Blast from the past: Chaos on Carden Street, a case study

By Gerry Barker

April 6, 2014

Editor’s note: In the past two weeks, I have been involved in a special project that is consuming a lot of my time. Nevertheless, I will be monitoring the Guelph political scene and developments. I will report in a timely manner events that affect us all, my best, GB

This column appeared in April 2014 just after Justice Donald MacKenzie announced the city wrongfully dismissed Urbacon Buildings Group Inc., the General Contractor of the new city hall. It marked the beginning of the end of the Farbridge administration as the city paid an extra $23 million over the original cost of $42 milliom. It’s an echo from the pas not to be forgotten too soon.

 

The big event

Last week, a judge found the city of Guelph guilty of wrongful dismissal of the primary contractor who was hired to build the new city hall as well as the Provincial Offences Court renovation of the old city hall. In a civil lawsuit, Urbacon Buildings Group Inc., sued for $19.2 million. A city countersuit of $5 million joined the fray, a $3 million suit involving the architects and the bond company’s non-performance bond.

In this mixture of lawsuits, claims and counter claims and a failed mediation session, Mr. Justice Donald MacKenzie has yet to state his final judgment and has encouraged the two main parties to meet and negotiate the costs.

The key element here is the judge came down on the side of Urbacon. What will eventually follow are the actual judgment and the allocation of costs. Resolution of this important aspect may end up in a second trial next October if the parties cannot agree.

A management in crisis

In the fall of 2006, Guelph voters elected former Mayor Karen Farbridge and ten councillors who were her followers.

This began an odyssey of hirings and firings as the new administration quickly shaped management into its ideological mold. The action included a mixture of policies that emphasized the environment, heritage, labour compensation, and anti-development issues.

Within months, the Chief Administration Officer (CAO), Larry Kotseff, and Chief Financial Officer (CFO), David Kennedy, were dismissed without cause. Two years later, the cost of these dismissals were more than $500,000.

Since that decision, the city has had two CAO’s and four CFO’s. This brings into question, who was deciding to dismiss long-term city managerial employees if the people charged with evaluating staff performance were let go or resigned?

The purge of staff has been a hallmark of the Farbridge administration. The fallout is staff uncertainty, fear of losing one’s job, primary and secondary mismanagement, clumsy internal organization, nepotism, loss of productivity, absenteeism, favouritism, all multiplying and leading to overall staff dysfunction.

Murphy’s rule, times two

Looking back, the Farbridge administration has had a dodgy history managing conflict. Case in point was the legal costs incurred trying to get out of a provincially mandated Public Health partnership between the City and County’s Dufferin and Wellington. The legal costs of an outside lawyer assigned to make the city’s failed case, has never been revealed. Further, the city had to cough up $10 million as its share of the new Public Health Centre on Stone Road.

In fact, the cost of consultants and lawyers has mostly been a state secret in the past eight years. As one observer noted: “This mayor has been one of the most litiganist in living memory.”

Then we connect with the Guelph Police Services request to spend $34 million on a new police headquarters. The Mayor has been a paid member of the Police Services Board since her election in 2006. Is it unfair to think that she failed to tell the board that the city couldn’t afford that expense? Instead, she informs council that the GPSB can appeal to the province to force the city to pay. Where was the Mayor’s renowned steely resolve when that topic was raised? She was missing in action (MIA).

Secrecy of operational costs continues to confound citizens. The costs of operating the multi-million dollar Waste Resource Innovation Centre (WRIC) the fancy name for the city dump remain a state secret.

Even being truthful about the annual real property tax increases escapes the administration’s responsibility to the taxpayers. Despite public protest about the annual increases exceeding the Consumer Price Index, in 2014, the property tax increase will be 4.36 per cent. When council struck the rate of 2.36 per cent last December, they conveniently left out the increase in assessment. That also boosted the cost to property owners.

The first casualty in war is the truth

Often, the details and costs of operations are conveniently left out. The task of informing the public falls on the shoulders of the 13-person city communications department. Why does Guelph need 13 staffers to communicate with the citizens when compared to General Motors, one of the largest corporations in America, which only employs 35 to do the job? Is it economy of scale?

And boy! Right now those GM communicators are earning their money.

It is an example of our administration trying to control the message. There has been little opposition in the past eight years as the two newspapers and the community television channel have frequently expressed confidence in the Farbridge administration’ handling of city business. News, good or bad, should tell both sides of the story.

But this isn’t about the news media, it’s about a sick and irresponsible administration that has spent money on their aspirations, ambition and minority beliefs at the expense of the citizens.

What it all boils down to is a lack of competence that ricochets through all levels of our municipal government.

Restoring confidence in our city governance and instilling the principles of competence will be a daunting task for the next council.

What’s needed in our city is a large dose of sunshine to open the closed closets of civic power.

Reminder: Tickets for the GrassRoots Guelph Blast Off breakfast are going fast. This kick-off event is on April 16, 2014 starting at 8 a.m. at the Guelph Country Club located on Woodlawn Avenue East. Guest speaker is Candice Malcoln, Ontario Executive Director for the Canadian Taxpayers Federation. Call Rena Akerman at 519 837 4010 for tickets. Cost is $18 advance sale or $25 at the door. Price includes breakfast buffet.

P.S. It was sold out.

 

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She promised to put Guelph back on track instead we got a financial train wreck

by Gerry Barker

July 24, 2016

Most people thought the 2006 Karen Farbridge election slogan of “Let’s put Guelph back on track,” was catchy and promised great expectations.

It is apparent that the critical mass of over-spending by the Farbridge eight years of financial mismanagement, is rapidly reaching a disastrous climax starting right after Labour Day.

Financial Climax? What climax?

