The 2007 Community Energy Initiative steered Guelph down the financial rabbit hole

By Gerry Barker

July 29, 3019

Opinion

Part Two of Seven

This part of the series outlines the objectives of the Community Energy Initiative (CEI) plan that was formed with excitement across a range of citizens when the non-elected consortium produced the future plans for the city. It was the beginning of the greening of Guelph.

The CEI was created by former mayor Karen Far bridge and supported by her majority on city council. As a result there were no checks or balances to question the decisions made by council for the following seven years.

The founding group was composed of members of the city administration, Union Gas, (now Enbridge), Guelph Hydro, representatives of business and Industry, University of Guelph, school boards and the Guelph Chamber of Commerce.

Without doubt it was a blue chip group from many interest groups in the city.

Here are the reported CEI goals:

* Use 50 per cent less energy per capita

* Produce 60 per cent less greenhouse gas emissions per capita

* Encourage and facilitate community-based renewable and alternative energy systems

There is no estimate of the costs of these goals or details of achieving them.

The CEI report, at the time, said that the goals would position Guelph among the top energy performers in the world.

How has that worked out for you?

Let’s start examining goal One to use 50 per cent less energy per citizen.

Setting goals is one thing but forcing people to change the way they live is another matter.

In 2007, the Farbridge administration initiated expansion of bicycle lane networks on major city streets to help reduce dependence on fossil fuel emission by motor vehicles.

Piggy-backed on this goal was increasing use of alternative transportation, (bicycles) and public transit.

The first major project was installing dedicated bike lanes on Stone Road in 2009 by taking advantage of the tri-government infrastructure program in which Guelph’s share was one third of the $66 million approved by all parties.

That project cost $2 million. Then council approved a ten-year bike lane development plan, spending $300,000 per year. But here’s what happened:

The city embarked on resurfacing portions of major streets all of which were to accommodate bike lanes. Part of the individual projects was to shrink the road to three lanes to two for traffic and a centre lane for left turns. The shrinking included painting in bike lanes on either side of their freshly resurfaced road.

But this accommodation for cyclists did not extend beyond the portion being resurfaced in most cases. These include Silver Creek, Woodlawn, Stevenson, Speedvale, Woolwich, Victoria, Gordon, Downey, and Clair Road to name a few.

This attempt to provide alternative transportation, thereby reducing greenhouse gas emissions, was thwarted by a growing population that was 119,000 in 2007 when the CEI was approved, to 131, 000 by the last national census in 2016.

Does more mean less?

Accordingly, more people mean more cars, trucks and transit vehicles. That adds up to increasing greenhouse gas emissions.

The new housing enclaves of attached strip houses, low-rise condos and high-rise apartment buildings, has further exacerbated the building boom of new housing. Then add the undergraduate population of the University of Guelph that has expanded with 22,000 now attending.

Traffic congestion, intensification following new housing development and improving rail service to Toronto, These are factors in increasing energy use, not decreasing it when the CEI goals were approved.

The same events apply to the second goal of producing 60 per cent less of greenhouse gases per capita. The timing of this vision is not mentioned in these goals’ report. As it turned out, it was an open cheque book opportunity for city council to introduce personal ideas and projects to achieve these CEI goals.

WE now know that more people driving more fossil-fueled vehicles does not reduce the greenhouse gas emissions

Let’s follow the money

Who benefits from all this housing built in Guelph since 20017?

Well, the Chamber of Commerce should be happy with the growth of commercial business in the city. The building trades have prospered and last, but not least, the development industry and supporting cast of architects, town planners and lawyers who benefit from the housing and commercial growth since 2007

In Mayor Guthrie election financial report presented to the city, it revealed an interesting fact. The mayor collected some $86,000 for his campaign from people who did not live in Guelph. Most were developers and service corporations seeking access to the Guelph market. Of this group, out of the 100 individual and corporations who donated some 29 per cent were from the development industry. Most of the donations were $1,200, the maximum allowed by Elections Ontario.

