By Gerry Barker
February 28, 2017
Judging from the comments on the guelphspeaks blog, there is a lot of confusion about what happened to the Guelph Municipal Holdings Inc. (GMHI) and its control of Guelph Hydro and the Guelph Junction Railroad.
Remember, confusion is the tool of authority.
But what is socialistic fascism?
The fabric of political socialism is a fair description in which most Canadians believe. Fascisim means total control. And the two previous admiistrations were experts at denying the right of the public to know, using closed sessiona to discuss important public business.
Even afrer 11 years of the former federal administration led by Stephen Harper, our basic beliefs in socialism pervaded. Remember Mr. Harper steered Canada through the world’s greatest global economic disaster. Canada survived for the most part thanks largely to the Canadian Banks that were not exposed to the mortgage-backed worthless securities securities that were being flogged by the major U.S. Banks as well as many banks oversears.
But when you drill down to the municipal level, Guelph’s two Farbridge administrations have introduced and then concealed projects by adding radical energy and environmental projects that, by latest count, have cost $96 million with miniscule tangible return.
I know there is the doyens of the socialist Left, including the former mayor and her supporters, who disagree with this. There is the old expression in the financial business, “you can’t fight the tape.” But that’s what is going on right now as our elected officials, aided by senior management, are fighting the tape by trying to seek solutions to avoid what has already been revealed.
The shades of grey and black of the cover-up
A former mayor created it. Her ambitions of energy self-sufficiency and unproven theories of accomplishing her goals have led to this debacle.
It ended October 27, 2014 when she was defeated as mayor of Guelph by Cam Guthrie by more than 5,000 votes.
In early 2015, Mr. Guthrie suffered through a couple of political events as council approved the 2015 budget including a property tax increase of 3.96 per cent. It was not what he campaigned on, promising voters that he would keep property tax levels at the rate of the Consumer Price Index. The second shock was the state of the city-owned GMHI, that had been chaired by the defeated mayor.
What they learned was GMHI was a money losing, failed operation that was virtually bankrupt. The one big GMHI asset was Guelph Hydro that the former mayor had quietly incorporated in GMHI.
Protected by a closed-mouthed administration, who knew of this development?
Guthrie became chair of GMHI along with Councillors Cathy Downer and Karl Wettstein.
Wettstein, a four-year member of the GMHI board, told the October 24, 2016 council meeting that he and Guthrie had “ a negative impact” on GMHI operations.
Mayor Guthrie angrily replied: “That is the most inaccurate statement I’ve heard in the past two years.”
Wettstein knew what GMHI was up to because he was on the board. To now say that he played a role in its discovery of waste, secrecy and politics, is the height of arrogance and of covering his behind.
Then, at the same meeting, Coun. June Hofland made the following statement: “I feel very sad because I feel we have been moving backwards but we don’t have the sophistication or leadership at this time to move forward with the holding company.”
Okay June, as chairperson of Finance, you get two minutes for forgetting your fiduciary reponsibility to the citizens as their elected representative. And June, this is a game for adults.
These are comments from two members of council who were paid to serve on the GMHI board for four years. Did they sit on the board like birds on a wire? Did they not realize what their sworn responsibility was to the citizens who elected them as their representatives?
And on the February 15, 2017 they voted to sell Guelph Hydro as recommended by the Strategic Options Committee (SOC).
But wait! This 8-5 vote not to sell Guelph Hydro was not necessarily a vote not to sell Guelph Hydro, according to some councillors. Coun. Phil Allt voted to sell the utility but then hedged his decision by saying he wanted more alternatives. Some councillors who voted not to sell Guelph Hydro also said their vote depended on the SOC phase two report in midyear.
Was this motiob a vote to instruct the SOC to “explore further options?”
Huh? While it was an up and down 8-5 vote not to sell Guelph Hydro, or so we thought, it was not necessarily a vote by council to not sell Guelph Hydro.
Are you still with me?
Why are there no council representatives on the SOC? Any volunteers?
For baseball fans, this is called a politiclal squeeze play. This is when a runner is trapped between the first and second basemen and is tagged out., because there is no place to go.’’
In this case, the metaphor seems to fit.
No elected official wants to be caught between selling Guelph Hydro or not. What they do know is the people they represent are dead against selling the utility. Councillors wanting to sell Guelph Hydro are motivated by the cash the city will receive from the highest bidder, It is estimated the proceeds could be as high as $150 million.
