How Two Guelph CAO’s were paid $1.598 million in 31 months and why did the City give Guelph Hydro away to dodge the GMHI losses?

 

By Gerry Barker

July 14, 2020

Opinion

This trail of silence and obfuscation started shortly following the 2010 civic election that re-election of Mayor Karen Farbridge and most of her council.

The Mayor wanted to put Guelph on a path of rejecting fossil fuels and to develop alternative power sources chiefly to make the city self-sufficient in terms of electricity generation.

The citizens were never in the loop concerning the business plan to execute the Mayor’s dream or the associated costs.

Oh, we had an inkling of what was going on, as parts of downtown Guelph were being excavated to install pipes to supply hot and cold water to certain selected buildings near the Sleeman Centre.

But now we know the ultimate costs and outcome. This is what this column is about.

In 2007, the Mayor convened a group of community leaders to introduce her Community Energy Innovation (CEI). In the main, the group approved of the initiative, although the details were not exposed.

This is the genesis of a colossal failure

I leave it to the people to understand how their trust in City leadership was denied by a suffocating and calculated cone of silence and closed- session meetings that masked the spending of millions on various abortive environmental spending at the expense of the citizens.

Here are some examples: The doubling of city staff to 2,400 from year 2006 to 2015, when the population of Guelph increased by 11,000 in the same period.

* Spending $34 million on the Organic Waste Processing Facility that had an approved capacity of 60,000 tonnes a year when the City was generating 10,000 tonnes in 2011. The result was importing wet garbage from other communities to keep the plant running. This project never made a dime.

* Subsidizing Guelph Transit by an estimated $15 million a year that operates four months of the year, running mostly empty of paying passengers until the University of Guelph resumes each September, when 20,000 undergraduate students arrive.

* The deals enjoyed by the U of G include paying less than $2 million a year in property taxes. This largest land owner in the City, that escapes re-assessment annually, also receives taxpayer-paid services, police, fire and EMS, hospitals and clinics, roads, water and sewer, and infrastructure repair and maintenance, waste collection, snow removal and bike lanes.

* The mismanagement of major city projects that exceed budgets: These include the City Hall, Police HQ’s $34 million renovation, already over the contract price. The City recently terminated the general contractor, Jasper Construction. This is based on a pending detailed investigation in the deficiencies of Jasper’s work.

Keeping it in the family

Mayor Guthrie took over the moribund Guelph Municipal Holdings Inc. (GMHI). The former mayor’s board of directors was composed chiefly of fellow council supporters, plus representatives of Guelph Hydro. A key appointment was naming Guelph’s Chief Administrative Officer, Ann Pappert, as Chief Executive Officer of GMHI. The final step was to integrate Guelph Hydro with GMHI.

This was the foundation laid out by the former Mayor in which she had total control of the City, GMHI, Guelph Hydro and the Guelph Trunk Railroad.

One of the first projects was to install solar power generating panels on a number of public buildings. This was completed and financed by a Guelph Hydro subsidiary, Avida.

Next, came the District Energy plan to install special natural gas- powered pumps. These were installed in the Sleeman Centre and the Hanlon Business Park.

The project was to develop two revenue streams for GMHI. One was generating power to the provincial grid and through a system of geo-thermal piping, supplying hot and cold water to five nearby public buildings. These include the Sleeman Centre and two high-rise condos built by London, Ontario-based Tricar, the River Run Theatre and a nearby church.

The veil of cover-up frays at the edges

Aside from the occasional annual financial report, the work of GMHI was submerged in closed-session meetings.

Following the 2014 election in which Mayor Farbridge was defeated, CAO Ann Pappert announced a re-organization of the City’s senior management.

As a result, the Provincial Sunshine List published in March 2015, only stated the amounts earned by CAO Pappert, DCAO’s Mark Amorosi, Derrick Thomson and Al Horsman.

Of the four top guns, Al Horsman was the first to resign in mid 2015 to take the job of CAO of Sault Ste Marie. His 2015 pay was $181,000, the equivalent of one year’s salary.

Mayor Cam Guthrie assumed chair of GMHI along with councillor Karl Wettstein. The temporary chair of GMHI announced a profit of $9 million. In addition, he announced GMHI had paid an annual dividend to the City averaging $1,500.

This appeared to match the same figure that Guelph Hydro was paying before joining GMHI.

Following his election, Mayor Guthrie, conducted a total of 84 closed- session council meetings in his first two years in office.

Why is this important?

Because Mr. Guthrie knew how serious the GMHI problem was after being briefed on the KPMG audit of GMHI, plus two key staff meetings May 16 and July10 that detailed the financial disaster.

In 2015, the accounting firm KPMG was hired to audit GMHI. While the details were eventually revealed to the public, there was a shareholder’s liability of $66 million.