Did all this development meet the 2007 CEI goals of reducing energy in the city by 50 per cent, or reducing 60 per cent less greenhouse gas emissions or facilitate and encourage community based renewable and alternative energy system?

WE now know how that last goal went. All it costs citizens more than $66 million with the failed Guelph Municipal Holdings Inc. district enery projects.

The irony is that despite the loss of millions of dollars by two administrations, is that the remnants of the Farbridge eight-year social engineering adventure is why does the CEI still exist? Its premise and goals are still influencing today’s council.

How did all this lower energy use reduce greenhouse gas?

This part will explain in 2009 how the wheels falling off when Guelph Hydro announced its subsidiary, Ecotricity Corporation, reported a loss of $3,945,000. The report stated that the loss was due to declining extraction of methane gas used to generate electricity at the Eastview landfill garbage site. This is contributed to an “impairment charge” of $2,984,000 of the corporation’s total loss in 2009.

An “impairment charge” is an accounting term based on the amount of an investment is less than the carrying charge, then the assets are deemed to be impaired. The amount of the investment must be eventually written down to the recoverable amount, if any exists.

In 2014, Councillor Cam Guthrie defeated Mayor Farbridge. There was hope that reform would occur and civic sanity would arrive.

In other words, it’s Act Two of the Farbridge CEI legacy and citizens are all empty-pocket endangered species.

There is only one way out and that is to elect a council of moderate, thinking, and responsible candidates to change the menu and reform the administration.

Stay tuned to more information that will be revealed in future parts of the Guelphspeaks seven-part series on the pathological odyssey of corruptive practices. There are other examples of losses and impairment charges that slammed city finances.

Miss the introduction and Part One? All published parts are located in the Guelphspeaks archives located on the website and are filed post publishing’s usual comments are welcome

Next, Part Three: is  to be published August 1, 2019.

How irritated spite increased the cost of the new city hall by $23 million

 

 

 

 

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A dysfunctional council most of whom fail to understand the financial implications of their actions

By Gerry Barker

July 21, 2016

Let’s confirm that Guelph’s council is divided and dominated by seven councillors who don’t have the guts to close down a $37.1 million failed energy project that doesn’t produce enough energy to pay the bills.

Mark your calendar that Monday night, July 18, is a night that will go down as a failure to do the right thing. The majority Bloc of Seven failed to arrest spending more money on a project passed by the former Farbridge administration saddling citizens with more debt that even the Urbacon fiasco.

Here are some of the facts that have made a nine-year capital-spending plan after only a year, firmly in the ditch. Yes, it already has a 2016 capital budget deficit of $170 million as the first year of a nine-year capital budget.

Monday night, a delegation asked council to build a new downtown library and, get this, not partner with private investors to finance it. The last estimate for a stand-alone downtown main library was $60 million, or was it $63 million? These days the way some staff and activists are running the finances of our city, one cannot tell what the amount is. Nor did the two delegates produce a figure.

Take the Community Energy Initiative (CEI). On May 16, staff gave specific figures on how the previous administration launched a District Energy plan that was composed of two operating Nodes.

The downtown Node was located in the Sleeman Centre and the other in the Hanlon Creek Business Park. Total cost was $8.7 million. The financing and operational details were conducted in secret and hung in there for five years before Mayor Cam Guthrie, last year started asking staff for financials on the CEI operations. He especially questioned the District Energy Nodes that were connected to buildings downtown and in the Hanlon.

According to a detailed staff report July 18 on the District Energy operations, the cost of this operation, were managed off the city books through Guelph Municipal Holdings Inc (GMHI) and Guelph Hydro. Two Guelph Hydro subsidiaries corporations, Envida Community Energy Corporation and Guelph Hydro Electric Services Inc, were used to implement the District Energy project.

Adding up the costs of this adventure to develop sustainable energy and thermal hot and cold water to nearby customers, are estimated to be $37.1 million. That excludes the $68.5 million currently sitting on the city books as an asset.

