Tag Archives: Derrick Thomson

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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Why is Guelph Hydro merging with Alectra Inc. without answers before council approves it December 13?

By Gerry Barker

November 27, 2017

I was lying in bed last Friday morning contemplating my day and trying to absorb more on the Trump follies south of the border.

I received a call from a counciilor and we talked about the Guelph Hydro proposed merger with Alectra Inc. I was advised to send my question to energizingtomorrow.ca where I could get all the answers I felt were needed.

On that basis, I went to work and prepared some 50 questions that I felt the Hydro customers and residents needed to know about this proposal and its consequences.

Here’s a snapshot of a portion of the website that was recommended I use:

The committee’s (SOC) education and community engagement efforts will continue through all phases of the process.

If Council decides to pursue merger negotiations, the community will be invited to comment on any proposed merger before Council makes its final decision.

Learn more. Ask us anything.

energizingtomorrow.ca

Well, city council has already signed a memorandum of agreement with Alectra, the corporation ready to merge Guelph Hydro. The merger would give away Guelph Hydro without any immediate compensation for the $228.4 million investment. Hydro’s customer’s investment in poles, wires, substations, equipment, technical staff and Hydro headquarters would be sucked into the Alectra network.

There is no consideration for goodwill, operating surpluses, investments or the wonderful culture of the organization that is described by knowledgeable experts as well run and profitable. In fact it is one of the top performing Local Community Distribution operations in the province.

So here’s what happened when I attempted to “Ask us anything.”

After talking to the councillor, he cautioned that I should not send my questions to CAO Derrick Thomson, who is also co-chair of the SOC, but to the energizingtomorro website and all my questions would be answered.

Well it didn’t work out that way.

Before I disclose my experience with this website, let me remind the administration of its determination to invest and practise transparency and open government.

Now it’s important to remember that the former administration spent some $600,000 to a Toronto consultant to develop a system of government that reflected open access and transparency to allow public participation.

In the case of this merger it isn’t true.

When I went into the energizingtomorrow website, there were six ID boxes and a box for my question(s).

I attempted to post 12 questions and was denied. Tried again with three questions and denied again. The reason was that the message box only allowed 255 characters per question. The restriction of the number of words and spaces per question and not allowing multiple questions, makes “Ask us Anything” well, untrue. It implies access to answering all and every question but restricts it.

In polite circles that is censoring public input and participation in the process.

I sent an email to CAO Derrick Thomson and received a muddled reply from energizing tomorrow based in Guelph Hydro.

So, I engaged plan B. I’ll send my questions to the members of council who will make the final decision December 13 just 16 days from now. I’m doing this because I believe councllors should demand answers to these questions on behalf of the citizens they represent.

 

So here is the intro addressed to council and the questions:

FROM: Gerry Barker

271 Riverview Place

Guelph, ON N1E 7G9

As a resident and taxpayer, I request answers to the following questions about the proposed merger of Guelph Hydro with Alectra Inc. As members of council, you will be asked to approve or disapprove this proposal December 13.

The reason I am asking you, the decision makers, to help answer these question is because I attempted to use the energizingtomorrow.ca “Ask us Anything” website. Well, it is setup to accept only 255 characters per question including the word spaces. It just wasn’t designed to answer multiple questions. I will refrain from explaining why.

I am presenting the questions to seek answers to better understand what’s under the hood of this project. I would appreciate a response via e-mail: gerrybarker76@gmail.com at your earliest convenience.

Thanks for your input and responses. Best, Gerry Barker

 

The questions

Is Guelph Hydro wholly owned by the City of Guelph?

Why was the Strategies and Options Committee (SOC) appointed by city council and what was its mandate?

Why were no elected officials appointed to the SOC?

How much were the SOC members paid in compensation for their services?

My current hydro bill contained a leaflet that stated: “Guelph Hydro begins merger talks with Alectra.” If this is true, why has city council already signed a memorandum of agreement with Alectra that is to be approved December 13?

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

What is the historical relationship between Guelph Hydro and Guelph Municipal Holdings Inc. (GMHI)?

What is the status of GMHI and it’s finances?

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

Were these inquiries reviewed by the SOC?

