Ever try to put lipstick on a pig? That’s what city spin-doctors are trying to do with GMHI

By Gerry Barker

July 10, 2017

Here’s the premise of a story that won’t go away. It’s about the losses associated with the Guelph Municipal Holdings Inc. (GMHI) and how some $163.474 million was lost in a bungled former administration’s attempt to create energy self-sufficiency in Guelph.

It’s a story that most people cannot figure out because they were not told details of the financial misadventure by the GMH Board of Directors chiefly composed of city councillors. They worked behind closed doors. Further, two of them, Coun. June Hofland and Coun. Karl Wettstein are still silent about their association as directors of GMHI.

Now it’s alarming that council continues to vote for projects such as the $12.3 million extension of trails over ten years. The off-road maintenance of these trails is estimated to be $271,000 a years. Council balked at this one and ordered staff to re-think its recommendation. In making this recommendation, why didn’t the staff, particularly those senior managers, think the maintenance costs were excessive particularly in winter?

Council caught it and recognized it was too high.

But I digress, the following is a statement by the accounting firm, KPMG, auditors of GMHI’s consolidated balance sheet.

“In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Guelph Municipal Holdings Inc. as at December 31, 2016 and its consolidated results of operations and its consolidated cash flows for the year ended December 31, 2016 in accordance with International Financial Reporting Standards.”

As quoted in the Guelph Tribune July 3, 2017: “Pankaj Sardana, the CEO for Guelph Municipal Holdings Inc., the parent company for both Guelph Hydro and Envida Community Energy Corp., also updated councillors on the status of the district energy project, which has seen millions of dollars written off or written down from the city’s books.”

The key words here are “millions of dollars” If anyone should know, it would be Mr. Sardana who addressed the dire financial condition of GMHI 14 months ago.

“The expenses are higher than the revenues, and expect to remain so for the duration of the contracts,” he added.

Here are the figures on the GMHI balance sheet audited by KPMG

The consolidated total audited current assets of GMHI are $67,943,000.

The total consolidate non-current assets according to the audit is $162,653,000.

Total assets are $230,596,000

“The capital asset has been written down to nothing, zero,” Sardana told councillors, adding many of the assets from the district energy portfolio are now considered “onerous.”

Now, here is what the audit declared as GMHI Liabilities:

Total current liabilities:                                    $30,736,000.

Total non-current liabilities:

Provision for liabilities and changes                $    490,000

Senior unsecured debentures                             $94,283,000

Employee future benefits                                     $10,297,000

Customer deposits long term portion               $ 5,196,000

Deferred revenue                                                  $22,472,000

Total current liabilities                                         $163,474,00

Shareholder’s equity:

Share capital                                                            $67, 530, 000

Accumulated other comprehensive loss            $     (555,000)

Retained earnings                                                  $     147,000

Total Shareholder’s equity                                    $67,122,000

Total liabilities                                                $230,596,000

The shareholder’s equity is worthless. The former administration used public funds to invest in the Community Energy Initiative. It needed capital to finance its blind ambition to change Guelph and convert its demand for power through what turned out to be a failed District Energy plan.

Few people knew the depth of losses that GMHI generated over five years. Almost all of GMHI meetings were conducted in closed session.

Shifting the deck chairs on the Titanic

Now the city is moving money between agencies controlled by GMHI to pay down part of the debt owed by Envida Community Energy, the total of which is estimated as $20 million.

Trouble is, it’s our money that is being shuttled around with Peter paying Paul.

According to the Tribune, “following discussion of the money lost … Mayor Cam Guthrie remarked that it “does feel good to feel that my concerns have been validated.”

How does the Mayor feel now that he and his council are stuck with a huge problem: What do we admit to the citizens? The KPMG audit reveals a brutal situation in which the public’s financial resources have taken a monumental financial dump of dollars.

There was the deliberate use of secret meetings denying the right of the public to be informed of what was going on. It was not only undemocratic but a cover-up by senior city employees and at least four councillors plus the former mayor as chairperson, who served on the GMHI board of directors.

This allowed the city council members of the board to have total control of GMHI including Guelph Hydro.

When you are not accountable, you can get away with anything

During this period, millions were being spent and committed to projects that were never openly discussed in public. GMHI never made any money but sent $1.5 million annually as a dividend to the city to validate its existence. It was all a phony exercise in which money was taken from capital funds to pay the dividend. No one questioned it yet in 2015 the GMHI board said more than $9 million had been transferred to the city over six years. In that same year, GMHI lost $2.8 million.

Now we are seeing some of the fallout. Guelph Hydro is buying the dying Eastview generating plant that relies on a dwindling methane-gas supply from the former landfill site. Also approved during a special meeting, councillors, acting as GMHI shareholders, approved the sale and transfer of solar panels. Ownership of solar panels on top of the Guelph Hydro headquarters was transferred to the utility. Also approved was the sale of solar panel installations on eight city facilities back to the city.