Let’s check it out. First, the reserves have been tapped out, in order to balance the books for every year since 2010. Why? It’s because the budgets were consistently overspent and the books had to be balanced. If the administration cannot stick to its own budget, it reflects financial mismanagement.

Then the new nine-year capital budget, starting this budget year has already been overspent, according to staff, by $170 million. Throw in the Urbacon city hall breach-of-contract lawsuit and unplanned overages totaling $23 million, and the $37.1 million spent on the Community Energy Initiative, and it’s no wonder the city is in financial trouble.

Toss in the annual subsidies spent on Guelph Transit – $15 million; the Sleeman Center – $249,361; the RiverRun Theatre – $531,440; a city staff numbering more than 2,100 full time equivalent employees (FTE’s) being funded by tax-funded revenue, representing 80 per cent of the total property taxes paid in the city.

What most people don’t understand is the long-term public liability to which taxpayers are responsible forever. Along with a matching contribution, most unionized workers contribute to a defined pension plan that guarantees a pension based on salary, wages, benefits and length of service. Most city workers belong to the Ontario Municipal Employees Retirement System (OMERS). The organization represents more than 270,000 Ontario public employees. The average retirement age for these folks is 55.

The math would indicate this liability, that the municipality must guarantee each employee’s pension. The exponential growth of the Guelph civic staff and remuneration has steadily increased that liability and the costs of carrying it.

The spending doesn’t stop with property taxes

Now add the city’s non-tax funded service increases including city water, Guelph Hydro, parking, use of city-owned facilities including the civic museum, libraries, the Farmer’s Market, donations to 10 Carden Street ($110,000), the Wellbeing operation ($150,000) and a multitude of user fees.

Next comes the annual $300,000 support to build bicycle lanes on major roads. Typical of the Farbridge-inspired financial management, in 2015, Coun. Mike Salisbury moved to spend $600,000 because the bike lane allotment wasn’t spent in the 2014 budget. Thanks to the Bloc of Seven (BOS), it passed.

In August 2014, then mayor Farbridge, persuaded council to finance a $34.1 million renovation of police headquarters. Here’s how it was financed: Tax funded debt – $16.3 million; tax funded police capital reserve – $3 million; Future development fees – $14.8 million. So, let’s get this straight, the police project was approved betting on that future development fees collected from OTHER projects would cough up $14.8 million!

Think about that. As a future developer you pay development fees that you believe will pay for infrastructure-connection to city services, parks, recreation, equipment and, oh yes, a library. Sorry that money has been pledged by a former council to finance a police building. Citizens are now saddled with some Farbridge fancy financial footwork to pay for this public safety Taj Mahal.

This has created a capital financial shortfall that cancels out the downtown library and South End recreation centre. Forget redevelopment of the Baker Street parking lot, mixing private funding with public money. What private developer would want to engage with the city with its track record of bungled civic projects? The former Building Inspector was fired by the city that is currently being sued because it failed to issue building permits for more than 50 city-operated projects. Bruce Poole, a veteran of 30 years working for the city, is seeking $1 million for wrongful dismissal.

That’s what we do know. The problem is there is a lot that we don’t know because of the closed-door meetings of council in which the members face discipline by the Integrity Commissioner for breaking the code of conduct. Councillors are forbidden to reveal the discussions, accusations, and opinions to the public.

As an aside, why wasn’t Coun. Mike Salisbury not investigated by the Integrity Commissioner when he blabbed that he tipped off friendly blogger Adam Donaldson. It was about the decision by five members of the BOS to walk out of a closed session meeting.

Do we have a council of 13 members or only the BOS who support the policies of the previous administration? That’s the situation why city council is dysfunctional, dominated by obstructionism that makes council unproductive.

The city administration takes an August siesta

With August looming, this administration has turned the city operation into a version of what happens every August in France. In that case, the country shuts down. There are no council meetings scheduled and activity slows to a crawl. Even the staff is give a half hour less per day, during August, to perform their jobs. That’s two and a half fewer hours per week.

Complicating this up-coming snore-fest is the realignment of senior management. Derrick Thomson was appointed Chief Administrative Officer (CAO recently) and Colleen Clack, Deputy Administrative Officer (DCAO) in charge of city operations and Guelph Transit. Mr. Thomson previously performed this job.

There is a learning curve to be taken and the political pressure is relentless being exercised by the Bloc of Seven (BOS) even when the city shifts into hiatus for more than a month, the BOS continues to dominate the administration.

But the rubber will hit the road, starting September 6, as the process of creating a 2017 budget begins. Already the staff is signaling that there are special levies in the planning stage. During a recent capital-spending workshop, DCAO Mark Amorosi, the man in charge of city finances for the past 19 months, denounced such measures as increased assessment-producing revenue and diverting the Guelph Hydro dividend of $1.5 million as “robbing Peter to pay Paul.”

Instead, Mr. Amorosi said, the way to go was some form of a special levy that other municipalities are using. Fasten your seat belts folks; the BOS is ready to support a two per cent, ten-year property tax levy starting next year. It will raise more than $230 million.

This is a serious situation but will the administration do something about it?

Their selling point to us will be that it will create funding for needed infrastructure renovation. Even the Associated Municipalities of Ontario (AMO) have labeled Guelph’s infrastructure shortfall at more than $220 million.

Not so fast, Tonto. This requires a reality check. The city is faced with excessive operating costs, high debt, and mismanagement of operations, terrible budget forecasting, and a political atmosphere that is bringing the finances of the city to its knees.

Most voters are starting to realize how self-serving members of council, plus senior members of the staff, have abused them and their personal finances. This group’s political agenda has to be halted and replaced by a plan of common sense recovery.

There is no easy fix but a resolute and responsible administration will start the process of repair to a shattered financial and political agenda.