If so, what was the outcome of these enquiries?

Why is the public not informed why Alectra was selected by the SOC?

Was there any incentive offered to members of the SOC, city council and Guelph Hydro to promote acceptance of this merger?

What are the actual benefits for Guelph that will occur by agreeing to this Alectra merger?

Why was the membership composition of the SOC changed? Why were three members on the original committee replaced?

Did city council approve these changes in open council or closed session?

Why is the City/Guelph Hydro spending $2.36 million to expedite this merger?

Did the memorandum of agreement between Guelph Hydro and Alectra signed by city council detail the financial considerations of such a merger?

What are the terms of this agreement including finances?

Does the City/Guelph Hydro agree to turnover Guelph Hydro to Alectra in return for a share of the Alectra profits?

What is that share of profits and interest in Alectra?

Are these Alectra profits guaranteed in the memorandum of agreement?

Does the city council know exactly the impact of the agreement on the citizen owners of the utility?

Why did the SOC mandate change in February 2017 to exclude the sale of Guelph Hydro from its consideration?

Is it a coincidence that the SOC dropped the option of selling Guelph Hydro just a few days following the incorporation of Alectra Inc. January 31, 2017?

Why did the SOC not reveal that decision released by a former member of the committee recently?

Did the SOC claim that the reason for the change in its original mandate was a matter of “client-solicitor privilege?”

Who was the client and who was the solicitor?

Explain why this unknown “client” was able to change the mandate of the SOC?

When does the memorandum of agreement between Guelph Hydro and Alectra signed by city council detail the financial considerations of such a merger?

Who are the members of city council who voted to sign this memorandum of agreement with Alectra and who did not?

Is this agreement binding on the stakeholders, the people of Guelph?

What is proposed to be the share of Alectra profits and Guelph’s interests?

How many respondents to the energizingtomorrow website are in favour of the merger?

How many attendees at the Town Hall meetings responded in favour and is this on the record?

Who sponsored and owns energizingtomorrow.ca website and how much did it cost?

How many respondents said they were in favour of the merger in the telephone survey contacting 500 residents?

What was the total number of calls made by the survey company?

What were the scripted questions asked in the telephone survey?

Did the City or Guelph Hydro hire a consultant to design and execute the merger proposal? If so, what did it cost in total?

Guelph Hydro has been praised on several levels that it is extremely well run with higher than average customer service including response times. It is profitable earning $7 million in 2016 after expenses. So, what’s the sudden urgency to merge it with Alectra when Guelph Hydro customers lose control?

Why are the SOC negotiations and progress information not being shared with the public stakeholders especially when there is no competitive bid?

Why is Guelph Hydro involved in Green Energy technology when a mismanaged sustainable energy project by GMHI has cost the citizens $63 million in loss of shareholder equity?

Is Alectra agreeing to take the $93 million long-term debt of Guelph hydro?

Who is representing the citizens’ interests negotiating the merger details?

We the people have the power

These questions represent an example of crowd-sourcing where the people’s collective knowledge and experience is far greater than the wishes of the powerful minority.

Now is the time to express the power of that collective and express your opposition to this proposal by informing your councillor. With only 16 days left, we still don’t know, not only the answers to these questions but the details of any agreement. One negotiated in private in which an unknown corporation that has made sketchy promises to take over our treasured Guelph Hydro with no compensation to the stakeholders.

Now is the time to act and just say no.

 

 

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Let’s talk taxes, spending and accountability as the 2018 budget process starts this month

By Gerry Barker

September 5, 2017

In the fall of 2015, Guelph resident Pat Fung CA, CPA presented council with a financial analysis that compared the operating and capital spending costs of Guelph, Cambridge and Kitchener.

His information came from two sources: The official audited financial statements of the three cities and a report prepared for the city of Guelph from consultants BMA.

For his trouble he was mocked behind his back after leaving the chamber. Now you can deduce two things. Either the councillors did not understand the presentation or they didn’t want to.

This council dominated by a majority of seven supporters of the former Farbridge administration has proved to be the least responsible and effective in the ten years I’ve been covering city politics.