The sale of Eastview will generate $558,000. The solar panels on the Guelph Hydro HQ roof solar panels $796,000. The city solar installations transfer cost $276,000.

Following a question by Coun. Dan Gibson, chief administrative officer Derrick Thomson confirmed the assets were being sold to generate cash that could be used to help pay Envida’s lenders. Who were these lenders? Did this involve the holders of the senior unsecured debentures, one for $65 million and the other for $30 million?

Who is liable for repayment of these debentures that are listed on the balance sheet as a liability?

Mayor Guthrie, as a councillor for those four GMHI years, were you ever informed of what the former mayor and her entourage were doing? Were all members of council receiving regular reports of the GMHI and Guelph Hydro activities in relation to the Community Energy Initiative?

Was the plan to make the city “look good?”

In the past, Guthrie has called the district energy project “a vision that was rammed forward” because the city “wanted to look good.”

Well Cam, you and your council colleagues have known about this multi-million dollar financial disaster for almost three years. Or maybe you didn’t because there was no Chief Financial officer in place to raise the alarm. It took two and a half years to finally hire a CFO who has financial accreditation and experience to provide the necessary checks and balances needed to sort out the mess.

In 2014, the voters figured it out that there was gross mismanagement by the city administration. As a result, you were elected mayor with the majority of people seeking change.

Unfortunately the honeymoon ended March 25, 2015 when council approved what turned out to be a 3.96 per cent property tax increase. That was a long way from your election promise to contain the property tax to no more than the Consumer Price Index.

But while that was a repudiation of you as Mayor, there was a much bigger problem brewing. While praising the contribution of the GMHI board, you did take over and named two councillors to the board. One was Karl Wettstein, who had served on the GMHI board for four years. The other was Coun. Cathy Downer. Wettstein remains silent on the activities of GMHI along with Coun. June Hofland, the former chair person of the city finance committee.

Did the city finance committee ever discuss what was going on with GMHI and Guelph Hydro, both owned by the City of Guelph?

What possessed elected officials to develop such a brain cramp about their connection with GMHI? Were they so loyal to the former mayor’s vision that they refused to blow the whistle?

What the public needs to be told are details of the wind-up of GMHI and the Community Energy Initiative. And, it is more important, to be informed of the costs resulting from this misadventure.

Stop playing games. Report to the real shareholders the details of this costly exercise to fulfill the ambition of a community leader who is no longer in power.

Meanwhile lets stop spending public funds on trails, road shrinking to create more bike lanes, wading pools, art centres and wellbeing giveaways until our house is put in order through an action plan.

Let’s learn from what happened in the 2014 election. The real political power in Guelph for the past ten years has rested with the 12 ward councillors. This will be the 2018 battleground and the citizen’s only opportunity to restore political balance on city council

 

 

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What’s your choice? Is fixing the potholes or building more off-road bike trails more essential?

By Gerry Barker

June 29, 2017

A little known bicycle advocacy group has recommended spending $12 million over the next 10 years to create an additional 52 kilometres to an existing network of off-road trails used by bicyclists and pedestrians.

In addition the group promoting this proposal, The Guelph Active Transportation Network Design Guidelines and Feasibility Study, says the estimate is “conservative” plus it would require spending $271,000 annually to maintain the trails.

This group claims that the proposal will make the trails system safer, more bicycle friendly and more efficient. But for whom?

Not to rain on any ardent cyclists’ parade, there should be some data about just how many cyclists there are using municipal streets and the off-road trail system year round. Bicycles are not licensed, have no standard of equipment such as lights and bells yet use roads, sidewalks and speed to get to their destination.

No one knows how many bicycles are used in the city. There are no statistics to determine the demographics of the riders, frequency of use including inclement weather during five months of winter.

The argument that riding a bicycle is healthy, inexpensive and is efficient for of transportation is nonsense when considering that children and most people more than 60 are not able to substantiate the claim.

So, how much has the city paid to create special lanes of roads and off-road trails? The first ten-year plan was to spend $13 million, expanding the bike trail system in the city. There was never any report to the citizen of where and how these funds were spent.

One example of council’s lack of managing your money came when the 2015 city budget was approved. In it, newly elected Coun. Mike Salisbury, moved that because there was no city contribution in 2014 for bike lane expansion, those funds would be joined with the 2015 allocation for a total of $600,000.

Jeepers! He added that the money should be spent putting bike lanes on Woodlawn Road. The result was squeezing Woodlawn from four lanes to two lanes, wider bike lanes and a left turn lane. But this was only from Victoria Road to the bridge spanning the Speed River east of Woolwich.

There is no accessible public record of where the money was spent on one of the busiest roads in the City and a designated provincial highway. The engineer in charge left the city.

Not one member of council or the administration stated that unspent funds in a previous year’s budget couldn’t be transferred to the new budget. This is simple accounting practice and rules. Each year the new budget must start with a clean sheet. Under the former administration it was common practice to balance the city books using money from the reserves.

