Tag Archives: Derrick Thomson

The short memory of Susan Watson ignores history of the past 12 years

By Gerry Barker

January 28, 2019

Opinion

Editor’s Note – Before launching into another overview of unvarnished civics reports on the management of our city, I urge everyone to read and absorb the history on which I have been reporting and commenting since 2011.  The administration is in charge of our $500 million corporation. But who is really running the show?

Susan Watson, the high Priestess of the Left-leaning coalition of power figures controlling our city administration. In a letter to the media, she says: “We all care about our property tax bills.”

She then adds that we should all care about impending increased changes to the development impact by-law updating currently before city council.

Three guesses as to where this is going.

She urges readers not to believe the ‘old’ slogan that, “Growth will pay for growth.”

However, before we consider her statement that in the next ten years, citizens will subsidize development in Guelph at an estimated rate of $5 million a year or $50 million. Those figures come from Tara Baker, the city’s General Manager of Finance and Treasurer.

Ms Watson claims that in the past five years taxpayers paid $21.5 million to subsidize development in the city.

There seems to be a difference here between the city staff manager, responsible for all things accountable is projecting in public administration. Susan Watson’s recent five-year analysis of taxpayers subsidizing development does not agree with the Financial GM’s forecast.

None of these figures define ‘development.’ For example, do the figures include city development projects or are these Ms. Watson’s personal political views?

Are development impact fees charged to the Wilson street five store parkade the city is building across the road from City Hall? That’s a $22 million project.

That cost has been declared as part of the estimated $350 million renovation of the Baker Street project announced before the civic election won by Mayor Guthrie. He said a deal has been struck between the city and Windmill Developments based in Ottawa. It is called a 3P or Private, Public Participation Plan. Whoops that’s four P’s.

This apparent proposal won’t start until 2024 and take at least five to six years to complete. The joker is what is the city’s capital share of this and its public liability? What is the estimate of revenue including taxes and, wait for it! Developments fees?

Some may believe it is heresy regarding city-managed projects to dredge up some of the spectacular management failures in the past 12 years.

Whopper Alert!

Here’s a run down of some of the historical failures:

* The organic waste processing facility costing $34 million of taxpayer’s money and the public does not have access to the organic mulch by-product. It was so overbuilt to handle Guelph’s wet waste that it depends on Simcoe County and the Region of Waterloo for feed stock to keep the joint operating. To top it off, a subsidiary of the company that built the facility, operates it through a subsidiary corporation and sells the finished compost. Details of this arrangement have never been revealed to the people who financed it.

Would you agree this information is in the Public Interest?

*         *         *         *

* Along came the new city hall construction. In 2006, city council approved a contract for $42 million. In 2007, a new council took over and by September 2008, booted the general contractor off the job. The contractor sued the city for $19 million and six years later, a Superior Court judge ruled the city responsible for wrongful dismissal. The overrun cost of the entire project was $23 million.

Why did a lawsuit outcome fail the interest of Public Interest?

*         *         *         *

* The $34 million police headquarters renovation will not be completed until next December. This is a city-managed project and so far it is on schedule to avoid cost overruns coming in at contract cost. However, experience dictates that missing the 2018 completion date indicates possible cost overruns.

* The greatest city mismanaged failure was the five-year record of Guelph Municipal Holdings Inc. (GMHI) led by former mayor Karen Farbridge and aided by her former Chief Administrative Officer, Ann Pappert, who had the dual responsibility as Chief Executive Officer of GMHI.

The real cost of this multi-tasked attempt to create self-sufficiency in power supply and a geo-thermal heating and cooling water system to a small collection of nearby buildings. These include the city- owned Sleeman Centre, River Run theatre and Hanlon Business Park. The only information about the cost of this operation was stated in a consolidated audit of GMHI conducted by accounting firm KPMG

There was a shareholder’s liability of $63 million. That’s a loss to taxpayers in any language.

Was GMHI shrouded in closed- sessions in the Public Interest?

*         *         *         *

Does Ms. Watson object to private enterprise and its role in creating housing both affordable and upscale? Or is it another undocumented scare tactic to reflect her ongoing anti-Conservative campaign to discredit the likes of Mike Harris and Doug Ford?

Susan, look back to the future

Ms. Watson should go back 12 years to examine the track record of former mayor Karen Farbridge and close friend who was supported financially in the three elections.

The Farbridge administration thatran the city for eight years was no slouch in cutting deals with private developers. These include Tricar developments that received deferred development fees in construction of two high-rise condos. There were others given deferred development and deferred property taxes to build housing, particularly in the downtown area.

These deferments were covered by transferring funds of the Brownfield reserve fund valued at more than $30 million. One of those sites was the former LaFarge cement manufacturing plant, east of the Hanlon, south of Paisley.

The funds were set aside to clean up contaminated sites that needed remedial action to remove dangerous elements in the soil.

That Brownfield reserve transfer was done to limit the annual property tax increases and deferred development charges that would impact the city budgets over the years. Again, details of these deals have not been revealed.

But there is more

But the biggest flop of the Farbridge administration was the Guelph Municipal Holdings Inc. The audit of this project by accounting firm KPMG, revealed shareholder’s loss (the citizens of Guelph) was some $63 million. The details of this were published following council meetings May 16, 2016 and mid-July 2016.

This audit showed the costs of creating self-sufficiency in power and a geo-thermal underground system providing hot and cold water supplied to a few city-owned building, a church and two large high-rise conco towers near the Sleeman centre.

The Guelph Hydro giveaway

Then the new council, in 2017 voted to merge Guelph Hydro with Alectra Utilities.

I remain convinced it was a terrible deal because the only thing citizens received was return of its own money. The surplus of Guelph Hydro cash of $18.5 million, that’s our money, is about to be returned to the city. Also, the city is to receive a 4.36 per cent share of 60 per cent of the Alectra Utilities profits.

Breaking news! In 2019 the city, according to budget documents, will receive a dividend of $1 million from Alectra Utilities.

So, why was it merged with Alectra when Guelph Hydro was sending an annual dividend to the city of $3 million?