Recently I was sent a report about the City of Santa Monica in California. The cost of employees in this upscale community was astronomic with the assistant librarian receiving a total of $220,000 in a pay and benefits package. City bus drivers earn $109,000 in total compensation.

These two examples reflect the operation of a city council that rarely discusses spending issues in public shutting the door to debate by the stakeholders. Even as affluent as Santa Monica, there is a limit of letting city costs soar.

Does any of this sound familiar? Guelph is also an affluent community due to the high compensation packages enjoyed by an estimated 6,500 public service workers. Add to that the penchant for council to conduct their public business behind closed doors echoes the Santa Monica experience.

But when a city official claims that the per capita costs of operating the city are not relevant, you know our spending and operating costs are going nowhere but up. The last ten city budgets have growth compounding property taxes and user fees to make Guelph one of the highest taxed communities in the country.

The truth is the per capita operational costs to Guelph citizens in 2015 was $3,213. That was a 56.2 per cent increase in just seven years. It is a statistic that is relevant.

The root of this is the high cost of overhead, the cost of running the city in which 80 per cent of employees are unionized. That percentage is even higher than Santa Monica’s civic workforce.

It is a problem that city council ignores and to its peril.

Here’s a personal real life story from a pensioner.

The elephant in the finance department is the silent liability of guaranteeing payment to hundreds of former employees if the pension management of the various plans fails to meet their obligation to support retirees for life. Council cannot take away defined pensions. Because this situation has been building for years, today there are growing numbers of retired employees, many of whom retired in their mid 50’s. This has lengthened the time they can draw their pensions that in most cases are indexed.

Here is an example that our family has experienced. My wife, the widow of a deceased Metro police officer, is a member of the Metropolitan Toronto Police Benefit Fund (MTPBF). It is a closed fund for the officers who contributed to the plan and their spouses. It is closed because the City of Toronto converted its various municipal pension plans to the Ontario Municipal Employees Retirement Services (OMERS) for its police officers some 30 years ago. The MTPBF members were exempted from the OMERS merger.

The City of Toronto is sponsor of the MTBPF and is responsible to ensure solvency and payment of benefits to pensioners under the provisions of the Ontario Pension Benefits Law.

And the city has had to fund the amount of capital needed to accomplish this. More than $14 million has been added since 2014. Keep in mind there is a diminishing number of beneficiaries due to death. Eventually, as the numbers decrease, the costs of benefits reduce as well. In 1998, there were 2,430 members of the MTPBF. December 2015, there were 1,828 members, a reduction of 594 or 24.44 per cent.

It appears that the obligation of the City of Toronto to pay the MTPBF members is diminishing to the point where it will no longer have to guarantee the fund benefits. Because eventually there will be no pensioners alive to pay.

The problem is that only city council can approve any increase in the payout to MTPBF pensioners. As a result the amount paid to pensioners remained fixed for some eight years with no cost of living increase allowed.

So what has this to do with Guelph?

With a municipal staff of 2,200 of which 80 per cent are unionized and members of OMERS, there is another group of non-union employees representing a variety of managers and members of other associations.

It is this group, many of whom are senior managers working under tailored personal contracts who are eligible to have their pension payments guaranteed by the City of Guelph.

An example is the retirement of Police Chief Rob Davis. When he stepped down, he received a sick/vacation benefit of some $40,000. His indexed pension was some $130,000 upon retirement. To be fair the former chief used the rules to end his days on active duty.

This example portrays the point that the citizens are obligated to guarantee his benefits in retirement if his underlying pension system ever becomes insolvent.

Here are some suggestions to return our city to the people

* Reduce spending by staff in all areas. This would exclude police, fire and EMS. Freeze all hiring across the board including part-time and occasional staff. Specifically, demand all departments to reduce staff in two stages: Three per cent in the first six months of 2018 and four per cent in the last six months of the year. Total reduction is a 147 Fulltime Equivalent Employees out of a total of 2,200.

* Instruct legal staff to negotiate outstanding legal issues including labour negotiations to bring them to reach a settlement.

* Freeze hiring consultants for 12 months. Any exception would have to be justified by the Chief Administration Officer and approved by council. Close out current contracts.