One thing is certain; there will be a tax revolt if council approves a tax levy of two-per cent over ten years on top of another three -plus per cent increases of normal costs of owning property.

The road of recovery lies only with cutting operational costs. The fact that two neighbouring cities, Kitchener and Cambridge whise operating and capital costs are 50 per cent lower that Guelph’s, points to the need for reduction of those costs

That includes, reduction of staff and realignment of responsibilities; chopping funding of special interest projects and lobbyists; capping salary and wages and benefits for two years; kill the CEI and District Energy project; reduce operating subsidies to Guelph Transit, the Sleeman Centre and RiverRun theatre; cease the bicycle lane expansion allocation; resolve to change the unfair University of Guelph’s property tax deal that pays $75 per student per year. It even fails to reflect the effect of inflation since inauguration in 1987.

It is time to take our city government out of the shadows and return competent financial management to city operations.

This includes hiring an independent Chief Financial Officer to put the train back on track.

It’s time.

If you feel the way that I do, drop me a line at gerrybarker76@gmao.com. Collectively, we can bring about refortm and change.

Goodbye Farbridge culture, hello open governance culture accountable to the people

By Gerry Barker

June 8, 2916

For her eight years in office, former mayor Karen Farbridge imposed a culture that restricted access to public information and spent millions on policies that attempted to change Guelph forever.

Well, we now know that she didn’t fulfill her dream of turning Guelph into a world-class leader in eco environment policies. They were replete with a system of sustainable waste disposal, downtown development, and reducing climate warming by restricting carbon emissions.

They were actions that divided the people by favouring those who supported her plans. Her record delivered her stunning defeat by the people in the 2014 election

Ms. Farbridge was so determined to impose her plans re climate change, she commented in a recent post on her blog: “It’s the low-carbon economy, stupid.” It appears that anyone who doesn’t like her low carbon policies is, well: Stupid.

Statistically, Canada’s affect on global warming is 1 per cent. To create an island of isolated radical restrictions and policies by our political masters was folly and expensive. Now, what do we have to show for it, aside from the millions spent by her administration to indulge her climate change principles?

Creating traffic congestion on busy arterial roads, despite former Councillor Maggie Laidlaw’s prediction that fossil-fueled cars would be off Guelph’s roads in 20 years. That was seven years ago.

Contracting vehicle lanes to allow for dedicated bicycle lanes has increased vehicle congestion, not reducing it. Millions have been spent on creating bicycle lanes in Guelph that are used by a tiny minority of the 130,000 residents.

Sustaining a heavily subsidized transit system that is barely used by full-time residents. The system is primarily designed to serve the 20,000 students of the University of Guelph who, between September and April. Each student is charged a flat fee of $75 per semester to use Guelph Transit.

Maintaining a tight relationship with the University of Guelph, the city administration has done little to change the grossly unfair property tax system for post secondary institutions. It was imposed in 1987 by the province and the rate has not changed in 29 years. It allows the university to pay $75 a head in lieu of property taxes. The University of Guelph is the largest landowner in the city. The primary source of revenue for the city comes from property taxes.

Have your property taxes remained frozen since 1987?

Here’s more, mismanaging capital projects such as the new city hall, failing to fulfill a promised new downtown library and south end recreation centre.

Just before the 2014 election, the mayor and Coun. Leanne Piper, convinced council to approve a $34 million police headquarters renovation when the police only requested $13 million.

Police Chief Brian Larkin pushed that deal and then left Guelph to become Chief of Police in the Region of Waterloo. In the space of just 14 months, Guelph lost its Fire Chief to Kingston and Chief of Police.

In 2009, the Farbridge administration allowed a group of anarchists to shut down development of the city-owned Hanlon Business Park. It cost more than $1.5 million in damages to construction equipment and delayed development of the project. The police did not intervene to remove the trespassers.

Coun. Mike Salisbury, warmly greeted representatives of the occupiers when they came to city hall to demand a work stoppage on the Hanlon Park. Their argument was based on the existence of the rare Jefferson salamander. Further investigation by the provincial Natural Resources Ministry said there was no evidence of the salamander in the park. The project was delayed for a year and a half.

The Mayor changed the governance of the city to accommodate her tight control over the administration and council. She personally approved all senior management personnel of which only one remains, Mark Amorosi, hired in 2008 to head up Human Resources.

Under the former mayor’s control most public business was conducted in closed-session prior to an open council meeting. She created a 13-person communications department to control the message, even to reporters covering city hall.

The result was a neutering of any opposition to her policies.

With other staff defections the house of Farbridge is tumbling down. What did those managerial employees know as they took their leave? The staff of the city has a lame-duck leader in the office of the Chief Administrative Officer, but no senior finance officer, operations chief, engineering or planning leaders. The organizational chart is in a shambles.

To suggest at this point that Mr. Amorosi should take charge in rebuilding the corporate structure is ludicrous and a mistake.

Having said that, council last Monday appointed Derrick Thomson the new CAO of the city. Mr. Thomson recently gave notice that he was accepting a position with the Town of Caledon. He has extensive experience in senior management positions notably with the City of Brampton. Before joining Guelph in September 2013, he was the CAO of the Township of West Lincoln. This is a first step in rebuilding the tainted culture that has enveloped the city’s administration for nine years.

A first step should be revising the governance system imposed by the previous administration to make it more transparent and accountable to city council and the citizens.

Mayor Cam Guthrie has an opportunity here to turn the Good Ship Guelph around. To do so, he should appoint a special committee to examine all applicants for the Chief Financial Officer and Operations positions.

This would be the beginning of changing the culture of the city administration by bringing in senior qualified candidates without political ties or bias. Their mandate is to get the staff on board with new directions and create the necessary changes needed to restart the city administration.