The administration’s war on fossil-fueled vehicles

The reconfiguration of major city streets is another alleged development of reducing the use of fossil-fueled vehicles. In fact, the opposite has occurred as traffic congestion has substantially increased due to the shrinkage of traffic lanes on major streets to accommodate bicycle lanes.

The cost of this abortive attempt to cut emissions is in eight years: Council has spent some $300,000 annually on bike lane development. Included also was $2 million received for special bike lanes on Stone Road as part of the 2009 infrastructure program of the provincial and federal governments. Oh yes! That also included spending $75,000 on a new time clock in the Sleeman Centre. That replaced one that was working well.

What in hell has that to do with infrastructure?

Added up, there were millions spent on projects described first as optional, but the Farbridge administrations were determined to adhere to climate change and environmental projects to achieve their dream. As usual, citizens picked up the tab.

I do agree with Ms. Watson about private developers paying the costs of connecting to city roads, water and sewer lines, power distribution and public safety facilities, to name a few. But I remain confused about the financial status between private and public development.

Property taxes spiral because of kitchen table accounting

We have just gone through 12 years of council and support staff that have strayed off the reservation.

The good news is there are some moves made to install experienced money managers who can re-focus and concentrate on fixing the infrastructure and freeze the mega projects such as Innovation Guelph Reformatory lands plan and the Baker Street renovation.

Reducing overhead operating costs, debt, pie-in-the-sky projects and maintains services are more important than ever.

How do you get out of the hole, stop digging.

 

 

 

 

 

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Guthrie’s running again when the ink isn’t dry on his beloved Guelph Hydro sell-out

By Gerry Barker

January 15, 2018

Three years ago my wife and I voted for Cam Guthrie. We were not alone as he trounced the mayor without breaking a sweat. He did it by promising property tax increases linked to the Consumer’s Price Index (CPI).

He was engaging and rarely spoke of his predecessor’s record and the Urbacon debacle. His handler’s presented him as a man with a mission to reform the city by creating a “Better Guelph”, what ever that meant.

So, here we are three years later and the promises made by our Mayor were rarely kept. As a matter of fact, the opposite occurred. He ran the table handling the senior staff power grabs and failures. Of the four top managers who received those huge salary increases in December 2015, only one remains. Those increases were concocted in a closed-session meeting convened by our Mayor.

There was no indication, by the administration, of what happened that December night. Four months later, it was exposed when the provincial Sunshine List published the details of the increases.

Here’s the back-story

The first senior staffer to leave, even before the December 10 secret meeting, was former CFO Al Horsman who left in August to take a new job in Sault Ste. Marie. His final pay for seven months work was an estimated $183,000, adjusted of course, for the new level of senior management increase awarded four months later.

The second manager to defect was Derrick Thomson, Deputy Chief Administrative officer, (DCAO) of Operations for some two months. He resigned shortly after receiving a 19 per cent salary increase to take a job in the Town of Caledon, where he lives.

The third departing senior staffer was the Chief Administrative Officer, (CAO) Ann Pappert, who resigned just after the Sunshine List was published March 31, 2016. She left May 26 and received her salary of $263,000 for the full year, despite only working for five months.

The fourth beneficiary of that Dec. 10 closed-session council meeting, was DCAO Mark Amorosi who left the city February 10, 2017.

Little of this information was released by the Guthrie administration. The stonewalling has reached epic proportions as the administration, to this day, has never publicly acknowledged the meeting ever happened.

It begs the question, why did these three senior staffers resign? In the case of two of them, Pappert and Thomson, who quit after receiving huge increases commencing in 2015?

In Mr. Horsman’s case, it is safe to assume he saw the writing on the wall dealing with the new city council and chose to leave, even, perhaps, not knowing about the senior staff increases that were being planned.

The shifting sands of power

Ms. Pappert’s departure left a huge gap at the top of the staff where the CAO was in charge of more than 2.100 employees.

In June 2016, the city announced that Derrick Thomson was re-hired as CAO. Talk about the Phoenix rising from the ashes! Mr. Thomson promised to reveal his salary and eventually we were informed it was $230,000 a year for three years. It turned out that he was also paid a $9,000 taxable benefit as a personal car allowance.

Mr. Thomson has overseen two city budgets, 2017 and 2018. The property taxes in those two budgets, including the special infrastructure levy, exceeds 6 per cent.

The council appointed Mr. Thomson as co-chair of the Strategies and Options Committee (SOC), charged with disposing Guelph Hydro. No elected councillor was appointed to this committee in the 18 months of its operations..

The effect of this is that the merger proposed by the SOC between Guelph Hydro and Alectra Utilities was not only conducted solely in closed-session, but the people’s representatives, city councillors, were not participants.

As a result, the ultimate checks and balances of decisions made by an outside committee were not involved during the 18-month negotiation period by the SOC.

Horse pucky is more effective than the facts

Instead, councillors were fed a line of unadulterated horse pucky from its own staff that led to a 10-3 council approval of the proposal. In my opinion, Council abandoned its responsibilities believing their own senior city  and Hydro staff and the mayor who led the cheerleading of the proposal starting October 5.

The public promised a dose of more good-paying jobs, a green power technology centre in the Guelph Hydro Headquarters. Guelph would become the hub for Alectra’s expansion plans for Southwestern Ontario expansion, and the Guelph Hydro staff would be retained with reductions coming from attrition and relocation.

This is what Mayor Guthrie was selling along with CAO Thomson and Hydro Chair Jane Armstrong.

To add insult to injury, the public was informed that council spent $2.36 million of public money on the SOC plan to dump Guelph Hydro. Then came the announcement that Guelph Hydro, following closure of the deal would send a “special dividend” of $18.5 million to the city.

Didn’t we just lose $63 million for the Green Powered GMHI experiment?

Gee! That friends, is $20.86 million of our money spent to give away our hydro distribution system worth $300 million.

Why is it so difficult to understand? Ten councillors including the mayor voted for the unfinished merger negotiations, but voted for it anyway. Why?

To this day, I challenge any member of council to explain the final two agreements, terms and conditions of the merger. Because the night they approved it, the negotiations had not been completed. Did they not know that? Or, maybe they did.

Would someone explain to me how a council can approve a merger of a $300 million publicly-owned utility serving 55,000 customers, without knowing or understanding the final terms and conditions of this proposal?