The cupboard is bare

Here’s the nitty gritty. GMHI and Envida have zero financial capacity. Envida owes GMHI $11.8 million. GMHI is being carried on the city books as an impaired asset of $68.5 million. Today, because of the impairment, the asset is being depleted in value because the carrying charges exceed the capital on the books. Result, it is converted on the books as an expense as the value of the asset declines. Now the cost of carrying the asset exceeds the value of the asset.

Despite this damning evidence, on Monday night, July 18, council voted to adopt a strategy prepared by consultants Deloitte, to keep operating the money-gulping Nodes until the first quarter in 2017. Then, results will be reviewed. But there is not to be additional capital invested. Deloitte calls it the “As Is” option. Their fee for this analysis is between $130,000 and $160,000.

To this observer, this looks like another method by staff to hire a consultant to create a plan supporting, at the time, a point of view to salvage the project. Later evidence produced by staff, reinforced what everyone feared … it was a major expensive flop.

Oh! In order to make the Nodes able to meet a commitment to the Ontario grid of 10 MW for upgrading each Node, the price is estimated to be another $60 million. And there’s more, if the Nodes are shut down, there will be costs to cover broken contracts plus retrofitting some buildings to return to standard sources of hot and cold water and heat in some cases.

And yet city council receiving all this detailed information, prepared by the city staff, voted to keep the Nodes running until next March.

Two councillors urge not to look back

Two councillors stated that it was a waste if time and money to investigate those responsible for this ill-conceived and carelessly managed project. Coun. Mike Salisbury said any attempt to pin-point responsibility was “political.” He was joined by Coun. Phil Allt who said any recriminatory investigation would be a waste of staff time and money.

Phil, that money has already been spent by staff and Deloitte. They had to untangle the facts surrounding this failed exercise. It is one that does not produce power to the grid or provide any environmental benefit, zero.

The only beneficiaries are that handful of nearby buildings hooked up to the Nodes to supply hot and cold running water. It still requires natural gas to operate the Node pumps.

Jason Dodge spoke to council and affirmed the previous administration that they were not justified bypassing proper business planning. He added the project exemplifies loss of public trust in past councils and credibility. Mr. Dodge said the city needs a council that takes responsibility and holds itself accountable.

Up speaks Coun. Phil Allt to demand what evidence Dodge had that the previous council didn’t do due diligence.

Phil, you had better start reading your staff reports. There is ample evidence that not only was there no due diligence but there was no evidence of accountability. This was because the practice of the former administration was to conduct its business behind closed doors.

Two members of the present council, councillors June Hofland and Karl Wettstein, were present at those meetings of GMHI more than five years. Yet they did not, it appears, even inform their council colleagues of events that have led up to this $37.1 million cost to the city.

Coun.Wettstein made the comment that he believe the new CAO and city staff understand the problem and he is confident they will handle the public fallout of the project. “I am proud to be able to vote for this in its entirety,” he said.

How can Coun. Karl Wettstein keep a straight face?

Is he serious? He refuses to take any responsibility for his role as a member of the GMHI board of directors

Mayor Guthrie was on target to shut the District Energy Nodes down but the majority of council disagreed. The Bloc of Seven was joined by Coun. Bob Bell in opting for continuing the District Energy Nodes for another eight months.

This is just perpetuating the mistakes of the previous council.

Hopefully the mayor and a majority of council will be successful to shut this operation down, including the abortive Community Energy Initiative. The evidence is clear that the thermal heating and cooling underground system is too expensive and disruptive to expand without a much larger customer base.

Deputy Chief Administrative Officer Scott Stewart agrees with GMHI CEO Pankaj Sardona that a customer user base of between three million and four million square feet is necessary to make the District Energy project viable.

The fact the previous administration failed to understand this key factor is the root cause of the massive spending on a project that was doomed to failure from the start.

That’s another reason why there is no money to build a new downtown library or South End Recreation Centre.

It also explains why councillors Phil Allt and Mike Salisbury don’t want to look back and hold those responsible. The reputations of Hofland and Wettstein are at stake along with former mayor Karen Farbridge.

Do you think it’s fair to ignore obvious indiscretions by the two councillors who were directly involved for five years serving on the Board of GMHI? Why did they not question the decisions that led to this multi-million dollar failed project?