For the Mayor, it will give him elbowroom to fulfill his election promises.

Of course there is some concern in recruiting top people to run the city. This is because of the city’s reputation for high staff turnover and perceived serious cultural problems that have led to a dysfunction of the administration.

The Farbridge loyalist Group of Seven has lost the support of the key staff and its power has been reduced. Their role now is to play along to get along. There is talent among them if they contribute responsibly.

It’s up to them.

The dog days of council dysfunction must cease.

Lets work together to make the Royal City a place in which to live within its means and enjoy the treasured opportunities of lifestyle in a well-managed city.

Coming up, reporting on the 274-page staff report on the Guelph Municipal Holding Inc. operations.

 

Finally, the city administration admits the financial cupboard is bare

By Gerry Barker

Posted February 17, 2016

You can assume that finger pointing has already started.

Tuesday’s report in the Guelph Tribune has exposed how Guelph has wasted millions on a variety of projects including building an organic waste processing facility costing $34 million. This was six times the annual amount of wet waste generated by the city annually.

The Dunlop Drive waste management facility cost was never revealed to the public. Next was spending $15.5 million on using household bins and automated trucks to pick it up. Trouble was, some 6,400 households were not served by the system.

To keep the waste operation going, the city approached other municipalities to use its facilities to process waste. While Guelph citizens underwrote these waste management facilities, there has never been a real financial statement that outlines the status of this Farbridge-inspired plan to become a world-class manager of waste processing. The sick joke is that 45 per cent of the waste generated in Guelph, is still going to the landfill.

This is just some of the reasons that Guelph is under financial duress.

Precious capital was spending $10,000 renovating a derelict former convent building on Catholic Hill. This resulted in a civic museum. The problem remains that the money was spent on someone else’s property. This could create a problem for future councils. The truth of this abortive exercise is the foundation needed severe remediation to support the three-storey structure. Cost is unknown, Special cabinets were ordered from Europe only to find sprinkler heads were too close to the tops of the cabinets.

During the recent meeting, Coun, Christine Billings asked the staff to confirm that the Capital Renewal Reserve Fund was short $5.24 million because the money was used to settle the Urbacon Buildings Group Inc.’s, wrongful dismissal lawsuit. City General Manager and Treasurer Janice Sheehy conceded: “Yes, we did fund that particular issue from the reserve.”

In fairness, when that decision was made, Ms. Sheehy was not an employee of the city. Her admission however disputes the Chief Administrative Officer’s 2014 public statement that there was more than one reserve fund raided, to pay off the Urbacon settlement and legal fees. Ms. Pappert stated further that the impact of the lawsuit would not affect property taxes.

In July 2015, city council decided not to repay the $5.24 million taken from the Capital Renewal Reserve Fund. That decision was made knowing that it would cripple the potential participation in a federal-provincial infrastructure plan that would require the city to pay one-third of any accepted proposal.

At the time, the staff warned that future capital projects may “limit” the city’s ability to take part in any future large-scale infrastructure grant programs because there is no money to pay for the city’s share.

On December 9, the meeting of council determining the 2016 budget quickly buried a staff proposal to institute a ten-year, 2 per cent special property tax levies to pay for needed infrastructure repairs in the city.

Tuesday, the Tribune reported what remains of a $30-million Guelph Hydro note that used to make an annual contribution to city coffers. In July, 2009, council decided to cash in the longstanding Guelph Hydro note and use most of the proceeds, $22 million, to fund the city’s share of a flurry of infrastructure-related construction projects, done in Guelph under a federal-provincial stimulus program.

That leaves $3.7 million in the fund. The whole reserve situation is severely underfunded as stated in the BMA consultant’s report on city operations.

Well, we should be used to this by now. In 2009, the city participated in a federal-provincials infrastructure program. Today there is only $3.7 million left in the Capital Renewal Reserve Fund

In March 2013, the Capital Renewal Reserve Fund was created with the money remaining, $8 million, left from the $30 million Guelph Hydro note. But the city’s share of the federal-provincial infrastructure funding in 2009, grew to $27 million as such infrastructure items such as $2 million spent on Stone Road bike lanes, and a new $75,000 clock in the Sleeman Centre. It is apparent that the $4 million share overrun was paid through successive budgets, in which the real costs were buried.

How did this city get into such a mess?

It was accomplished by a city council dominated by Karen Farbridge and her supporters. For the past four years the council appointed chairperson of Finance, June Hofland, whose financial credentials do not extend beyond a teller’s cage. The former administration was aided and abetted by senior staff; today, four of them appointed by the former administration, are running the city. The present senior staff is devoid of responsibility in maintaining the net worth of the corporation, its ability to pay its bills or finance an aging infrastructure.

The agenda of the former mayor and her supporters on council is filled with projects and schemes to fit their plans with little public input. They have been supported by members of nine unions making up 80 per cent of the total city staff.

The present city staff has grown to such a point that the city can no longer support their numbers. Yet, the seven councillors continue to vote for more staff, as recommended by their cohorts in management, the city staff. This only perpetuates the growing costs and employment liabilities to the taxpayers and those citizens who must pay record-high user fees.

There are only two ways to fix the immediate cash problem: Add cash by going deeper in debt or sock it to the taxpayers with a special levy to raise cash. Sorry, I’ve seen this play before and you won’t like the ending.

The stakeholders in Guelph have been neutered by a minority group of individual, who have grasped power determined to change the city in any way they want.

And here’s an example of Councillor Mark MacKinnon’s solution to the city’s participation in a possible new federal-provincial infrastructure plan: “Take as much money as the federal government will give us.”