There are words that describe what has happened. I’ll leave it to your imagination.

Our only hope is that we are told, in plain language, the details of this merger when negotiations are completed and council holds another vote to approve or walk away.

If they don’t follow this necessary step then two things will happen.

Those councillors who still support the merger will have to answer for their decision next October’s civic election. That is, those who choose re-election.

The second issue is that the Ontario Energy Board must approve the merger based on the details and evidence provided, so that the majority of Guelph citizens are either in favour, or not.

It’s an old axiom, for every action there is a reaction.

It’s our property, let’s protect it

 

 

 

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How Guthrie’s Great Wall prevents the public from knowing the people’s business

By Gerry Barker

January 8, 2018

Note – The following is the opinion of the author based on known facts and history of the administrative management of the City of Guelph.

Donald Trump is still trying to get his $18 billion wall proposed to be built between Mexico and the U.S. but Cam Guthrie has succeeded in erecting a wall to protect his council and city staff from public participation in city business.

Just ask the 22 delegates who opposed at to the open council meeting to approve the merger of Guelph Hydro and Alectra Utilities last December 10. Each delegate outlined why this was not in the best interests of the community and many requested a deferment until all the facts were known, including the final documents pertaining to the agreement.

Council, by a 10-3 majority ignored those citizen delegates. Instead they agreed with the points raised by seven Alectra delegates who offered reasons to merge.

The structure of Guthrie’s Wall of denial

We looked up how the wall was erected initially by the former administration, starting in 2008 when council appointed Amberlea Gravel, located in London, to investigate citizen’s complaints about closed-session meetings of council. The appointment was made when former Premier Dalton McGuinty’s government ordered all municipalities to appoint a closed-session investigator.

Since 2008, Amberlea Gravel, our Local Authority Services (LAS), has processed just three complaints, while being paid a retainer for nine years. The city has not revealed the cost of the retainer. Regardless, it has to be the best deal Amberlea Gravel made to bolster the privacy of council doing the public business.

A few years ago, the Ontario Ombudsman was given authority to act for municipalities. Today more than half have switched to the Ombudsman’s office for investigating closed-session council and local board meetings.

But not Guelph.

I was one of only three complainants requesting a closed-session investigation in early January 2016. I had plenty of reasons for obtaining the minutes of the December 10, 2015 closed council meeting that awarded $98,202 salary increases to the four senior managers of the city.

By now most people in the city know the decision was not revealed until publication of the 2015 Sunshine list which publoshed the salaries and taxable benefits of every city employee earning $100,000 or more.

Guelph Speaks published several posts that decried this blackout decision by city council. For my trouble, I was at first threatened by one of the recipients of our largess and subsequently sued for defamation. That case is before the courts and I cannot comment further.

Four months following my request for the December 10, 2015 minutes, the special closed-session investigator ruled in favour of the city to deny the minutes of that meeting. That’s just one brick in the Guthrie Great Wall of denial to control the public’s business and rightful interest to suit the staff and council. It’s known as shaping the message to satisfy the administration’s interests.

The council code of conduct is the second barrier to open government

Here is an excerpt published on the city website under the title: “Council Code of Conduct/Integrity Commissioner:

The Code of Conduct was adopted by Council to:

  • establish a common basis for the ethical behaviour of Members of Council and Local Boards, and
  • increase public confidence by making a commitment to operate with integrity, justice and courtesy.

I’m sorry; but I can’t make this stuff up.

In 2011, Council appointed an Integrity Commissioner to address the application of the Code of Conduct for Members of Council and Local Boards. The Integrity Commissioner has the power to deal with requests to investigate suspected contraventions of the Code of Conduct. The record shows that all requests referred to the Integrity Commissioner originated with members of council. Council recommend the following penalties:

  • A reprimand; or
  • Suspension of the remuneration of the Council or Local Board member for a period of up to 90 days.
  • In addition to conducting formal Code of Conduct investigations, the Integrity Commissioner also serves as an advisor on appropriate conduct to individual Members of Council or Council as a whole.

The ultimate muzzle on the very people we trust to serve the public’s interests

So, now in his sixth year as Integrity Commissioner, Robert Swazey of Caledon, is judge, jury and prosecutor in cases involving elected officials who may be accused of breaking the code of conduct.

It is an implied threat to any councillor who reveals the contents of a closed-session meeting. It threatens their reputation for protecting the public interests.

In just a few words, this policy was approved by council in, we believe, another closed session. The commissioner, during since 2011 has investigated three cases. His annual retainer is $5,000 and he is paid an hourly fee conduction his investigation and preparing his report.

The one case involved then Coun. Cam Guthrie, who received none of the punishment listed above. It cost the citizens $10,000. The irony of this event is suffocating in tracking the performance of the Mayor and his council.

That was then and this is now

In the past three years of his mayoralty, Cam Guthrie has consistently demonstrated adherence to the Code of Conduct set up by the previous administration. In fact, there has been more closed-session meetings of council and it’s appointed Strategies and Option Committee (SOC) than Noah organizing the Ark.

This is an affront to every citizen of Guelph. It’s a manipulated system to dumb down the electorate and coverup mistakes from public exposure. What they don’t know won’t hurt them.

There is no shortage of information underlying doubt about this Hydro/Alectra merger,

The present council, again in closed-session, approved spending $2.36 million to sell this deal to its own citizens.

The plan was to produce the illusion that most people were in favour of the merge employing leading questions to agree with a phony outcome; sparsely attended town hall meetings and producing a phony 245-page “final agreement” document just 12 days before the meeting. And it was only available online. I charge that fewer than 250 hard copies were distributed to the public.

The communications plan did not put its case forward through Guelph Hydro’s network of 55,000 customers except at the last days prior to the meeting when a tiny resume of the deal’s advantages was inserted in the Hydro/Water bills.

So as city Communications General Manager, Tara Sprigs, described the process of informing all those Hydro customers who were being threatened with everything to lose in return for a boatload of promises.

I would like to think that at least four councillors, those with knowledge and intelligence, would change their vote under the circumstances.

Not one of them is the Mayor.