Not only did they not perform their fiduciary responsibility to the citizens but also they took money to serve on the board.

The only course left for them to salvage what’s left of their professional reputations, is to resign.

It cannot happen soon enough.

 

 

Assessing the financial wreckage left by the Farbridge Community Energy Initiative

By Gerry Barker

July 18, 2016

Tonight, city council will discuss a thorough and damning city staff report detailing the history of the Community Energy Initiative (CEI) that was the heart and soul of the former mayor’s administration.

This was a master plan to develop District Energy Nodes that were linked to an underground network of insulated pipes to deliver hot and cold water to nearby buildings. The Nodes also were designed to generate electricity. These Node sites include the Sleeman Centre where the natural gas-fired pumping system was located; the RiverRun theatre across the street; St. Marks Church located nearby and the two Tricar high-rise condo buildings south of the Sleeman Centre.

The staff report also detailed the operation of the District Energy Node built in the Hanlon Business Park. That only had two customers plus the head office of Fusion Homes. The report said that both the Hanlon and Downtown district energy Nodes cost $8.7 million.

Ms. Farbridge acted as chairperson of a corporation, formed in 2010, known as Guelph Municipal Holdings Inc. Also serving on the board were Councillors Karl Wettstein, Lise Burcher, June Hofland and Todd Dennis. Burcher did not run in 2014 and Dennis and Ms. Farbridge were defeated in the civic election.

That meant that Councillors Hofland and Wettstein served on the GMHI board for five years or more in Wettstein’s case. They were present when the original business plan was developed, yet they never revealed details. They were present when the board meetings were held in closed session for five years, but never said a word about what was happening at GMHI and the Byzantine collection of various companies involved.

Tonight as city councillors, Wettstein and Hofland will be able to vote on the future of the CEI. If they were part of the problem for five years of closed session meetings of GMHI, they should resign or at least recuse themselves from participating in tonight’s meeting.

Oh! What a tangled web we weave

The former mayor did know what was going on and who pushed the failing CEI. She also said little about the role played by GMHI and ultimately Guelph Hydro, plus its subsidiaries, Envida Community Energy Corporation and Guelph Hydro Electric Services Inc

Now Mr. Wettstein says he will not be a candidate for council in 2018. Ms. Hofland tells people that she didn’t understand what was going on.

In 2015, it was reported that GMHI lost $9.4 million. At the same time, Envida owes $11.8 million to GMHI.

Then the staff report says that GMHI does not have the financial capacity to underwrite an expansion of the downtown Node to meet the Combined Heat and Power Standing Offer Program (CHPSOP). To meet that requirement standard, the reports says will cost $29 million.

Are you beginning to believe that this wasn’t such a good idea in the first place? You are not alone.

In the case of the Hanlon District Energy Node, the cost to meet the CHPSOP contract power requirements will be $31 million. That’s a total capital cost of $60 million including the two units already installed, and hooked up to the underground thermal heating and cooling system.

According to the staff report, GMHI has admitted that the two Nodes “will not generate sufficient cash flows over their useful lives to fully recover the costs of installing these assets.” GMHI has already stated it does not have the financial capacity to expand the two Nodes.

Up until this year, the city’s Capital Asset Renewal Reserve (CARR) fund financed the retrofits. Repayment to the reserve will come from cost savings from reduced electricity bills on public buildings with solar panels installed. The repayment is estimated to be completed in ten years. The report did not say how much was taken from the CARR reserve.

Exactly how these power savings will be transferred to the CARR is not explained.

Then there is the item carried on the city books of $68.6 million as an investment in GMHI on our balance sheet. But the so-called investment is already impaired and, over time, this will reduce the value of the investment that will become an expense on the city income statement.

Translation: Citizens could be paying this off over the next 10 to 15 years.

Another wrinkle in this maze of duplicity is the so-called dividends paid to the city by GMHI each year that totaled some $9 million up to 2014. This smells like it was a book entry without actual cash changing hands. If this is true, then it is gross misrepresentation and borders on being criminal.