With respect, Mr. MacKinnon, that’s remark is a purely political sound bite that ignores the real financial situation this city faces.

City Council must engage in serious political decisions to extricate the stakeholders from this serious financial situation.

Not to take charge and assert financial principles, will be done at your political peril.

 

 

 

 

Part Three -We’re stuck with Farbridge’s Fungible Financial Folly

By Gerry Barker

Posted October 23, 2015

Yesterday, we addressed the need for the city to be put on a financial diet. Here is one of the chief reasons our finances are in such a mess, it’s called fungibile financing.

At the outset we should give you the dictionary definition of the word “fungible.”

According to Mr. Webster, it is an adjective meaning: “Any unit or part of which can replace another unit, as in discharging a debt, capable of being used in place of another.”

Translated it means that after a budget is created by a municipality or any organization, the moving around of money is counter-productive to basic accounting principles.. If a department has an overrun on one project, it is fungible to move money from a reserve or another less important project in the budget. Starting to sound like it’s a method to discharge an internal debt?

It happens all the time in many organizations around the globe. The difference in Guelph is that the public does not know how their money is being moved around in a budget. The city administration has fungible-ized the practice to perfection.

It has been going on in the city of Guelph for more than eight years. The prevailing attitude is what the people don’t know won’t hurt them.

It’s a lullaby for financial disaster

Just look what happened when the city embarked on a foolish exercise to fire the new city hall general contractor. It took seven years of negotiations, mediation and finally, a $19 million wrongful dismissal lawsuit brought by the contractor, Urbacon Building Group.

The city was found to have wrongfully dismissed Urbacon in 2008 and, being that it was a civic election year, the matter was quickly negotiated to cost $8.9 million.

In a second trial shortly following the lawsuit loss, the city attempted to stall the costs portion of the wrongful dismissal trial until after the October 27 civic election. The judge asked the city why they did not settle the lawsuit. The city lawyer replied that because they thought they would win. Just that simple yet arrogant reply was a telling attitude that cost the citizens some $2.3 million in legal costs.

Another fungible exercise was the renovation of the downtown Farmer’s market. City staff told council the cost would be $170,000. Later, it revealed it cost more than $350,000. But not to worry said the staff at the time, we’ll take the overrun money from the new humidifier to be installed in the West Recreation Centre pool area. That’s fungible and stupid because forecasting budget is not a skill set used by many on city staff.

For Finance chairperson Coun. June Hofland, it seemed like a good idea at the time.

So, the Chief Administrative Officer, Ann Pappert, states that the $8.9 million Urbacon settlement will not affect property taxes. They took the money from three unrelated reserve funds to pay off Urbacon. Then they announced that those funds would be replenished by budgeting $900,000 a year for five years.

On the eve approving the 2015 budget, Coun. Karl Wettstein moves that the city spend only $500,000 instead of the previously announced $900,000. and the Farbridge Bloc of Seven agreed. Wettstein added that the staff should come up with an alternative reserve replenishment plan for the 2016 budget. Now engaged in 2016 budget planning, it will be interesting just what the staff will propose to replenish the reserve funds.

Where is our Chief Financial Officer when we need one?

One of the reasons that this practice continues is the absence of a Chief Financial Officer (CFO). We’ve had five in eight years and they’re all gone. Without a trained and experienced CFO, the stage is set for manipulation of finances. And that’s exactly what has happened. Oh, attempts have been made to put the city finances in order by the parade of CFO’s to no avail. One only lasted one week on the job. That’s probably how long it took him to see what was going on. And fungible manipulation of money was happening at the public expense.

Now here is a perfect example of fungible financing. Coun. Mike Salibury, speaking to the 2015 council budget meeting, suggested that instead of spending $300,000 in creating bike lanes on Woodlawn Avenue, increase it to $600,000.

And where did the extra $300,000 come from? He said it was included in the 2014 budget but was not spent.

This is just another example of fungible stupidity. The Municipal Act requires all municipalities to close their books by December 31 and balance them. If Salibury and the rest of that bloc don’t understand that, then they shouldn’t be on council.

This attempt to spend money, that was not part of the current year budget, is the direct result of not adopting zero based budgeting. That means that each year stands alone and unspent money from the previous year’s budget cannot be used.

This practice has been going on for several years. In 2012, GrassRoots Guelph presented documented figures, showing that the annual closing of the books revealed the final balanced accounts. But then a different figure, usually showing a surplus, popped up in the next year’s budget.

Most people were not informed of these differences because the 400-plus page Financial Information Report, filed by the city to the province, was not available to the general public except by request. Few bothered.

This was pure manipulation of the city finances by the city staff, with the complicity of the council.

It is a practice that must stop

 Yet, earlier this summer, the President of the Guelph Chamber of Commerce, Keitho Mwanza, asked the city to adopt a budget system that had a true zero starting point. He did not use the expression “zero based budgeting” but that’s what he meant.

What followed was an hour and a half debate by council that resulted in no changes in the way the budget was prepared. There were three votes to accept the zero based system and all were defeated by the Farbridge Bloc of Seven.

In other words, continue the fungible ways of running the city. Increasing costs annually; hiring more staff; paying higher salaries, wages and benefits, is making Guelph staff one of the highest paid in the country of a city of similar population.

If Kitchener and Cambridge can maintain lower per-person costs, why can’t Guelph?

Note: If you missed the first two parts of this series, check our the guelphspeaks archives.

 

Your GuelphSpeaks Weekender

By Gerry Barker

Posted October 19, 2015

Note: Revised October 19, 2015

Coming next week, exposing city finances – a three part series – Predicting the Federal election outcome- Moving to the mushy middle

 

Next Wednesday: The Farbridge Legacy saddled Guelph with high taxes, financial mismanagement and with your money

Part One of this series reveals a new, startling analysis of the per-person cost to live in Guelph. It is 50% more than residents of Cambridge and Kitchener pay. The analysis is an apples to apples comparison, prepared by a professional accountant, extracted from published official financial statements. The facts are clear that our city is saddled with operating costs that greatly exceed those costs of our nearby neighbour municipalities. How did this happen?

