5 for our yard waste and to give the Guelph Storm $5,000,0000 which will no doubt increase our property taxes next year. The notion that a Farbridge inspired bloc of seven still exists serves to only deflect the blame from each of the current 12 elected members in how they vote. We need to hold Bob Bell accountable for voting on the energy initiative, the Mayor for hiring Derrick Thompson, and all of them for wasting our money on spendthrift projects be it a private energy company, hockey team or for not doing anything to be more transparent about city employee compensation and stop this from continuing in the future. Shame on all of them.

    • Eric: Good points but have no illusions, the Bloc of Seven are in control. The math is simple: There are seven members of council who vote as a bloc. Here is how I see the numbers: There are four members, Mayor Guthrie, Christine Billings, Dan Gibson and Andy Van Hellemond who favour change and reform; there are two who are fence sitters, Mark MacKinnon and Bob Bell; the bloc of seven include James Gordon, Phil Allt, June Hofland, Mike Salisbury, Leanne Piper, Cathy Downer and Karl Wettstein. The seven’s agenda is a clone of the former mayor’s plans, to transform Guelph into a world class city based om extreme environmental action plus the Community Energy fiasco. I share your observation why Bob Bell voted to keep the District Energy plan going. Maybe he pushed the wrong button.

  3. Glen

    The whole District Energy concept that was part of the Community Energy Initiative is a classic case of those on council who are technically and financially illiterate wasting hard earned tax payers’ dollars. Who was the genius that decided Guelph should get into the electricity generating gambit while the province of Ontario was dumping excess hydro to several US states at a loss? Then came the co-generating pipe dream of salvaging the waste heat from Envida’s gas fired turbines generating the electricity to heat Hanlon Creek Business Park industrial buildings and downtown Tricar condos as well as the Sleeman Centre & River Run Centre. A slight problem occurred when it came to light that for the Hanlon Park caper to be semi-realistic, there would have to be nearly 3 million square feet of industrial heat usage. Consider that a typical industrial facility is 100,000 sq ft , that would require only 30 or so new facilities. At a cost of $40 million for each facility, private investment of $1.2 Billion would be needed. Where was Guelph’s business development staff on this file? Snoozing? Ditto for the humungous square footage required to be heated by the downtown District Energy node to make it financially viable.
    How many council members and city bureaucrats touched this file without asking for a viable business case? It’s time to have an audit by an external consulting group composed of forensic accountants, qualified engineers, and lawyers to hold accountable those involved in the tens of millions of dollars wasted.
    What to do to stem the perpetual cash drain caused by the CEI camp; DE? First step is to sell the downtown DE node to Tricar for $1 under a force majeure exit to stop financial losses. For the Hanlon DE node debacle, again sell the Envida lame duck for $1 to Wurth, the only currently connected customer. Then without ceremony bury the social engineering CEI, dissolve Envida and GMHI.
    Does council have the guts to do this or will the bloc of 7 councillors (now reported to be 8) continue to protect their tax and spend social engineering compatriots butts and do nothing?

  4. geo

    Were paying one man more than $200,000/yr plus $7,000/yr for travel because he lives in Hamilton? (I assume were not talking Hamilton Bermuda) This is way beyond financial incompetence; this is immoral!

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