Now we know why our former Chief Financial Officer, Al Horsman, left the city last August. His successor, General Manager of Finance and city Treasurer, Janice Sheehy, resigned in March after one year on the job. The city finances have been under the supervision of Deputy Chief Administrative Officer, Mark Amorosi for the past 19 months.

This secret scheme is so financially convoluted that we may only get to the bottom of it when the results of an audit are announced in September.

The three options recommended by the consultants and the staff:

In the meantime, this extensive staff report is offering three potential options:

1. Exit Option: Exit the District Energy business and specifically shut down both Nodes.

Number One includes paying off agreements with customers using the heating and cooling system. Price tag is estimated to be more than $10 million to exit agreements with customers connected to the two Nodes.

2. Operate As-is “Stabilize” the current investments in both systems and continue operations under current contractual agreements, without investing significant capital or infrastructure expansion or spending on business development activities.

Number Two is to keep it going until next March and evaluate the outcome of another nine months of losing money. It not hard to figure out that this is the salvage option to save some reputations and bump the mess into the 2018 budget.

3. Preserve opportunity for growth: Continue to operate the current investments within both Nodes and actively assess our position for future investment opportunities.

Number Three represents insanity. We own a system that is losing money at warp speed and it will cost another $59.7 million to fulfill the Farbridge dream.

If you’ve made it this far, you are probably scratching your head over how could this have happened? How could reasonable and experienced people create such a mess and there was no critical comment or explanation for five years?

We now know it happened right under our noses by a small group of people who held absolute power over the city government for nine years.

We may never know the real costs of this failed project, masquerading under the guise of a Community Energy Initiative.

Did you benefit from this? It was a total abuse of the public trust that was a corruptive attempt to inflict a multi-million dollar energy plan on the citizens who had only one recourse every four years: Vote them out of office.

Let’s total up the costs of what is known so far

Cost of installing the Node pumps in the Sleeman Centre and Hanlon Creek Business Park – $8.7 million;

Tax loss costs for GMHI and Envida – $18 million

GMHI loss in 2015 – $9.4 million

Finally there is the $68.6 million investment by GMHI sitting on the city books. The trouble is the investment is impaired because its value declines as servicing the debt costs exceed the value. Over time, the GMHI investment becomes an expense on the City of Guelph’s income statement.

Other charges include $267,000 per year for GMHI Staff. There is a $612,000 break-up fee for contracts with the Independent Electric Service Organization. Add in the cost of consultants including Deloitte.

It appears that the losses so far amount to $37.1 million excluding the $68.6 million listed as an asset on the city financial accounts for GMHI. Also not included are the asset write-downs and write-offs or the so-called $9 million in dividends GMHI alleges it sent to the city.

Annual net income of both Nodes is $123,230. It will take more than 70 years to recoup the $8.7 installation costs. The Hanlon Node is losing $51,193 a year.

The problem lies in the five-year failure of Envida and GMHI to develop a customer base for each Node that would make the District Energy plan and thermal heating and cooling system successful. It was pointed out May 16 by GMHI Chief Executive Officer, Pankaj Sardana, that each Node should have a customer base in buildings of between three and four million square feet in order to meet operating expenses.

In the original business plan of GMHI and Envida it is now apparent that this vital component of the District Energy installations failed to factor in the customer base needed to support the two Nodes.

Here’s what should occur at tonight’s meeting.

The CEI should be scrapped and be reconsidered once the audit of the GMHI operations is completed. The “As-is” District Energy Nodes option proposed by the Deloitte consultants should exist until November 30^th. At that time the two Nodes need to be closed down and mothballed until all agreements and associated costs have been settled. Current estimated liability to exit the District Energy system is $10 million.

It is up to our council representatives to consider the stakeholders who they represent and stop the bleeding of city funds supporting this failed attempt to satisfy the ego of a defeated mayor.

I urge Mayor Guthrie to call a recorded vote on each motion and amendment.

