Is the Province shutting down the city’s development fee piggy bank used to finance capital projects?

By Gerry Barker

June 29, 2019

Opinion

The story in Guelph Today was an expose’ of the weakness of our Mayor protesting the provincial legislature’s Bill 108. That’s the one that proposes reducing the amount of development fees a municipality can charge developers.

The whining over this from the Mayor and his council has been going on for some time. Tara Baker, General Manager of Finance and Treasurer, said the impending bill could cost the city $150 million over the next ten years. That averages $15 million per year.

Have the developer’s fees morphed into a piggy bank to finance certain capital projects? You can bet that Guelph is not the only municipality that has discovered this silent source of revenue.

Bill 108 deals with changes in the Development Charges Act. The city’s GM of Finance suggests that two key capital projects include, the estimated $53 million proposed downtown main branch library and the $63 million South End Recreation complex, might be in jeopardy.

Nothing new here, we have been waiting 19 years for a new library

For several years, the city has been increasing development fees by using proceeds to fund capital projects. This includes sweetheart deals that suspend payment of those fees for up to ten years.

It is next to impossible for citizens to find the details of these deals intended to encourage residential development downtown.

More important, why doesn’t the city come clean about transferring funds from the Brownfield remediation reserves to cover the ten-year development holiday not paying those development fees or suspending property taxes? Take your pick.

Municipal development fees or impost fees, are intended to connect new development with vital city services such as water and sewer hook-ups, power, increased emergency staff and equipment, parks, hospital, transit, and infrastructure.

This party started in 2007

Former mayor, Karen Far bridge, campaigned in 2006 vowing to “put Guelph back on track.” Sad to say that promise has gone off the rails as personal issues to convert the city into a paragon of environmental rectitude and a world class leader in coping with climate change.

The administration was determined to reduce the use of fossil fuels and spent millions trying to force cars to use major streets by shrinking lanes to allow bike lanes.

Today there are more vehicles using Guelph streets causing daily congestion.

The majority of her council is still pushing much of that agenda. The 12-year cost to citizens has been more than $1500 million due to poorly planned projects to satisfy the former mayor’s desire to create a new Guelph, one that was to be world class.

Was this a competition?

Compared to what? Let’s start with the money spent on waste management: The organic waste processing facility costing $34 million and built with a capacity of processing 60,000 tonnes of wet waste a year. That decision was made when Guelph processed only 10,000 tonnes a year. The plant was built by Maple Reinders (MR) then was staffed by a subsidiary company of MR that also sold the compost created. So the city turned over the entire project to the original developer, MR.

Financed by the taxpayers since 2011, not one ounce of composted material is available to citizens.

Conclusion? Guelph is in the organic waste processing business but cannot access the finished compost.

The $23 million mistake building the new city hall

Here’s another example of wasting money. The new city hall project was contracted to cost $42 million, it lost a major lawsuit by the defrocked general contractor, Urbacon Biuldings Group and ended up costing$65 million.

But wait! The Guelph Municipal Holdings Inc chaired by the former mayor, according to the KPMG consolidated audit cost $66 million in shareholder equity.

That’s more than $123 million wasted by the previous eight-year term of the former mayor.

City enters the real estate business

Those are the biggies. While all that was going on, in 2012 city council was planning to create a green city on 245 acres in the former Reformatory lands, property it did not own. Known as the Guelph Innovative Development, (GID) it is now being offered in a modified auction to all qualified parties. The result of the sale will be announced at the end of July.

Where is the city going to find the money to purchase the land if it wins the auction? Take more from the reserves to take ownership and then spend millions to develop it?

Then we have the Baker Street redevelopment project estimated to cost $350 million in a Public, Private Project (3P) to create a retail, library and condominium centre on the site of the Baker Street parking lot.

Mayor Guthrie announced the project during the October election campaign. We know how that turned out. Shovels in the ground are scheduled to start in 2024. The big question needing an answer, is what is the liability to the citizens?

But it took the administration headed by Mayor Cam Guthrie to giveaway Guelph Hydro with an adjusted book value of $16o million to Alectra Utilities for a 4.86 per cent of 60 per cent of the utilities’ profit. Was that a great deal or not?

The mysterious departure of CAO Thomson

It gets better. Both co-chairs of the council appointed Strategic Options Committee to dispose Guelph Hydro, Former CAO Derrick Thomson and the un-elected chair of Guelph Hydro, Jane Armstrong, personally benefited from the merger.

Thomson received a $67,000 performance bonus for his role in the merger while Ms. Armstrong was appointed by council to be its representative on the Alectra Utilities board of directors being paid $25,000 a year for five years plus travel expenses.

Mr. Thomson left the city in March just after the provincial Sunshine List showed that in 2018 he was paid $335,000 plus a taxable benefit of $11,000.

The mayor announced the Thomson bonus March 18, yet not one media outlet reported the bonus or details of why it was awarded in 2018 or the reason that he abruptly ended his employment.

Why our property taxes and user fees are juiced every year

These are some of the reasons why our property taxes, annual increase have exceeded three per cent for more than 13 years. The only exception was in 2014, the civic election year.

Now I know readers of guelphspeaks.ca have read parts of this posting before.

It is my mystifying response wondering why that 90,000 voters were eligible in last October’s civic election but only 30,000 bothered to vote.

There are two reasons for apathy when it comes to vote in civic elections. The first is satisfaction with the previous council’s performance. This reason must be based on accurate information, personal impact of council decisions, trust and loyalty.

The second reason is about coverage and details of council’s decisions that affect the 90,000 residents. Regretfully the media is dependent on city department handouts such as press releases, paid advertising of events, policies and legal matters in the local print weekly.

Rarely do reporters question statements in press releases. They should never be an extension of the public administrations. The media in Guelph has a serious credibility problem in failing to cover the news as journalists and get reaction, from stakeholders affected by the council decisions.

The staff should not be immune to critical thinking. There is the flow of producing what the city wants and that dismisses the media’s obligation to the reader and viewer. Their job is to report the full story and not just what the city releases to them.

That friends, is why two-thirds of the eligible voters did not show up. The media only publishes one side of the story. Even on the social media, individuals dominate the message with an axe to grind and political bias.

Do not expect anything to change.

A major story that has broken is the council has decided to review itself with a hint of public involvement. The exercise is to consider reducing the size of council; change the ward boundaries; decide to only elect full-time councillprs; to complete the study in the first quarter next year.

This exercise will cost an estimated $150,000, details of how and when the money will be spent and on whom?

Check guelphspeaks for more details including both sides of the story.

 

 

 

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