How council manipulates the Municipal Act closed-session guidelines

It’s simple really; they made up their own closed-session guidelines.

Now topping Guthrie’s Great Wall of denial are the Municipal Act policies. The following are the legal reasons under the Municipal Act to hold a closed-session council or local boards meetings:

Section 270 of the Municipal Act provides that municipalities must develop and maintain various policies regarding the accountability and transparency of municipal government and its operations.

The key words are Accountability and Transparency

The following have been adopted by Council and are regularly reviewed to ensure compliance:

  • Sale and Disposition of Land
  • Number 1: Only covers the sale and disposition of land not the acquisition of the provincially owned Jail lands
  • Hiring of Employees
  • Number 2 – Yes, hiring employees should be confidential but does not include approving salary increases to staff and then not revealong it to the public.
  • Procurement of Goods and Services
  • Number 3 – This covers a lot of areas and there is evidence it has been used to          blackball certain contractors from bidding on city jobs.
  • Public Notice
  • Number 4 – This is an oxymoron; hold a meeting in closed-session to discuss a public notice? It’s a convenient method of calling a closed-session meeting to discuss almost anything in private.
  • Accountability and Transparency
  • Number 5 – Again, why is it necessary to call a closed -ession meeting to discuss accountability and transparency? The previous administration has already paid more than $500,000 to a Toronto consultant to come up with an A&T plan.
  • Delegation of Authority
  • Number 6 – This dovetails with the administrations’ allowance such as giving $98,303 raises to four senior managers in 2015?

The key story here is that council adopted this collection of reasons to legally hold a closed-session meeting. Seems it’s self-serving giving council and the boards absolute power and control of the public’s business. It’s like turning off a tap, shutting off any information they choose for whatever reason. These reasons would include political liability and criticism, personal benefit, adherence to a political philosophy,

The two Councillors who served for four years of the GMHI board of directors, the operator of Guelph Hydro, were paid over and above their regular salaries. Councillors June Hofland and Karl Wettstein still voted in favour of the merger. They not only benefited serving on the GMHI board but in my opinion, were in a conflict of interest.

The Great Wall is intact and a barrier to the public interests

These “blocks” of the public’s business have been refined over the past 11 years to giving the administration-unfettered control of the message. It denies the public’s access to its right to know and understand the corporation’s operations on their behalf.

In future posts, GS will provide specific reforms covering a widespread grouping of issues that the electorate should consider before entering the voting booth.

The most vital reform is to make the council and administration operate openly and accountable.

This year, October 22 to be precise, we the citizens have the opportunity to return power to the people by electing councillors who understand their responsibility to the people who elected them. That means persuading civic-minded, experienced individuals possessing a universal mature backgrounds to turn this city into the jewel of Southern Ontario.

It means a sharp turn to the centre of the political spectrum, away from the left wing domination of our political management where there have been too many mistakes in judgment, losses of public money due to misguided projects that have set the city back in the past 11 years.

The time has come to elect councillors ready to reform and employ critical thinking managing the people’s business.

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Guelph Speaks takes some time off during the holidays

By Gerry Barker

December 22, 2017

In the waning days of 2017 we are all busy preparing and sharing the Christmas and New Year’s holiday season.

Guelph Speaks (GS) is no different and will take time for needed computer maintenance and reflective down time.

It has been quite a year being capped December 10 with the merger of Guelph Hydro and Alectra Utilities. We still maintain that is the greatest giveaway of our most valued public and profitable asset ever experienced in the long 200-year history of our city.

As far as GS is concerned, the New Year will bring some interesting insights and news about the council approved deal that could change this path of consolidated absurdity.

This will be our last post until Tuesday, January 2 when we prepare posts commenting on events during the final year of the council’s mandate. The GS archives contain 922 posts that are available at guelphspeaks.ca since 2011 for information, a history of municipal affairs and perhaps some entertainment.

That totals 1,475, 200 words. It is the equivalent of 20 75,000-word novels.

I am thinking of using the posts to write a book about the management of Guelph including the people responsible from 2006 to present day. The time to organize the material is daunting but not impossible. I intend to turn over my archives to the Guelph public library’s reference department as a source of a very exciting time in our city’s history.

It is a running account of lies, secrecy, cover-ups, accomplishment and the personalities involved.

The New Year will bring a change in our city council. With the merger possibly closing next fall, the impact on the citizens, we predict, will galvanize the voters to express their objection of council’s past actions.

My wife, Barbara and I wish everyone a happy holiday and a healthy and prosperous New Year.

A special thanks to all those GS viewers who follow the blog, the only one in Guelph that challenges the administration and digs under the veneer of city-managed information to reveal the truth and the facts.

As usual, the blog remains open for comment regardless of the content taking a small vacation.

We’re back on the job Tuesday, January 2, 2018.

Best to all,

Gerry and Barbara Barker

 

 

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Grand Theft Hydro: How ten councillors gave away your $300 million Guelph Hydro

By Gerry Barker

December 18, 2917

Here is the anatomy of a $300 million Guelph Hydro giveaway when a lobotomy was needed.

Make no mistake, from the day the Strategies and Options Committee (SOC) was formed by council in 2016, the plan was to merge Guelph Hydro not sell it. When I asked the Mayor why there were no elected councillors on the committee. He replied: “Using a skills-based team is the most appropriate way to conduct this type of asset review.” Appropriate for whom?

Wednesday night was crucial for council to approve the merger. The majority voted to approve the merger knowing there was no looking back, no second chance to reconsider. Guelph now faces losing control, sold out its Hydro employees, all for receiving 4.63 per cent of 60 per cent of Alectra’s profits.

The Ontario Energy Board (OEB) must approve the final agreement. Closing the merger is expected to follow the OEB approval and the brand, Guelph Hydro, will disappear before the end of 2018.

The citizens have the right to object to the merger before the OEB.

The approved draft agreement, supported by ten councillors out of 13, allowed the city, through its defunct Guelph Municipal Holding Inc. (GMHI), one member on the 14-member Alectra Board of Directors, but not the Mayor or acouncillor.