It is anticipated there will be arguments made to keep the CEI on track. The more people who attend the meeting, creates the greater opportunity to end this failed project.

Let’s show up and wrap it up.

 

 

How the NDP has dominated Guelph’s civic politics for the past ten years

By Gerry Barker

July 11, 2016

This is material you won’t read anywhere else.

It pains me to say this but the majority of Guelph residents either fail to understand how their city administration performs or they don’t care. My task is to make it informative and meaningful to every resident of our city.

This is how a national political party, the New Democratic Party, seized control of the city and imposed its policies and will onto the average citizen.

I have often referred to them as the “orange crush” (OJ) because they have successfully managed to elect their supporters to a council majority creating a ten-year history of political dominance. Not even the 2014 defeat of their leader, Karen Farbridge, plus two councillors and two choosing not to run again, changed their control of council.

By just five votes in ward three that returned June Hofland to council, the OJ retained the majority of votes on council electing seven out of 13 members. This group usually votes as a bloc to perpetuate the failed Farbridge policies that have wasted millions of taxpayer dollars.

Let us count the ways

It started with the 2007 decision to convert the derelict Loretto convent into a new civic museum. The project took more than five years and $16 million to complete the renovation located on the Diocese of Hamilton property of Catholic Hill. Today, the number of people visiting the museum does not cover the operating costs. And the second floor is structurally unsound for major, heavy exhibits.

As a follow-up, the former civic museum on Dublin Street, a heritage building, was sold to a corporation on the promise it would be converted into an artist’s colony for aspiring artists plus graphic and computer developers. Supporting this applicant was James Gordon, the architect of the Farbridge victory in 2006. The building was sold on that promise, despite another offer that council did not accept. Today the dream has been shattered as the owners have converted the space into upscale office suites. The city manager of real estate resigned.

Here’s a further follow-up: The city recently donated $110,000 to Ten Carden Street, a front organization created by the Guelph Civic League, (GCL). That was the key organization that elected Karen Farbridge and ten supporters in 2006 for four years. Who is godfather of GCL? Why it’s current Coun. James Gordon. The grant is supposed to create artist studios on the second floor of the former Akers Furniture Store on MacDonnell Street. Does this have a familiar ring to it? Who owns the building? Does 10 Carden Street have an interest in the property?

The financial train wreck that still needs explanation and the truth

Now, let’s look at the largest single loss of public money in the city’s history called the Community Energy Initiative, (CEI).

This potential train wreck that was initiated by former mayor Karen Farbridge and her supporters, was unanimously approved by city council on April 2007.

There was joy across the city as the newly elected council formed a consortium composed of the city administration, Union Gas, Guelph Hydro, business and industry representatives, University of Guelph, school boards, and the Guelph Chamber of Commerce.

Here are the goals set by the CEI to be fulfilled by 2031:

* Use 50 per cent less energy per capita.

*   Produce 60 per cent less greenhouse gas emissions per capita.

*   Encourage and facilitate community-based renewable and alternative energy            systems.

The staff report in 2007, said that the CEI would position Guelph among the top energy performers in the world. Missing from all this was the business plan to support the claims.

Compounding the potential losses to the city besides the poorly planned energy scheme, was the decision to fire Urbacon Buildings Group Inc in September 2008. The general contractor of the new city hall and conversion of the old city hall into a provincial offences court, sued the city for wrongful dismissal. In 2014, Urbacon settled for $8.96 million.

It was only the tip of the iceberg. While CAO Ann Pappert was telling us before the 2014 civic election, that the settlement would not affect property taxes, the real cost of the completing the city hall project was $23 million more than the original budget, as reported by Ms. Pappert.

Remember, while this was occurring before the 2014 election, then Mayor Farbridge convinced her council in August, just before the capital spending was cut off, to approve spending $34 million to renovate the downtown police headquarters.

The wheels of the CEI’s noble experiment started to come off in 2009 when Guelph Hydro’s subsidiary, Ecotricity Corporation reported a loss of $3,945,000. The report said the loss was due to declining methane gas supply from the Eastview landfill. An impairment charge of $2.984 million was taken that year.