* Instruct all departments to reduce non-staff expenses by 3 per cent in 2018. Have a staff report regarding the status of all mandated projects including infrastructure requirements and the affect on future cash flow.

* Cut city advertising and public affairs budgets, including a communications staff reduction by 25 per cent in 2018.

* Require River Run Centre and Sleeman Centre to be self-sustaining within one calendar year. These two public operations are being subsidized by the city of an estimated $783,000 annually.

* Review and suspend all public financial support of community groups until January 2019.

* Consult with the provincial government to increase the property tax deal enjoyed for 29 years by the University of Guelph to help meet the city’s 2019 financial needs. The amount is $75 per student has not been adjusted since 1987 when it was enacted.

* Suspend the Well-being funding program for one year or until a public review of where the money is being spent is completed and approved by an independent board.

* Pass a by-law to reduce the number of ward councillors to six in 2018 and make the job a fulltime position with appropriate remuneration and support. Following the Milton example of having a nine-member council, the Mayor and two councillors would be elected at large.

* Abolish the Deputy Chief Administrative Officer rank. Return to a two level system eliminating the costly DCAO designation. Replace it with department managers reporting directly to the CAO.

* Report quarterly, informing the public of the cost of all travel and associated expenses by staff and elected officials. Report all details of staff credit cards including all communications using city-supplied equipment.

* Publish an easy to understand financial summary every quarter detailing spending, new projects, budget deviations, current financial status.

* Appoint a citizen’s committee under the leadership of a qualified and respected library expert to study and recommend a public private partnership for a new downtown library.

* Form a task force composed of citizens and staff to study a public and private partnership to build the south-end recreation centre.

* Get aggressive to collect taxes in arrears and uncollected traffic fines.

* Take the necessary action to open a large grocery store in the east end of the city.

* Hold a conference with property developers and builders to explore ways and means to increase assessment through careful planning.

* Speed up the approval process for developers and new businesses.

* Provide budget support and incentives to the staff’s commercial and industrial development team to seek business and encourage candidates to settle in Guelph.

* Renegotiate the deal with Maple Reinders re operation of the organic wet-waste plant.

* Invoke a sunshine bylaw that opens all council meetings to the public. Cancel all in-camera council meetings held before the public council meeting. Exceptions would be negotiations regarding city-owned real estate, all employee contract negotiations and problems associated with employees. Council, in advance, would have to explain to the public why such an in camera meeting was necessary.

* Have the Mayor give a monthly status report on the city with an overview of finances and status of major projects. It should be real news oriented and not propaganda.

* A customer service team should be trained to answer public questions and complaints. This group would follow-up to ensure the affected department handled the query promptly.

* Abolish the present security system at city hall so that any person can enter and access council and staff at any time. This is a public building owned by the people.

* Amalgamate the response teams for police, fire and EMS to a singular administration and call centre.

* Review the operations of the fire department to reduce operations that are often duplicated by other public safety services.

* Review all bylaws with the city’s legal team to reduce the obfuscation and redundancy of current business practices.

 

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The high cost of departed senior City of Guelph managers

By Gerry Barker

May 18, 2017

We learned this week that former Chief Administrative Officer (CAO) Ann Pappert is looking for a job according to an extensive online Linkedin profile. Ms. Pappert left the city last May 26 for a new position as Assistant Deputy Minister in the Tourism, Culture and Sport Ministry.

That position lasted from October 2016 to February 2017. For whatever reason, she left prior to expiry of her six months probation. The 2016 Ontario Sunshine List shows Ms. Pappert received $263,757 from the city of Guelph although she only worked barely five months. The question is: What were the other benefits to which she could have been entitled? What were the terms of her contract? Such benefits could include pension, car allowance, unused vacation and/or sick time, travel expenses and insurance.

We do know that part of her package awarded in December 10, 2016, during a closed session by council, was reimbursement of unused vacation time, and a $28,000 retroactive performance bonus. Much has been written about that closed session but there has been no official acknowledgement or explanation why Ms. Pappert, Al Horseman, Derrick Thomson and Mark Amorosi were given such high increases.

The kicker is not one person in the entire Guelph administration said a word about those increases until the Sunshine List was published in March 2016.