Part Two, to be published Thursday, October 22, is about putting Guelph on a financial diet. It is a plan to cut costs and bring property taxes and user fees in line with peer communities. After eight years of financial mismanagement and growing costs to citizens under former mayor Karen Farbridge, it’s time to pay the piper. Her policies have driven taxes and user fees higher to a point where the middle class can no longer endure paying among the highest tax rates in Canada.

Part Three will run in guelphspeaks.ca Friday, October 23 under the simple title: “Farbridge’s Fumbling Fungible Financial Folly.” If the alliteration fails to get your attention, read on because ‘fungible’ is the right word to describe how budgets and spending were manipulated by the Farbridge administration. It works like this: The staff prepares the annual budget with detailed allocations for funding projects and operations. Council approves it.

Then, what happens is a cost over-run occurs that was not forecasted so money is taken from a reserve or other less important funded project, to pay for it. Multiply this practice over eight years and it’s one reason your taxes, electricity, water and user fees have soared. The most recent example was taking $8,900,000 from three reserve funds to pay off the Urbacon City Hall settlement.

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Sometime I feel like the Sorcer’s apprentice figuring out the outcome of the Federal election.

So after hours of reading the polls, the tea leaves and chicken bones, (old Voodoo practice), here is the unofficial guelphspeaks prediction of the number of seats each of the four official parties will win, Monday October 19.

Before beginning this exercise there are 338 seats up for grabs. One of our sources was the Sauder Business School in British Columbia, which used a system of investors voting their choices with money. Now you have to take that seriously because it is meaningful and about money, not just a “who would you support today?”

So, here’s the guelphspeaks.ca federal election seat count that indicates a Liberal minority government.

Liberals – 140 seats

Conservatives – 129 seats

NDP – 69 seats

Greens – 2 seats

It would take 170 seats to form a majority government.

And what do the tea leaves and bones predict in Guelph?

Longfield 33%, Kovach 31%, Miller 28% and Seagram 8%.

Cluck, Cluck, Cluck

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Is Canada moving toward the mushy middle in the political spectrum?

The reports of the various pronouncements by the political parties, indicates a shift from the extreme positions of both Right and Left. Example, Thomas Mulcair moved his party from the enduring “tax and spend” policies of the NDP to proposing a balanced budget. Sacre Bleu, Monsieur. However, with the other social promises he made, the usual NDP dilemma and record, seem to diminish the party’s message and opportunity. He went from running first in the polls in early August to last in October.

Lesson learned? You can’t appear to be moderate and appealing to the base but promoting long-term and expensive social policies. Then there was the naqib uproar when Mulcair misread the feelings of his Quebec supporters.

On the other hand, Prime Minister Harper moved his party from right to left, promising more tax breaks for Canadians and strong economic management. However, his campaign was still sitting under the Duffy trial and the Senate misrepresentation of the facts by the PM.

The death knell came to the Conservatives when Rob Ford tweeted a photo of himself and his family with Harper. It was an ill-considered event tying in with the Fords as Rob, was mayor of Toronto, was a revealed drug user and alcohol abuser, embarrassing the citizens of Canada’s largest city for four years in office.

With friends like the Fords, Harper doesn’t need enemies.

Despite the pressing attacks by the Conservatives on Justin Trudeau, he established himself as confident and ready to lead the country. He accomplished this by presenting himself as an agent of change. He identified with the struggling middle class and opposed the fear propaganda that the Prime Minister was selling to Canadians.

As they say in showbiz: “It ain’t over ‘til the fat lady sings.” She’ll be singing about 1:15 a.m. Tuesday morning.

 

 

 

 

 

 

How Mayor Farbridge snatched victory from the jaws of defeat using her power and your money

Posted February 26, 2014

Our environmentally obsessive Mayor, architect of a multimillion dollar failed waste management system, is now scheming to supply energy through a citywide district energy network. Translation: Burrowing under the city to supply heat and cooling to buildings in the downtown area. The source of energy requires deep drilling to extract the natural thermal energy in the earth. It’s known as geo-thermal engineering.

The city propaganda machine hailed the project as North America’s first “District Energy Network.” Not so fast, Kemosabe. Winnipeg has had underground district energy since the 1920’s. The University of Manitoba has had central steam heating since 1911. If you lived in Winnipeg, you’d understand the imperative.

What has triggered this latest massive plan to provide energy to parts of the city of Guelph?

Well, it goes back to when the Mayor tried to ram through a motion to sell Guelph Hydro to a consortium of electricity distributors, including Hamilton and St. Catharines. Even some of her most ardent supporters on council voted against the deal. People were outraged that the Mayor had manipulated this deal using Guelph Hydro executives and board members.

Soon after, the undaunted Mayor, with support of her council majority, called a $30 million loan owed by Guelph Hydro. So, indirectly she finally got her hands on some real money. It quickly disappeared into the city’s share of the $66 million provincial-federal infrastructure stimulus program. The city went ahead and spent another $7 million of the Hydro loan repayment on a new time clock in the Sleeman Centre, $2 million on bicycle lanes and a number of other non-infrastructure projects.

That was the end of the $30 million.

But it’s not the end of the story.

The Mayor then persuaded her majority in council to set up Guelph Municipal Holding, Inc (GMHI) to manage the assets owned by the city. The major asset was, you guessed it, Guelph Hydro. As chair of the new holding company board, she filled it up with four of her most loyal city councillors plus two independent members and the head of Guelph Hydro.