Is this any way to run our city? Do we have to spend $600,000 to get some outsider advisor to tell us about the options? We just lost $96 million on the abortive GMHI schemes. Why are we now spending more money to placate those councillors who still believe the Community Energy Initiative was an important contribution to the city?
Remember, confusion is the tool of authority.
It remains the most epic mismanagement of the operation of this great city in its 200-year history.
Last October, the strategy of unwinding the money-losing GMHI entwined with Guelph Hydro was discussed by city council. A staff report to council recommended to “shelve, cease or park” the failed city-owned corporation.
Mayor Guthrie was thrilled when council voted 10-2 to investigate the future of GMHI using the term “rationalization.” That’s muni-speak for investigation and taking action.
That action has wrapped up GMHI by about 90 per cent. The remaining obligation to support the District Energy Nodes (pumps) is to continue supplying hot and cold water to five buildings downtown. The Hanlon Business Park Node has been written off.
It all started with the Community Energy Initiative (CEI) created by the former mayor, Karen Far bridge, in 2007. In 2011, the then mayor, supported by her majority of council, approved setting up GMHI. The first board of directors included the Mayor as chair, four members of council, June Hofland, Karl Wettstein, Todd Dennis and Lise Burcher. There were two independent members and the CEO of Guelph Hydro.
The Mayor also brought in her city Chief Administrative Officer, Ann Pappert, to be Chief Executive Officer of GMHI. She remained in that job for four years. On December10, 2015 in closed session, council awarded Pappert with a retroactive pay increase of some $26,000.The reason for this was never disclosed.
Is it possible that this incresse to the CAO, that totalled $37,501, was followed four days later when council approved a new Indemnification bylaw, It stated that the city would reimburse legal expenses of any elected or staff member if they were the subject of a legal procedure initiated against them.
Guess you may describe that timely action as locking the barn door after the horse has been stolen.
On May 16, 2016, council, acting as shareholders, was told that GMHI had lost $26.6 million and had no financial ability to pay off a loan from Guelph Hydro.
Now that loan sits of the city books as an “impaired” asset totalling $69 million in 2015 as reported by the city.
Now, supposing you are a major Canadian bank risk manager and based on the GMHI business plan, considered loaning the money to GMHI. With the state of the GMHI balance sheet showing a loss of $26.6 million, would you take the risk and loan GMHI the money?
It is safe to conclude that the former mayor, having control of Guelph Hydro, convinced the publicly-owned utility to use its credit rating to allow the loan of some $60 million.
Here are two city-owned corporations, both controlled by the former mayor as chair of GMHI and serving on the Guelph Hydro board.
This action was all done in secrecy over four years. The public was not informed nor participated in the merger of the two corporations owned by the citizens. Nor was there any information regarding the justification for obtaining the loan.
There are no underlying asssets of GMHI to justify calling the loan an “impaired” asset.
The citizens were double-duped by the whims of an eco-centric former mayor whose actions went far beyond her capability to manage fiscal responsibility. It was a monumental echo of the Urbacon affair that cost the city more than $20 million to complete the new city hall. It occurred on the former mayor’s watch.
Fortunately, her blind ambition was halted upon her defeat in 2014. By then most of the damage had been done.
In my opinion, I believe the SOC and Community Energy Initiative should be scrapped. In its place we need an independent audit of the financial impact of the Governmental and financial relationships of the three three public institutions, the Corporation of the City of Guelph, GMHI and Guelph Hydro.
Why, you may ask? Guelph currently has no Chief Financial Officer or City Solicitor. They are key players in administering life support to an administration that is bereft of qualified senior management.
If council is ready to spend $500,000 to obtain additional information on how to deal with Guelph Hydro and wrap up GMHI, the money should be spent on the audit.
Since October 2014, there is evidence that an independent audit is indicated. Here are the 11 senior staff managers who have left:
Janet Laird, Executive Directort of Environmental Services; Derek Mcaughhan, Executive Director of city Operations; Dean Wyman, General Manager of Solid Waste management; Al Horsman, Chief Financial Officer; Bruce Poole, Chief Building Inspector; Don Kudo, Deputy City Engineer; Janice Sheehy, General Manager of Finance and city Treaurer; Ann Pappert, Chief Administrative Officer; Mark Amorosi, Deputy Chief Administrative Officer of Corporate Services; Donna Jaques, City Solicitor.
If the audit reveals criminal action by the three corporations, the Ontario Attorney General should order a police investigation.