The revelation ignited a wave of the four senior manager’s departures. Pappert left in May, Thomson resigned shortly after the Sunshine list announcement to take a job with the Town of Caledon, Al Horsman left in August 2015, and Mark Amorosi left the city last February.

These four executives were handsomely rewarded by a gob-struck city council, in secret, not having the guts to tell the people who pay the bills. To this day the minutes of that closed session are locked up. I know, I tried to get them released. Turns out the special “Closed Session Investigator,” a city paid consultant from London took four months to even reply to my request. Their opinion is that the city acted according to the rules of the Ontario Municipal Act.

The thing that citizen’s should take away from all this behind closed-door handling of the public’s business is that our Mayor, Cam Guthrie, went along with it.

Today only Mr. Thomson remains the last of four top senior managers who, after resigning, was hired last June to take over the CAO’s job. Why wouldn’t he? His first year on the job will earn him $245,000 including a $9,900 car allowance. To his credit he went public with his salary.

There were some astonishing inclusions and exclusions.

According to the 2016 Provincial Sunshine list, former CAO, Ann Pappert, was paid $263,757.32 in 2016. Now you would assume that was for the year but Ms. Pappert left the city May 26, 2016, Seems like a lot of money for less than five months work. Why did she earn a $28,000 performance bonus? People earning performance bonuses don’t plan to leave, so why did she leave Guelph?

Checking the 2015 Provincial Sunshine list it showed Ms. Pappert was paid $226,060.96.

The only possible conclusion was that Ann Pappert was paid $489,818.26 for 17 months work as CAO, from January 1, 2015 to May 26, 2016. That works out to a monthly salary of $28,812.

At those rates, why did she resign when the Sunshine List revealed her increase onMarch 2016?

So while her provincial government job did not pan out there are still many unanswered questions about that December 10, 2015 closed council meeting. A total of $98,202 salary increases was awarded to Ms. Pappert, Deputy Chief Administrative Officer’s (DCAO) Al Horsman, Derrick Thomson and Mark Amorosi.

But there is more:

Former Chief Financial Officer, Al Horsman, left the city in August 2015. Today his name shows up receiving $188,999 in the Sunshine 2015 report, the equivalent of a full year on the job. Not bad for eight months work … in 2015. The question is, why did Horsman leave? He was deposed as CFO in the November 2014 reorganization of the senior management and switched to the Waste Management, Environmental Services and Engineering portfolio.

Former CAO Ann Pappert supervised that reorganization, following the 2014 civic election.

Horsman discovered the debacle of the deal made with the Rizzo brothers of Detroit to recycle material shipped from the motor city. The deal fell apart and was reported to have cost Guelph some $2.5 million. In December 2015, Solid Waste General Manager Dean Wyman, who was involved in the Detroit deal, left for a similar job in Edmonton.

DCAO Scott Stewart is now engaged in a rationalization procedure to discover and fix why the Waste management operating costs are losing $270.000 a year.

With Horsman gone, it left just three Senior managers, CAO Ann Pappert, DCAO’s Mark Amorosi and Derrick Thomson.

The revelation of the large increase awarded by council to the remaining three top managers in March 2016, triggered the resignation of Mr. Thomson who said he was taking a job with the Town of Caledon. In April, Ms. Pappert announced she was resigning. But Mr. Thmson came back.

Along with her duties as CAO, Ms. Pappert was also Chief Executive Officer CEO) of Guelph Municipal Holdings Inc (GMHI), for four years. As CEO she signed off, along with her successor at GMHI, Pankaj Sardana. They jointly presented the report to council, acting as shareholders, May 16, 2016. It revealed that the city-owned GMHI was broke and had lost $26.6 million. Ten days later she left her job.

The unfolding story of GMHI leaves many questions to be answered.

Was Ann Pappert paid two salaries for her two senior responsibilities as CAO of Guelph and CEO of GMHI?

Why did two Councillors, June Hofland and Karl Wetstein, both appointed to the GMHI board, not report to council about operations? The chair, former Mayor Farbridge, appointed them. Did they not realize that appointment carried specific fiduciary responsibilities to the public?

What was the role of Guelph Hydro in the Community Energy Initiative program?