She achieved full control over the city’s greatest asset and supplier of power…without a shot being fired. It happened without public input despite the negative response of the failed earlier attempt to sell Guelph Hydro.

So now the Mayor needs money to launch her new downtown central heating plan.

Recently, accompanied by Lloyd Longfield, CEO of the Guelph Chamber of Commerce, Rob Kerr, General Manager of GMHI and an unidentified staff member, she travelled to Germany. The official explanation was to encourage German companies to establish in Guelph. That being the case, why wasn’t Peter Cartwright, general manager of economic development, not included in the war party?

It was revealed that the trip was sponsored by an organization called Transatlantic Urban Climate Dialogue (TUCD).  All expenses were covered by TUCD except the airfares of the mission and “incidentals.” The question is why? Why did the mayor and her delegation really go to Germany to meet and greet members of TUCD? The question begs asking: Is Guelph a member of this organization whose purpose is exactly, what?

Why was this trip necessary?

Stay with us, it gets better.

It seems that in 2012 the Provincial Minster of Energy issued a report that essentially said that small electricity distribution corporations should consolidate into larger, more efficient entities. The report claimed that distribution costs for small Hydro units increase costs to the consumer by 15 per cent. Despite serving 50,000 customers, Guelph Hydro is deemed small by the province.  

In July 2013, a city press release said that Guelph Hydro staff was examining “sharing services and resources or more formal mergers and acquisitions.” The Mayor stated “Consolidation was a distinct possibility,” followed this announcement.

Let’s follow the money.

Mayor strikes out when the people decline a consolidation of their Hydro utility with two other cities.

Mayor wins a victory by calling a $30 loan owed by Guelph Hydro.

Council spends all the money on the infrastructure stimulus plan and an assortment of pet councillor projects.

Mayor forms a holding company to control Guelph Hydro with an estimated book value of $130 million.

Mayor promotes the district underground heating and cooling plan for the downtown area.

Guess where the money for this undertaking is coming from?

And you know, the people were never consulted or voted for this project.

Thanks to GrassRoots Guelph research team for details of this report.  Join the crusade to bring common sense and informed management to the City of Guelph Contact GrassRootsGuelph.com for details.

 

 

 

The Good, the Bad and the Ugly

Posted October 6, 2012

Judging from recent revelations, Guelph is about to lose its renowned title “the Royal City”.

Instead, it will become known as Garbageville, that place where the unwanted waste of North America can find a home.

It’s strange how events can shape policy. For instance when Dean Wyman, General Manger of Solid Waste Resources, announced the city is negotiating to bring in “dry” waste or recyclable materials from New York and Michigan. The question is, why?

Here’s the back-story. Seems the Guelph dry-waste sorting facility is running short of material to recycle. The reason is Waste Management has built a large, automated sorting facility in Cambridge. This operation is sucking business away from Guelph where sorting is done manually by a platoon of workers.

This has resulted in Guelph waste management to seek a solution. The answer, the brain trust feels, lies in the United States.

Really? Did the Wasters (I can’t help myself!) consider the solution lay in closing down the Guelph facility and ship the recyclables to Waste Management where processing costs are almost half of the Guelph operation? No, because that is against the Farbridge administration’s determination to be the leader in waste management.

Does it make sense to import from the U.S. and process it at a loss just to maintain jobs? You be the judge.

That’s the Good part of this essay.

The Bad part is the huge cost to Guelph taxpayers of building a $34 million wet- waste composting plant that is six times greater than the city’s 10,000 tonne annual requirement. Then they enter a contract with Waterloo Region to ship its wet stuff, at a cost estimated to be half of the estimated real operating costs of the plant. But wait! Even that contract will only use 50 per cent of plant capacity.

Another problem is that after a year of breaking in the “Microbe Motel”, it has yet to process any wet waste from either Guelph or Waterloo. Reason is the Ministry of the Environment (MOE) has not given the operation the green light. No authority, no operation.

It gets worse. Taxpayers have to pony-up another $15 million for a bin-based collection system. It was done despite MOE’s approval of using biodegradable plastic bags that would have continued the city plastic bag collection system without spending the $15 million.

And this was done without any city testing of the bins, using the automated trucks to see if it warranted spending the money.

The taxpayers, of course, had no say in this huge investment that has been built to serve other municipalities.

Starting to sense where this is going?

Now for the Ugly. Phase three in the administration’s waste management plan, and I use that term loosely, is planning construction of two stainless steel, glass lined silos at the waste water plant to store processed sewage sludge. The cost is estimated to be $20 million.

This plan is to store the stuff over the cold months and then it is taken by Lystek Corporation to be “re-watered” with raw human waste from septic tanks, aircraft toilets and porta-potties, then spread the liquid on agriculture lands.

The city entered into an agreement with Lystek five years ago to use the fully processed sewage sludge for its fertilizing programs of farmer’s fields, including pastures.

Get the picture? This allows some potentially deadly elements found in human waste to penetrate the food chain.

So far Lystek has only been able to use just 15 per cent per year of the Guelph sewage sludge. The company is only able distribute the stuff between April and November.

So Lystek has persuaded Guelph to store not only the city’s sewage sludge but also that of other municipalities.

This is the perfect trifecta of gambling with taxpayer’s money.

When did Mayor Farbridge announce that Guelph was going to finance and service waste disposal of other communities?  Why aren’t the taxpayers informed of the details of these major capital-spending plans?

I guess we missed the memo.

Behind the bafflegab: This is a bad idea

Posted July 10, 2012

When the Mayor speaks, duck! Because it’s likely about spending your money before she gets it.