Not only were there no elected officials on the SOC, but also council agreed to merge with Alectra without knowing the details of the final agreement, according to the Toronto-based Aird and Berlis lawyer, representing the City of Guelph. The lawyer warned council that if they approved the merger there was no reversing the approval.

The majority of council ignored his caution.

Names of the ten councillors who voted to give Guelph Hydro away

June Hofland, Mike Salisbury, Christine Billings, Cathy Downer, Karl Wettstein, Leanne Piper, Dan Gibson, Andy Van Hellemond, Mark MacKinnon and Mayor Guthrie.

They ignored the clear evidence that this merger was being rushed. They ignored that there was no rational benefit to the 55,000 Guelph Hydro customers. They ignored the methodology of secretly conducting the investigation over almost a year, beyond any real public participation.

Those ten councillors also ignored several appeals by concerned citizens to defer the decision until the final version of the agreement was revealed and debated. They denied the demand for a referendum to be held as part of the civic election in October next year.

Just for those reasons alone, they will be remembered as the gang that couldn’t shoot straight when logic escaped their judgment.

Here are the three councillors who voted against the merger: James Gordon, Phil Allt and Bob Bell. Apparently, these three representatives of the people had the courage to see through this hazy proposal that was nothing but a sales pitch to get control of Guelph Hydro without paying for it.

That is the essence of this merger that was planned and executed only in the interests of Alectra.

Council was used and subsequently believed that the future of Guelph Hydro was more important than the reality that the utility was a jewel that had great value to make a fair agreement on its terms, not that of Alectra.

The beginning of the march toward Guelph Hydro’s Waterloo

The SOC was formed by city council October 24, 2016 composed of Derrick Thomson, the newly appointed Chief Executive Officer of the City of Guelph, Pankaj Sardana, Chief Executive Officer of Guelph Hydro, who both acted as co-chairs of the committee. Also Robert Bell, Mark Goldberg and Richard Puccini were appointed to the SOC.

According to the news release, the SOC was charged to investigate and recommend opportunities related to maintaining the status quo as a standalone municipally-owned electricity distribution system (acronym LDC), or making a change, which could include buying, selling or merging.

The SOC provided council with a timetable of four phases of their preliminary investigations that would be completed in “early 2017.”

As it turned out, February 2017 was pivotal when the SOC mandate of selling Guelph Hydro, was removed as an option.

The plot thickens

Here is a coincidental series of events that occurred. Alectra Inc. was incorporated January 31, 2017.

The SOC committee personnel changed with Mr. Puccini stepping down. Hydro Chair Jane Armstrong replaced Co-Chair Pankaj Sardana and a Mr. Ault replaced Mr. Puccini.

A council meeting was held February 15, 2017 in which a motion was passed to drop the sale of Guelph Hydro as an option to consider. The vote was 7 to 5. This cleared the deck to only consider a merger with another utility.

On what advice or basis did council at this point make the decision?

Did the SOC recommend to city council to drop this option? Someone did, and the timing, two weeks after the Alectra incorporation opened the door for Alectra to craft a merger proposal that was not made public until October 18, 2017.

That was eight months after the decision not to sell Guelph Hydro.

Here is part of a report published October 25, 2016 in the Guelph Mercury that outlined the SOC’s committed task:

  • Consulting with stakeholders;
  • Investigating transaction options and approach; and
  • Reporting to Council on recommended options and seeking Council’s direction on next steps.

Let’s talk about the claim of “consulting with the stakeholders.” The SOC, to the best of my memory, held all it’s meetings in closed-session including those with city council. With Mr. Thomson as Co-Chair of the SOC and the CAO, it’s difficult to know what information he passed to his staff and council.

After the Alectra merger announcement by the Mayor October 18, the city staff recommended approving the merger. Why would they do anything different? Their boss was the SOC Co-Chair and CAO of the city?

In that position, Mr. Thomson was effectively in control of the process along with his new Co-Chair, Jane Armstrong. Did either of them convince council to remove the Hydro sale option from consideration? As CAO, Mr. Thomson, wearing two hats, was positioned to be a major influence in recommending the dropping of the sale option.

The mystery exists. Who motivated council to eliminate the sale option February 15, 2017?

Given council’s majority of ten approving the merger, it is apparent many were out of the loop in understanding the effect of that decision although five councillors voted against removing the sale option last February.

We later learned that Mr. Puccini was not happy about the move and indicated that he was in favour of a sale of Guelph Hydro. His address to council the night of the approval meeting to decide the future of Guelph Hydro, was that he offered details of the benefits of selling the utility based on empirical evidenced of similar transactions in the LDC field.

Timing the rollout to curtail opposition

In my opinion, this was a carefully planned decision to merge with Alectra and targeted only at the 13 elected members of council. They had control and any opposition was blunted by deliberate release of some of the proposed merger agreement details just 12 days before the crucial council meeting last Wednesday.

Let’s talk about the possible incentives offered to certain members of council and possibly the SOC.

Why did this campaign to influence 13 members of council to approve an agreement that contained no substance, no tangible benefits to the Guelph Hydro customers and, most of all, the exercise was mostly conducted in secret. The council held a one hour closed-session right before the public meeting. Why was that necessary?

Some 29 delegates spoke at that meeting with 22 opposed and seven recommending the merger.

Of the seven, two were Alectra senior executives; a Brampton Alectra employee extolling how fair Alectra was to its employees; a VP representing Pearson International Airport saying how well Alectra performed its maintenance of the 40 megawatts facility; a steward of the Power Worker’s of Ontario that is attempting to take over as bargaining union of Guelph Hydro, and two representatives from Barrie, the mayor and a councillor saying how well the take over by Alectra has worked well with that city.

Their job was to reinforce the message to take over Guelph Hydro and, unfortunately it worked.

Councillors were briefed November 30, the day before the public release of the 245-page agreement report. The next day it was released and was only available Online.

It was a part of a strategy to deny the 55,000 customers of Guelph Hydro their right to see the completed signed document before the December 13 approval meeting. Councillors were also briefed the two days before D-Day in closed-sessions with Hydro CEO Pankaj Sardana.

It is mindful of a George Orwell novel in which the people were tightly controlled by the authoritarian authority and only received information that favoured the controlling class.