In case you are wondering, the shareholders are members of council. They represented you and me.

In the fall of 2015, CAO Ann Pappert requested reimbursement of her unused sick leave and vacation time. Does that sound lilke the CAO intended to stay with the City?

The cookie begins to crumble

December 10, 2015, Mayor Guthrie convened a closed-session council meeting. The apparent purpose was to make a major change in the 2015 salary and benefits of Pappert, Amorosi, and Thomson.

The details of those increases were not revealed until March 31 2016 and were retroactive to include 2015. This was a highly unusual practice. Because the 2015 operating budget had already been approved by council. It would have included the salary and benefit increases for the top three executives.

Such increases would be connected to performance reviews. When and by whom did that occur? How does management increase its remuneration just three weeks before the end of the fiscal year?

It can only be because Pappert and Thomson told the closed-session meeting they were leaving. Confirm or deny.

Should not the public be informed of these developments only to be informed in March, three months after the fact that Thomson had already given notice he was leaving. He was joined a month after the Sunshine List was published that Pappert resigned and stayed on until May 26, 2016.

As Mr. Amorosi was the only senior manager on the job, I have always wondered why as having the most service, he was not promoted as CAO. Instead, Mr. Thomson returned and was named CAO.

Guelph Hydro becomes the GMHI bank

The fact is that GMHI used Guelph Hydro as a bank to fund the Farbridge excursion into a plan, that was not discussed openly. It was accountable to only themselves, leaving the administration to fix the huge deficit owned by the citizens.

During her first four-year term, Mayor Farbridge used her power like a mix- master, borrowing money off the City books from Guelph Hydro.

On paper, it was brilliant. She and her CAO, Ann Pappert, were in charge and had the support of a majority of followers on the GMHI board of directors and city council.

Unfortunately, Mayor Guthrie allowed some of the people responsible to fix the GMHI problem. I’m sad that the subsequent solution was to give Guelph Hydro away, to cover up the $66 million shareholders’ losses.

This was apparent in 2016, when the Special Options Committee was formed to dispose of Guelph Hydro. Heading up the project was CAO Derrick Thomson who was co-chair eventually with Guelph Hydro chair, Jane Armstrong.

In the wake of this so-called merger of Guelph Hydro with Alectra Utilities, both Thomson and Armstrong financially benefited when the agreement was approved by council in December 2016

Following the money

The three top managers of the City and their 2015 increases, CAO Pappert – $18,000; DCAO’s Mark Amorosi – $27,000 and Derrick Thomson – $28,000. The City no longer employs all of these managers.

Here’s how much each was paid and the sequence of leaving.

Ann Pappert was paid for the year 2014 – $219,000; 2015 – $237,000; 2016 – $263,000. Time in service, 29 months, total $715,000. Less than a month following the Sunshine List, Ms. Pappert resigned and left the City, May 26, 2016.

Mark Amorosi earned $182,000 in 2014; in 2015, he was paid $209,000. His total remuneration is not available right now as there is a legal issue to be resolved.

In November 2016, it was notable because Mr. Amorosi sued Guelph resident Gerry Barker for defamation, demanding $500,000 in damages. The City agreed to pay his lawsuit costs. While the City is reluctant to reveal the current legal costs, it is believed to be more than $100,000.

After four years, Barker has not been found guilty of the alledged charges being financed by the city administration.

Derrick Thomson’s Guelph career is different. In January 2016, he left the City to take a job with the Town of Caledon, where he lived. In June 2016, he accepted the CAO position vacated by Ann Pappert.

Thomson’s meteoric rise in the space of 31 months, saw his pay jump from $240,000 to $335,000 in 2018. It included a $64,000 performance bonus in recognition of his leadership, giving away Guelph Hydro to Alectra Utilities.

His total remuneration during his 31-month tenure as CAO in Guelph was $832,000. In June 2016, Mr. Thomson was put in charge of the City staff, a month following the beginning of Police HQ renovation. He was the man responsible for the project because the City was obligated to fund the police facilities.

Suddenly, in February 2019, the City announced it had parted ways with Thomson. No explanation was provided.

For the record, last year I asked DCAO Trevor Lee the status of the police project and if it was meeting costs. He replied that it was proceeding under-budget with $5 million remaining to complete the job at the end of 2019.

In view of the data presented, here are some questions that we should be asking, including the payments to the two CAO’s totalling $1.598 million.

Why would Mr. Thomson accept the CAO job, in mid-2019, in the Town of Minto, population 9,000? Why was he given a $64,000 performance bonus, then leave less than a year later?

Why was Pappert paid $263,000 for five months’work in the year she resigned?

Where was council when all this was happening?

When will the cost of the Police HQ’s renovation eventually be known?

What is the Mayor’s responsibility overseeing the city’s business?

 

 

 

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