How much did Guelph Hydro invest in GMHI in four years?

Why did Guelph Hydro loan GMHI $65 million without any collateral or expectation of repayment?

How can GMHI give the city $9 million over four years in dividends and lose $26.6 million in the same period?

Were the GMHI financial books audited, if so by whom and when?

What was the impact of Guelph Hydro bills to residents during the five year period, 2011 to 2015?

Will the city reveal the total wind-up costs of GMHI and when?

How do GMHI’s financial costs and losses impact the sale of Guelph Hydro?

Is the potential Guelph Hydro sale to pay off these GMHI losses and clear the city books of the debt?

This is the result of misuse of political power and mismanagement of city resources.

The closed session meetings, regardless of what the staff says, are nothing short of secret manipulation of events and decisions. Much of it is political because the city has been held hostage for the past ten years by the political left, supported by the powerful labour movement.

If the majority of citizens don’t complain and demand answers from their elected representatives, then nothing will change. Property taxes will continue to grow exponentially annually. The same will happen with user fees.

The fall-out is that we allowed a CAO to leave this city after receiving more than a million dollars after just over five years on the job.

We can only blame ourselves for allowing it to happen.

Our only chance for electing responsible and experienced councillors next year, to clean up the financial mess the city is in to reduce the operating overhead, restore the reserves and demand performance of the professional staff.

 

 

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Why did the Guthrie administration shut the water off when the house was on fire?

By Gerry Barker

February 27, 2017

Late last week, I finally received a response from the Closed Session Investigator, employed by the city, after almost four months of “investigation.” On November 2, 2016, I requested that the minutes of the closed session council meeting of December 10, 2015 be released to the public.

The reason? That was the meeting in which the public learned four months later, that the top three senior managers of the city had been awarded a total of $98,202 in increases for 2015.

That decision was hidden from the citizens until March 31, 2016 when the provincial Sunshine List of all public employees earning more than $100,000 a year was published.

And there it was. Chief Administrative officer, Ann Pappert, got $37K, Deputy Chief Administrative Officer (DCAO) Derrick Thomson, $33K and DCAO Mark Amorosi, $26K

The city administration currently led by Mayor Cam Guthrie and CAO Derrick Thomson has never publicly acknowledged even paying the increases let alone the rationale.

The conclusion by the special closed session investigator Amberley Gravel, stated: ”That the council did not breach the provisions of the Municipal Act where it went into closed (sic) for consideration of the non union compensation adjustment on December 10 part of the council budget meeting of Dec 9 and 10 2015.”

This five-page report detailed how the Amberley Gravel investigator arrived at this conclusion.

First, the open public discussion of council to approve the 2016 city budget was spread over two days. I know because I covered it both days. During those deliberations, council sandwiched, in a closed session, to approve the non-union compensation isncreases of the three top managers. The details of which were not revealed.

The reason for the closed session as stated in the Municipal Act was s.239(2) (d) was “with respect to labour relations or employee negotiatio

Denying the right to know what we are paying our staff

Do you think this explanation gives council the right to deny the public to know what stakeholders are paying their professional staff?

How long had these labour negotiations with the three senior staffers, occur before that Dec. 10 meeting? In my opinion council, before that meeting, had an excellent grasp of what the three managers were going to receive. All they had to do was vote to approve it and they did it behind closed doors which the Amberley Gravel reports interprets as quite legal under the Municipal Act.

There was no one to protest or comment as for four months the people were unaware. Our society demands that public boards apply the rule of law and ensure checks and balances. City council abandoned this responsibility and acted to cover it up. To me this was moral turpitude and cowardice.

The report states: “At 8:45 p.m. December 10, Council reached the matter identified as the 2016 Non Union Compensation adjustment recommendation. This is identified as item #8 of the 2016 Tax Supported 4 (sic).”

Okay let’s offer an explanation of this Amberley Gravel statement.

They are referring to the 2016 budget. I contend, and the provincial Sunshine List concurs, that those increases were awarded for 2015, not 2016. If Amberley Gravel can’t keep it straight, how do they expect the citizens to understand … or maybe they don’t.