In my opinion, this turkey was hatched long before the Hydro customers had any say.

That friends, is dictatorship not a democracy. And there is no comfort to be gained when we are told that Guelph citizens paid $2.36 million to sell this deal with the bulk of it going the lawyer and accounting firms. Those public funds financed the Alectra deal.

So why? Why would ten members of council vote for this merger that has not only cost us $2.36 million but agreeing to give a $300 million asset in return for 4.63 per cent of only 60 per cent of Alectra’s profits with no firm numbers attached?

Why not top it off with a gift of $18.5 million from Guelph Hydro?

The final insult to the citizens who own Guelph Hydro was the $18.5 million “special dividend” that Guelph Hydro will pay the city when the deal closes in a year. That’s our money taken from a $22 million surplus of Guelph Hydro.

The council members who voted to give Guelph Hydro away, Mayor Guthrie denies it, saying: “We are not giving anything away.” Perhaps the Mayor did not understand the drastic step of giving away its publicly owned utility to a private corporation for a tiny interest in that corporation in the name of progress.

We should be interested learning about the two Tesla electricity storage sytems installed in Guelph as the Mauor has stated. Who owns these two sytems and where are they located?

Even though they cannot change their decision, next October those ten councillors will be asked to explain their decision during the civic election campaign.

That is if they choose re-election.

They are the gatekeepers of the city business, providing the checks and balances to maintain the trust that the citizens have placed in them. Instead they fell for a sales pitch to dump our treasured asset for a bunch of promises that have yet to be proven.

The damage is done now.

They don’t realize that from now on, the citizens will never trust them. They were professionally sucker-punched by experts and failed in their job to protect the stakeholder’s interests.

Were they naive?

Did powerful interests seduce them into believing the proposal was the best solution for the future of Guelph Hydro?

Or are they just bad listeners?

It doesn’t matter now; they fixed it so there’s no looking back.

Our only hope is to mobilize and make a case to lobby the OEB to reject this merger.

In my opinion, those ten councillors will eventually have to apologize for the their actions.

History can be so unforgiving.

 

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The top reasons for city council to reject or defer the Guelph Hydro Merger

By Gerry Barker

December 11, 2017

With just two days before city council approves or rejects the alleged final agreement to merge Guelph Hydro with Alectra, there are some troubling aspects derived from an independent source and the mayor’s answers to the 46 questions we asked.

Yesterday, Guelph Speaks (GS) published a second unbiased and independent analysis by Toronto Lawyer Jay Shepherd, an expert on most matters concerning power and its distribution. We urge citizens to read Mr. Shepherd’s full analysis that is fair, transparent and informative. He takes no sides. The post may be reached by clicking on the title above today’s headling.

I personally want to thank him on behalf of all citizens and his reminder that the actual agreement wording is released before any final decision is made.

*            *            *            *

Muzzling the truth denying the details of the merger

GS took some of his diagnosis of benefits as outlined in the 245-page so-called final terms of the agreement as published December 1. The document was published Online, available only to citizens with a computer. GS was able to obtain a hard copy and was stunned at some of the content that was misleading and impossible to understand or be available to all 55,000 Guelph Hydro customers.

It was another deliberate tactic by the authors to use the Internet as an escape hatch to prevent full disclosure of the proposed merger.

According to Mr. Shepherd, he asked the Mayor, the Chief Administrative Officer, Guelph Hydro and Alectra for the agreements. He was referred to Pankaj Sardana, CEO of Guelph Hydro, and the designated spokesperson of all things merger. Sardana said the agreements are not final and cannot be shared. Shepherd stated that the secret final agreements have been provided to the Alectra Board of Directors, Guelph Hydro Board of directors and City Council.

But cannot be shared with the stakeholders who own Guelph Hydro.

*            *            *            *

GS Question: Are Guelph stakeholders receiving any immediate reimbursement for turning over Guelph Hydro and its assets to Alectra?

Mayor Guthrie: There are no incentives, and in my view, Guelph isn’t turning over anything. A merger would make Guelph a part owner of larger utility company. In a merged company, neither party would have complete autonomy, but Guelph would still have some ownership rights and protections set out in a shareholder agreement.

GS Comment: In that case, and thanks for answering a question that was not asked, is Guelph Hydro being given to Alectra with no payment other than a share of Alectra’s profits? Who operates our publicly owned power distribution system if council passes this incomplete agreement? There is no evidence that Guelph will retain ownership rights and protections as set out in the shareholder’s agreement. It is the agreement where citizens have no knowledge.

*            *            *            *

The consequence of approving the merger Wednesday night

Mr. Shepherd: Further, under OEB rules they (the agreements) will have to be made public when OEB approval is sought, although of course by then they will be signed, and Guelph will be legally obligated to complete the deal.  Public disclosure at that point doesn’t really help anyone.

GS Comment: Wednesday night it is crucial for council to approve the merger. If the majority votes for it, then there is no looking back. Guelph has lost control, sold out its Hydro employees all for getting 4.63 per cent of 60 per cent of Alectra’s profits. The city will be allowed, through its defunct Guelph Municipal Holding Inc. (GMHI) one member on the 14-member Alectra Board of Directors (not the Mayor or councillor). That’s like playing in the minors because we are not good enough for the big show.

*            *            *            *

GS Question: Why were no elected officials appointed to the SOC?

Mayor Guthrie: Using a skills-based team is the most appropriate way to conduct this type of asset review.

GS Comment: It appears that the Mayor did not have confidence in his council to be part of the Strategies and Options Committee (SOC.) it was selected to research and investigate a sale or merger of Guelph Hydro. It is reported that the law firm Aird and Berlis of Toronto was selected to handle the legal issues concerning the merger. That firm also previously represented Alectra in an application before the Ontario Energy Board;            there is no information about the accounting firm Grant Thornton LLP and its experience in assessing mergers and acquisitions.

*            *            *            *

Mr. Shepherd: Claim #2:  “Guelph Hydro will pay the City a special dividend of $18.5 million immediately prior to closing, without adversely affecting its regular annual dividend.”

The implication is that this is a benefit from the transaction.  It is not.