What is the interpretation of an ”impairment” charge? If the recoverable amount of an investment is less than its carrying value, then the asset is deemed to be impaired. The value must be written down to the recoverable amount. Now most people know that the city, by provincial law, must balance its books every year.

But because Ms. Farbridge formed Guelph Municipal Holdings Inc (GMHI) in 2010, as a separate corporation to pursue her dream of energy sustainability and reduction of carbon, the finances went off the city books.

It’s reasonable to assume that with the declining rate of methane gas supply at Eastview generating plant that the recoverable amount is fading fast, thereby increasing the impairment.

Let’s dig a little deeper. The problem occurs when the combined assets of GMHI and the renamed Ecotricity to Envida Energy Corporation, are losing, on average since 2007, $1,967,625 a year. When factoring in the aging of these assets and the CEI enterprise, as organized by the Farbridge administration, the CEI becomes a major league loser. In fact, GMHI lost $9.4 million in 2015.

The accountants like using the term ‘impairment” to describe actual losses of operations as “tax losses.” It’s still a loss by any other name. The argument is that tax losses can be useful to offset future profits and capital gains. In this case it is an actual impossibility. Read on to find out why.

It is calculated that GMHI has an investment impairment of $68.3 million.

GMHI amalgamates with Guelph Hydro

It should be noted that in 2013, GMHI and Guelph Hydro (GHI) were formerly amalgamated. This irrevocably pulled control of Hydro, a corporation with a book value of more than $150 million with a strong monthly cash flow from 55,000 customers, under control of the former mayor and chairperson of GMHI.

The mayor pulled Guelph Hydro into her web of manipulating funding for her CEI agenda.

This was a little-noticed development that gave impetus and funding to pursue the CEI plan to develop two district energy units in the Sleeman Centre and the Hanlon Business Park. These units cost $8.7 million to build. Powered by natural gas, they were linked to the geo-thermal underground water heating and cooling thermal system then under contract. The new plants were also licensed to supply power to the hydro grid, and that has not occurred.

The truth is these CEI operations do not make money and there is never going to be an opportunity to recover the millions that has already been spent.

There were two developments that gave the green light to proceed with the CEI plans. The first, approved May 28, 2012 by city council, was a waiver of sending audited financial statements of GMHI to the city as required under the shareholder’s declaration starting in 2012. But that’s okay, the mayor and four of her councillors were on the GMHI board and could monitor the finances. Surprise! The city council agreed to NOT receive the audited statements.

Now this is what citizens should understand. This is to prevent public knowledge of the GMHI activities and those associated corporations supporting the CEI. And the Farbridge dominated council went along with it.

The second, approved June 28, 2010 by GMHI, was: “The tender process as set out on the city’s Purchasing Policy be waived for energy efficiency and renewable energy generation projects that require access to city-owned lands buildings and rooftops.”

These two developments reinforced the mayor’s determination to prevent any public exposure to what the GMHI was doing. She proceeded with her CEI plans without having to deal with pesky city bylaws that would threaten her plans.

And her counci8l went along with it.

The bottom line is that these two developments broke all the rules of running a business, let alone the city, with no accountability or checks and balances. It remains a deliberate attempt to hide the truth from the public, who are ultimately responsible for the failure of the CEI plans.

In private industry, it would be equivalent to instant dismissal of the managers involved. This CEI was set up to protect those responsible for the planning and execution of this abortive scheme.

In other words, due to a series of operational mistakes that remained unreported, due to the closed-session meetings conducted by GMHI for five years, recovery of this GMHI financing was seriously jeopardized.

To be blunt, this CEI enterprise is a disaster financially with little or no hope of ever becoming remotely viable or an asset of the city. Today, there is no benefit to the public to show for the investment now estimated to be more than $40 million. Now, add in the growing annual “tax losses” of $1,967,245 of GMHI and Guelph Hydro’s subsidiary Envida and you don’t have to be an accountant to figure out this is a growing serious financial disaster. It adds up with debt servicing, tax losses, and write-downs of capital to some $3,268,245 every year.