The top three managers’ increases were for 2015. In my opinion, this only exacerbates the sloppy financial management that has plagued the citizens.

Here’s why. In March 2015, council approved the 2015 budget. It is certain that non-union compensation for 2015 would have been included in that budget. Why did it take a special closed session meeting Dec. 10 to approve the $98,202 staff increases? Would this not generate a negative variance of the 2015 Budget when the 2015 Financial Information Report (FIR) is filed to the province?

As an aside, the 2015 FIR was not completed until August 2016 chiefly because the financial staff was missing two key employees, General Manager and Treasurer Janice Sheehy, who resigned in March 2016 and Tara Baker, a financial analyst who went on maternity leave mid year.

Now, two of the recipients of this Dec 10 event are gone, leaving just CAO Thomson as the third employee who received the increase in 2015. And neither he, nor any member of council who approving the award, has said a word about this exorbitant public expense that has been covered up for the last 14 months.

Was it just coincidence or a cover-up?

Even stranger, there was another closed session of council, just four days later, December 14, 2015, to approve the Indemnification Bylaw. Thus it authorizes repayment of legal costs incurred by any staff member, or elected official if they are charged with a legal procedure onitiated by any citizen or corporation.

There is one legal case currently in play in which a former city official has sued a citizen for alleged defamation. This case is a reversal of the intent of the Indemnification Bylaw.

Even more important, was it just coincidence that after the recipients received a boatload of money council, in its wisdom, decided to make sure that no one complained and sued the city or its officials?

On November 2, 2016, I requested an investigation by the city’s closed session investigator who was on a retainer with the city since 2008, the request was denied. As far as I can find out, this is only the fifth such request that has been investigated since 2008. None of them were granted or in favour of the complainant.

This investigator is a part-time employee of the city who represents the staff and elected officials but not the public interests.

I should point out that an investigation implies that all affected parties are interviewed. I never heard from the Investigator, Amberley- Gravel, located in London.

Why are citizens paying for this “independent” service that apparently always sides with the administration? Particularly when more than half of the 445 Ontario Municipalities use the services of the Independent Ontario Ombudsman’s office for such closed session investigations.

This is another tactic used by the administrations headed by the former mayor, Karen Farbridge, to suppress public opinion and participation in the business of the people’s government.

In the past nine years, the record is full of examples of the misuse of closed public sessions of council to conceal, thwart or de-politicize important events and decision involving spending the public’s money.

So the cover-up remains. Mayor Guthrie and his council could have prevented this abuse of the public purse and right to know. I know there is a minority of council who probably did not go along with this decision to grant large increases to three staffers.

But because of the implied threat of being investigated by the Integrity Commission for speaking out about the details of closed session meetings, they are politically hogtied. That’s how the former mayor kept the troops in line.

While the majority of council sits back and believes they are immune from criticism and confrontation when the public objects, they will discover the wrath of the public come the next election in 2018.

I think about this a lot. Our city is being run by a collection of weaklings on council and a depleted senior staff. That is a double whammy against the citizens. Nine years of abuse of the public trust has done n irreparable damage to the citizen stakeholders.

This is why the cost of operations in Guelph are 50 per cent higher that comparably-sized cities. That’s why our taxes are among the highest in the province. That’s why our user and service fees are higher than other municipalities of similar size.

Administrative weakness at the top

Today, there is little strength at the top of city management. By the latest count the city has lost 12 senior managers since Mayor Guthrie was elected. The city has no Chief Financial Officer, no City Solicitor, is minus two DCAO’s and a bloated city staff that needs rationalization.

It’s ironic that in the 2016 budget discussion, there was an attempt to conduct a total staff rationalization to strengthen the administration. The majority of council pooh-poohed the plan saying it would cost too much and the current senior staff had made all the staff realignments to reduce costs that were possible. It was defeated.

In the preparation of the 2917 budget, council approved hiring 13 additional employees costing more than $1million annually.

Yet, February 15, 2017, this same council voted to spend $500,000 to conduct a search of options available to sell, merge or just leave Guelph Hydro alone. The irony of this decision is to hire some nameless outside consultant to solve their problem in the next four months is like shutting off the water when the house is on fire.