Guelph Hydro is currently managed conservatively, and so is underleveraged.  It doesn’t need a merger to pay $18.5 million out to the City, thus increasing Guelph Hydro debt and decreasing equity.  It could do that today.

It is not coming from Alectra.  It is coming from Guelph Hydro’s cash on hand, which at the end of 2016 was $22 million. The City is not better off initially under this transaction.  That is just not correct.

GS Comment: This is perhaps the most damaging reason to reject this merger. It was obviously crafted during the many closed-session meetings between Alectra and the SOC, representing the council. Now we can understand why the Mayor didn’t believe his council was qualified to be part of the SOC. He may be surprised Wednesday night when some of his council understands this naked attempt to mollify the undecided members of council and vote no deal.

*            *            *            *

GS Question: Who and how many third parties expressed an interest to the SOC to buy or merge with Guelph Hydro?

Mayor Guthrie: As stated in June 2 public notice “The committee had preliminary discussions with 14 local utility companies to learn how a potential merger could affect Guelph Hydro’s operations, financial position, infrastructure, ownership structure, organizational culture, and local electricity distribution rates.”

To protect competitive information about Guelph Hydro and the 14 utilities we engaged, all parties agreed not to disclose the identity or the reasons why a business transaction was or wasn’t pursued. This is a common practice.

GS Comment: If this was widely known by the stakeholders, why are so many surprised at the Mayor’s answer. Well, don’t be, because the mayor’s major communications tool is the Internet with the odd paid advertisement in the “City News” pages in the bi-weekly paper. Those ads are paid from the public purse.

Will the Mayor explain what he means by competitive information? Does Guelph Hydro compete with Kitchener or Cambridge power distribution systems?” It may be common practice in competitive businesses but this isn’t the case with a publicly owned utility.

There is competition among those corporations seeking to consolidate Local Community Distribution systems such as Enbridge, Hydro One, EPCOR and others. It is reasonable to expect that major corporations will make high priced offers. Mr. Shepherd points out that it is not reasonable to expect that Alectra – or any distributor, merged or standalone – will remain municipally owned forever.

In view of that, perhaps Guelph Hydro, the SOC, city staff and council should defer this decision in the event the utility may attract a good offer to purchase Guelph Hydro at a fair market price.

Claim #15:  Guelph customers will experience a lengthy list of customer service and other improvements, shown at page 29-30 of Att-2, the advisors report.

This seems to be somewhat oversold.

When you go down the list of supposed benefits from the merged utility, it would appear that virtually all of them are already in place at Guelph Hydro.  It is not clear where actual improvements are being proposed.  Are there any?

As is so often the case when companies that have a business goal are trying to get the public onside, a picture is painted that is the prettiest version of the transaction.  Claims are made, rosy forecasts are delivered as if factual, small things are treated as big, and any details that could undermine the narrative are either not made public, or glossed over.

That appears to be the case here.  This may be a good deal.  There are arguments on both sides.  However, it is important that those assessing the situation start with the actual facts, not hopes and dreams and maybes.

Or sales pitches.

  • Jay Shepherd, December 9, 2017

*            *            *            *

Some final thoughts

What matters most is the will of the people to express their doubts about a possible corrupted piece of legislation. The reasons are clear why this attempt to takeover our standalone Guelph Hydro system is so flawed and contrived. It’s all about the money.

The real value of Guelph Hydro is estimated to be $300 million; the utility’s cashflow is more than $600 million annualy; council has already spent $2.36 million just orchestrating this deal; Guelph Hydro has cash reserves of $22 million.

And the council appointed Strategies and Options Committee recomends that we turn all of it over to Alectra for 4.63 per cent piec of 60 percent of its profits. Trouble is what does that mean in dividend dollars?

Only we the people can change it by influencing our elected councillors to just say: NO

Instead, save our Hydro system and its loyal employees until the right and fair agreement can be completed without the secrecy and insider influences that have made a mockery of our democratic rights.

Our last chance comes Wednesday night. By attending the meeting that starts at 6:30 p.m. at city hall, we can peacefully demonstrate that we don’t want this deal with Alectra.

Instead, council should listen to the people who have little opportunity to even discover what’s really in these agreements that are not being shared publicly.

If council approves these merger agreements, there is no recourse by the shareholders.

Not after the fact changes, no objecting and Guelph Hydro, as we know it, disappears.

Please show up and we’ll have a chance to stop it or at least defer it until the real facts are revealed. We can judge whether to approve it or start over again on the people’s terms and engagement.

Gerry Barker, Editor of Guelph Speaks

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Why the Guelph Hydro merger with Alectra Utilities has the stench of hypocracy

By Gerry Barker

December 8, 2017

The time line of learning the details of the merger is a recipe for denial of public participation.

Last Saturday a citizen gave me a hard copy of the final agreement terms between Guelph Hydro and Alectra. The members of council were presented with the report Thursday, November 30 in a closed-session meeting.

The only way a citizen can access this 245-page agreement statement is online at the city website Guelph.ca. Make sure you have lots of paper and ink! For the 35 per cent of citizens who don’t use a computer for many reasons, we are sorry because it’s every citizen’s right to have access to public information.

All aboard for losing Guelph Hydro

According to the agreement package, serious negotiations between Guelph Hydro and Alectra began October 5 in a closed session of council. Apprently the Strategies and Options Committee (SOC), appointed by council, recommended the merger. Also the Guelph Hydro board of directors unanimously approved the merger. The city staff has also gone on record as recommedding to council to approve the merger.

Why would they do anything else? Their boss, CAO Derrick Thomson, is the architect of this merger as co-chair of the SOC..

Mayor Guthrie held a media briefing on what a great deal this was and how the city and 55,000 customers of Guelph Hydro would benefit. The city would receive higher dividends than currently provided by Guelph Hydro and for the power users, lower rates.

There is still no proof of that happening in the general agreement document to merge and be approved by council December 13.

It took more than a year of research into either selling Guelph Hydro or merging with another locally owned distribution utility, (LCD).

To set the stage, early in the process the SOC presented council with a timetable that indicated the various steps in the process. There were four stages. The fourth, the recommendation to sell or merge Guelph Hydro, was to have been made in the spring of 2018.