Citizens now have a debt created by the former mayor, with the complicity of the board of directors of Guelph Hydro, costing even more millions to wind down the non-performing assets.

Any attempt to keep this failed project alive is just pushing more money down the rabbit hole with no guarantees we’ll ever get a refund of Return of Investment (ROI).

Even the current Chief Executive Officer and Chief Financial Officer of GMHI, Pankj Sardana, admits the CEI district energy projects, including the thermal energy connections, were poorly planned, managed and should never have been started in the first place without a sound business plan.

Yet, there are still plans being made to continue this charade of incompetence and wasteful spending.

The two who kept their mouths shut

Two councillors who served on the GMHI board since 2011 supported the architect of this financial disaster, former mayor Farbridge. Coun. June Hofland has been chairperson of the city council’s finance committee since 2010. Why did she not act in the public’s interest, to protest the financial gyrations of this operation? Was she not aware, did she not understand what was going on? She was a member of the GMHI board for four years. She also received a stipend for serving on that board.

The other is Coun. Karl Wettstein who also served on the GMHI board. Just last February 29, Wettstein declared a potential pecuniary interest at the time because he served on the GMHI board. The pecuniary interest he was referring to, was the stipend he received for serving on the board. Again why did he and Hofland not blow the whistle on this situation? Their silence in this matter is deafening.

Just to get this straight. If you receive a stipend for serving on a board, does that mean you don’t have to speak up when the organization is diving into a disastrous depth of debt and operational failure? Apparently it never entered their minds.

And there were other members of council who were part of the GMHI abortive energy project. Former Councilors Todd Dennis and Lies Burcher who were either defeated or chose not to run in 2014. Regardless, they did not raise concerns about the secret of public money flowing out the door to maintain Karen Farbridge’s dream of world recognition.

The sick joke about all this is the some $9 million that GMHI sent to the city treasury through Guelph Hydro over a six-year period. Was it just a book entry on the GMHI balance sheet or did the cash really get transferred? Following the money for that phony claim defies logic. How does a money-losing millions GMHI afford to send an annual dividend of $1,500,000 to the city?

It was all part of the Farbridge plan to make it appear the GMHI was making money, when in fact it was losing millions annually. It also could affect the city’s credit rating that the city needed. Because the GMHI operation was off the books, it did not affect Guelph’s credit rating. It remains all smoke and mirrors.

It’s disturbing how egotism transcends reason particularly when it comes to spending the public’s money.

Most citizens did not benefit from this CEI plan

The citizens of Guelph have been Royally duped by the former Mayor and her followers. Only the people can change it by demanding accountability and transparency.

This was a misguided program that was enjoyed by a tiny minority of the Guelph populace. The CEI plan affected only a concerned a handful of buildings downtown and a similar number of businesses in the Hanlon Business Park.

It’s safe to say that 98 per cent of Guelph’s households and businesses would not benefit from this multi-million excursion into an ego-driven experiment. It is one that has monumentally failed in planning and execution. Now we all must pay for it.

There exists a huge gap in trust by the public of those members of the council’s Group of Seven caucus that continue to support this boondoggle. Instead, they lament the exodus of management staff, excusing it as staff being lured away by more money and better working conditions. They don’t get it.

There has been a gradual disintegration of staff trust in the controlling majority in council. They know how money has been wasted. Former CFO Al Horsman, got it and left to be the CAO of Ste Sault Marie. He left a $209,000 job as a Deputy Chief Administrative Officer (DCAO). You have to ask yourself, why?

Even Ann Pappert took her leave soon after the report she signed with Pankj Sardana May 16, outlining the disastrous history of CEI was made public. Derrick Thomson, resigned his job as DCAO of Operations to be closer to home in Caledon, He was rehired to replace her.

This is the classic case of the chickens coming home to roost. The staff exodus of managerial staff is unprecedented but indicative of the staff malaise that has infected city operations since October 2014.

This should bring a long overdue political enema. Hopefully it is that our mayor and council will return civility, compromise and, give the city back to the people.