Case in point.  Members of the corporate administration, finance and enterprise committee, voted to approve a $3.1 million grant to the London, Ontario based -developer of an 18-storey condominium property at McDonnell and Woolwich Streets.

While the mayor acknowledged that her feedback indicated the natives believed this was a grant – read that—taxpayer incentive to private developers to build downtown.

The Mayor said that these “grants” were based on the anticipated increase in property assessment.  That means the city could be receiving more taxes over the years.

It works this way. The developer completes the project and after meeting the city criteria, receives his grant. The catch is if the assessment on the completed structure does not produce increased taxes, there is no recovery of the grant.

This is a house of cards if there ever was one. It’s based entirely on the property being assessed at higher levels over the years, resulting in increased property taxes.

But what happens if the economy in Ontario turns south and assessments decrease instead of increase? The city has no say in assessing properties. That is done by a provincial agency operating at arms length from the city.

Essentially, this handout is nothing but a further drain on city finances and will not be the responsibility of this council.  It’s an unnecessary financial hand-me-down to future councils.

Our city has no business providing incentive grants to private residential developers. This is a competitive field and does not need grants. Developers need timely, efficient and fair adjudication of projects. This has not been the case in Guelph during the Farbridge years.

The Farbridge administration has made doing business with the city a struggle for entrepreneurs.  Two independent consultants have reported that Guelph is not friendly toward business.

On the surface, the light bulb has apparently clicked on. So that steps are being taken to streamline and fast-track residential development applications. You have to wonder how this sits with the group of Guelph developers and builders who sued the city for $2 million because the impact fees on their projects were almost doubled by this council.

Before reading on, remember it’s a major element of the Mayor’s personal goal to revitalize downtown.

In the past six years, her determined drive has delivered a public transit terminal on the edge of downtown; a skating rink in front of city hall, complete with imported roadway bricks; demolition of three properties on Wyndham, Street costing $5 million; Spending $15.5 million on a new civic museum, resurrected from the derelict Loretto convent on land not owned by the city.

This stage of the Mayor’s dream has been supported by a majority of like-minded councillors.

Yet the ratio of 84 per cent residential assessment to 16 per cent commercial/ industrial has barely changed in six years. Meanwhile, the University has exploded with growth in the same period. Its meager provincially mandates payment in lieu of property taxes exacerbate the crushing financial load on residential taxpayers.

The Mayor and her cohorts have failed to manage the nightlife problems downtown. This has left the area blighted with human waste and bereft of little control. An attempt two years ago to install temporary pissoirs for men only turned into a disaster. All it proved was that night visitors downtown pee etcetera, in public.

To turn the area into her personal dream, she decided what was needed was more people downtown. So, in the past few months we have witnessed a new system of fast-tracking, higher density condominium projects.

This is yet another example of bureaucratic bafflegab.

The city has a number of tools to encourage development, giving grants to residential developers downtown isn’t one of them.

Changing the deck chairs on the Titanic

Posted June 2, 2012

Note: This is a response to a comment from Geo and Craig on guelphspeaks.ca regarding the restructure proposal of city council in 2014.

The restructuring of council is to recognize that Guelph is no longer a small town. The governance structure of council allows the 12-elected ward councillors to run the show. That is what Mayor Farbridge and a collection of like-minded individuals accomplished in the 2006 election.

They formed an airtight majority that still exists today despite some losses in the 2010 election. The result is evident as millions has been spent to make the city into their image of environmental and heritage perfection.

The governance committee of council is headed by the mayor and has commanded the council agenda to reflect what she feels is best for Guelph. It has failed on many counts.

At the same time, the increase in city staff has resulted in the past five and a half years, of FOF’s (Friends of Farbridge) hired in many key positions. This increased hiring of city staff has resulted in blatant politicizing of the 1,200 plus city staff.

Mayor Karen Farbridge is totally in control.

The embryonic proposal will reduce ward representation to one councillor who would work full-time on behalf of the residents to bring better service and prevent absolute control by one person. Also this proposal includes two full-time councillors to be elected across the city. They would share power with all citizens and focus more on managing the city as a whole, instead of the ward collectivized domination that has created the current situation.

The last thing this city needs is another dictatorship like the one we are experiencing.  The heavy capital spending on waste management ($50 million; heritage ($16 million); city hall and surroundings ($11 million not including settlement of the city hall’s original contractor’s $19 million law suit and associated legal costs); and the ongoing effort to reshape downtown (uncounted millions).

Lost in capital planning is the proposed $63 million downtown Library; the $32 million South end Recreation facility; the east side commercial centre; all promises not kept by the Farbridge administration.

Topping it off there is no wiggle room to borrow money as the city debt exceeds its own limit by 25 per cent.

Council has few choices to bring its financial house in order.

Raise taxes and user fees, dramatically increase assessment or reduce overhead by cutting staff and unproductive services.

The majority of this council gives you an idea of its ability to do critical thinking. Coun. Leanne Piper has been quoted as saying that there is $84 million stashed in various reserve accounts.

So her idea of fiscal management is to spend the reserves to overcome the spending mistakes of the past two terms of the Farbridge leadership.

Yeah, let’s crack the piggy bank so we can buy more candy.

Citizens should be reminded that the city has had no senior financial official in place to control finances for almost a year.  The city has just hired a Director of Finance who does not have a formal degree in finance or accounting. Meanwhile the purge of managers continues.

Matters turned south when a Calgary public relations firm was hired to tell residents about traffic blockages; or engaging a lawyer as Integrity Commissioner at $235 a hour to investigate why a group of councillors were refused an air quality report by staff.

He interviewed the Mayor and Chief Administration Officer, Anne Pappert, but no one from the other side.

This is why a change is needed in the make-up of city council to never allow this to happen again.