That seemed logical given the task the SOC faced. It even mentioned that there would be a civic election in October 2018.

Keep in mind that the SOC’s investigation and negotitaions were all held in closed sessions. Periodically, they would prepare an interim public report to council that was benign and lacked fundamental details of the committee’s progress.

Enter the unintended consequences

But two events occurred that were baffling and unexplained.

First, the original SOC, then called the Stategic Options Committee, had a major personnel change with three of its members replaced including co-chair Pankaj Sardana, CEO of Guelph Hydro. The two “civilian” members were replaced with two new members

CAO Derrick Thomson, remained as co-chair of the SOC. Hydro Chairperson Jane Alexander was appointed co-chair. The name was changed to Strategies and Options Committee. Why? Did the new brooms want to mark its space?

This change was agreed to in closed session. It’s a sharp lesson in the strategy of the SOC to conduct business behind closed doors.

Then came the SOC’s 2017 February meeting. Mr. Thomson was reported as not there due to a scheduling conflict. The committee then formerly removed the mandate to sell Guelph Hydro and only to consider the merger option. It was done in closed session but one of the former members of the SOC, Richard Puccini, let the cat out of the bag. He also said that the utility should be sold not merged.

Keeping the Guelph Hydro employees in the fark

Considering this SOC decision, it is clear that the 130 Guelph Hydro employees had no idea of what was going to happen to their jobs. In fact, the final agreement says that 60 employees would be gone in the next three years or 46 per cent of the workforce.

The agreement states that the brand Guelph Hydro would be dropped within a year of the merger approval once the deal is finalized.

What does council, that has the power to accept or reject the Alectra merger terms, understand the value of the utility? The agreement says it’s $18.5 million and Guelph Hydro will pay the city in the form of a “special” dividend.

So, let me get this straight. The council can approve the merger and in doing so, agree that Guelph Hydro is only worth $18.5 million to the stakeholders? There are some councillors who believe that this is evidence that the merger is a great deal for the city.

So council values Guelph Hydro at $18.5 million

Well, it’s a terrible deal and a mockery of the public trust.. First, Guelph Hydro is wholly owned by the citizens of Guelph, so moving $18.5 million from one pocket to the other is is a charade designed to mollify the majority of citizens opposed to the merger.

The question that councillors should be asking is why should they agree to give away a $300 million publicly-owned Local Community Distribution system, and receive no tangible consideration for it? This system was built by thecustomers of Guelph Hydro

Why even consider this when the city staff has warned of a $450 million shortfall in infrastructure repairs, replacemeny and manatainance? Or the staff report that the 10-year capital spending budget is $420 million underfunded?

And reports are that our city councillors are ready to accept the promise of a dividend payout of 4.63 per cent of part of Alectra Inc’s net profits. Allow me to explain. The agreement states that 4.63 per cent share is based only on 60 per cent of Alectra profits.

It is reported that the City of Hamilton, an Alectras partner, in 2016, received an 18.50 per cent share of Alectra’s profits thst paid $ a dividend of $6 million.

Under the terms of the agreement, Guelph would receive one quarter (4.63 per cent) of the Hamilton Alectra dividend or $1.5 milion. Well, that happens to be the same figure as the city is receiving now from Guelph Hydro. So how does this merger increase the dividend to the city as has been promised?

Why did Alectra borrow $220 million from investors outside Ontario?

There is no mention in the agreement about the $220 million that Alectra has borrowed from investors located in five other provinces. No mention of the interest rate being paid or the duration of the individual loan agreements. The only comment came from the Mayor who stated that the lenders were not shareholders.

There are no actual figures of what the cash dividend may be. There is a promise to establish a Green Power Technoly Centre in Guelph that will employ between eight and 10 employees. That means a net loss of employees affected by the merger is 50. all from Guelph Hydro.

So when the Mayor says the merger will create good jobs, the evidence is not apparent.

Let’s talk about the fairness report prepared by accounting firm Grant Thornton LLP (GT).

This independent report contained a mountain of detail about how this deal was put together and the assets of Guelph Hydro.

Keep remembering that all these negotiations were conducted in secret for several weeks. The one interesting item was that GT referred to Guelph Municipal Holdings Inc. as “the shareholder” of Guelph Hydro. The members of the board of directors are unknown although the Mayor was last reported to be the chairperson.

It is apparent that the city is using GMHI as the shareholder to keep hands off the merger.

The administration gave citizens just 12 days to understand a 245-page ageement

In fact a citizen needs a program to figure out who is in charge of actively negotiating this deal that is complex and difficult to understand exactly what the benefit is to the citizens? We are the real owners of Guelph Hydro Electric Services Inc. the operators of Guelph Hydro?

In my opinion, this has been a carefully planned and secretive attempt to steal Guelph Hydro by Alectra. It is like picking the pennies off a dead man’s eyes.

Throughout the long process the City of Guelph has paid some $2.36 million to outside legal consultant Aird and Berlis of Toronto and accountant Grant Thornton to legitimize the deal.

Why? Because council did not want to defend this before the 2018 election. Also the evidence of the GMHI financial disaster has been established by the KPMG audit of GMHI’s consolidated balance sheet.

I challenge city council to lay the cards on the table about GMHI and tell the stakeholders what really happened. They know but don’t want us to know. So all it has cost us so far is $2.36 million to pay all the crafters of this abomination of a deal and, as an added bonus, is grabing $18.5 million of our money as a $300 million utility disappears down the road.

This was a deliberate, creative and expensive plan to stick handle around a $63 million loss of shareholder’s equity (KPMG GMHI audit) and protect their personal interests in order to get elected next year.

Using your money to buy council support

That smell you notice is the stench of hipocracy when your money is used to cover-up a huge loss of our corporation’s shareholder value.

It’s because this plan is designed to prevent the truth that was kept under wraps until 12 days before the council meeting, to finalize this debacle. It has artfully sucker punched the very people who elected them by blocking the details of the merger until that last moment.

There is more to come on how they did it.

 

Join the growing number of citizen who oppose the merger

Meanwhile, if you don’t like to be conned, send me a note including name, address and ward to gerrybarker76@gmail.com and your name, and those of friends and family, will be added to the petition protesting the merger.

 

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