For those members of council who are planning to seek re-election, here is some advice: Vote to conduct an independent audit of the city’s finances; conduct a public hearing to review all bylaws, particularly those passed by the three administrations.

Open all city meetings. If a legitimate closed session is necessary, publicize the reason and conclusion of the discussions and recommendations conducted in private.

Memo to council: Please stop treating your constituents as dummies who are manipulated and coerced. Remember whom you work for.

Just think about that

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Citizens will hear the future of Guelph Municipal Holdings Inc. & Guelph Hydro Wednesday night

By Gerry Barker

February 13, 2017

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Important note: The sale or merger of Guelph Hydro is scheduled for Wednesday night February 15, commencing at 6. p.m.  The fate of GMHI will also be discussed the same night. Sorry for the inconvenience. My advice still stands, please plan to attend the Wednesday meeting and make your voices heard. GB

On Wednesday, expect a different tactic employed regarding disposal of Gyelph Hydro.. A five-person committee, headed by CAO Derrick Thomson, is asking council to approve the sale of Guelph Hydro with the committee having the power to do so.

This time the method is different from 2008 when then Mayor Karen Farbridge was defeated in attempting to have council approve the merger with two other local distribution facilities in Hamilton and St. Catharines.

This is nothing but an end run to capture capital gain from the sale or merger, take your pick but someone is going to pay for it,

How can this committee, that has one member of council on it, Bob Bell, be given the power to dispose of the city’s most valuable, profit making asset?

How can the committee gain such power when the future of the Guelph Municipal Holdings Inc. misadventure into a $96 million disaster, hangs over the city like a vulture setting up his evening meal.

Ask yourself, where does the city, the one without a Chief Financial Officer for more than two years, plan to use this potential cash bonanza? Reduce the debt? Pay-off the $65 million hydro loan now sitting on the city books as an impaired asset. That’s because the borrower, GMHI, chaired by former mayor Farbridge, has no money to even pay the interest of the Hydro loan.

Apparently, the Wednesday agenda will discuss extending the future of GMHI to be targeted until mid year.

Are the potential Hydro sale/merger proceeds going toward the police HQ renovations? Or a new downtown Library? Or the South End recreation centre? Those items total capital spending of $140 million.

Is this prudent management of city assets? We live in a city that has higher operating and capital spending budgets than Cambridge and Kitchener, some 50 per cent higher. The disappearance of senior managers since 2014 has made matters worse. Our taxes are among the highest out of 445 municipalities in the Province.

Even more interesting, the Thomson committee debated for five months. They asked for public input and the response was overwhelming against the sale/merger of Guelph Hydro.

The committee also gave citizens little time to appear before council to comment on the committee recommendation to allow it to sell or merge Guelph Hydro. Is this fair?

This is nothing but a gigantic sham to shut down public protest and grab the value of Guelph Hydro estimated to be $150 million.

* If you want someone else to control your electricity costs, don’t show up Wednesday night.

* If you believe what this Thomson committee was told by outside consultants about the declining value of Guelph Hydro and the future of turning your home into a storage site costing thousands of dollars, then don’t show up Wednesday night.

* If you believe that your water bills are going to be reduced if Guelph Hydro is sold, don’t show up Wednesday night.

* If you believe that the proceeds gained by selling off Guelph Hydro will lower your taxes, don’t show up Wednesday night

* If you have faith that council will table the committee recommendation, don’t show up Wednesday night.

It’s time to call a halt to the sloppy and inefficient management that has been denuded of talent. Instead, it lurches on without reducing the city’s gargantuan spending policies that always are directed at the wrong goals at the expense of the necessary goals.

This is the citizen’s opportunity to protest this recommendation that lacks the credibility of public power.

If council passes the recommendation, say goodbye to public trust, power and the city’s most valuable asset.

Addendum

In my opinion, Councillors Karl Wettstein and June Hofland should not participate in discussions regarding Guelph Municipal Holdings Inc or the proposed sale/merger of Guelph Hydro. Their role of serving on the GMHI board of directors for four years and participating in the $96 million dollar losses, linked to Guelph Hydro, of that city-owned corporation, creates a conflict of interest.

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