In Ontario, the provincial law states that all 445 municipalities, large and small in Ontario, must file an audited Financial Information Report (FIR) covering the calendar year.

In Guelph, there has been manipulation of the FIR going on for at least nine years, chiefly due to overspending the budgets, both operational and capital spending.

So here’s the skinny. The city administrations have created huge losses in a number of projects. First, there was the $23 million overage cost completing the new city hall and converting the old city hall into a provincial offenses court. The acting Chief Administrative Officer, Hans Loewig, kicked Urbacon, the general contactor off the job and was awarded with a four-year contract starting at $199,000. Six years later, it cost the city $8.96 million in legal fees and damages just before the 2014 civic election

Then along came the GMHI fiasco that an audit by the accounting firm, KPMG, showed huge losses, unpaid and unsecured debt of $103 million and shareholder-liability of $67 million. Currently, council has authorized a non-elected committee to explore selling or merging Guelph Hydro. The cost of cleaning up this financial disaster is still to be counted but it will be in the millions with the audit cost now at $2.8 million.

Let’s not forget that 2 per cent property tax levy approved by council, starting this year, that was supposed to be used to repair and renew the city’s infrastructure. Then three months ago the city staff upgraded the infrastructure cost from $178 million to more than $400 million.

And that friends, is why our streets have potholes, rough pavement and bike lanes that start at one intersection and disappear at the next.

It’s all a matter of priorities. Now converting wading pools to splash pads is being touted along with the bike trail expansion. Then we learn that the indoor soccer field surface is being replaced under the bubble. Remember, the city is guaranteeing repayment of the $570,000 mortgage on the property.

So, ask yourself first, why is the city staff recommending this $12 million bike lane expansion in view of greater needs especially repairing rugged streets and infrastructure? Second, why are we catering to a minority of citizens demanding high-cost facilities without some form of contribution?

Vehicle operators pay taxes, for gasoline and repairs, licences and insurance. Home- owners pay taxes and user fees. Commercial and industrial businesses pay licences, taxes and user fees. Citizens subsidize public transit. Also, citizens pay for every activity and operation conducted within the city. Everything we do is bought and paid for.

So why are the cyclists getting a free ride and expecting the city to provide them with more trails and controlled access to public roads?

Special interest groups should pay for their projects and not expect handouts from the public purse. In many cases these donations to various groups through the “Wellbeing” initiative are frequently politically motivated.

There are a number of these situations that cater to special interest groups that are either being subsided or given grants. The city is not a bank nor charitable organization.

Citizens are totally dependent on their representatives on council. If a councillor does not heed the opinions and needs of his constituents, then there will be a price to be paid at the next elelction.

Remember what happened in 2014. It can happen again next year when the performance of our councillors will be tested at the polls.

How the city plans to sell Guelph Hydro, something that Farbridge failed to do

By Gerry Barker

June 8, 2017

Today it’s Part One. Monday Part Two will be published

Nine years ago, former mayor Karen Farbridge attempted to convince city council and citizens to merge Guelph Hydro with systems in Hamilton and St. Catharines. The mayor had a comfortable majority of followers on council, so what could go wrong?

Well, it did as council turned it down. It was the only time I can recall that the mayor lost a major battle. Looking back, it occurred only because the people almost unanimously rejected the proposal and the councillors heard them. It was a rare occasion where the people had the final say.

The mayor needed the money that a sale of Guelph Hydro would provide. The first priority was to pay the $22 million toward the federal and provincial government’s special infrastructure plan. Under the plan, Guelph would pay one third, as would each of the senior governments. Some $66 million was approved and spent on a variety of shovel-ready projects in the city.

But the mayor’s plan almost failed because of the citizen’s revolt against selling Guelph Hydro. Instead, the mayor, who sat on the Hydro board of directors, notified the board that council was calling a $30 million note that Hydro owed the city. That solved the city’s share of the infrastructure plan and there was a little left over that was spent on a time clock in the Sleeman Centre and $2 million building bicycle lanes on Stone Road between Edinborough and Gordon Streets.

This all happened in the first three years of the Farbridge administration.

Shortly following her re-election in November 2010, the mayor set up Guelph Municipal Holdings, Inc. (GMHI), a corporation wholly owned by the city. The mayor was chair of the company and controlled the board of directors by naming four councillors, Lise Burcher, Todd Dennis, Karl Wettstein and June Hofland. Two independent directors were appointed.

The company had assets including Guelph Hydro and the Guelph Junction Railroad. GMHI sent a dividend of $1.5 million to the city each year. The last known total was $9 million before the roof fell in with the revelation in May 2016 that GMHI had lost $26.6 million and had never made a profit.

With a startup in late 2011, in five years, little was known about its operations as the meetings were held in closed session.

In addition to the losses, there was a large loan taken out of Guelph Hydro for $65 million that was described by former GMHI Chief Executive Officer, Pankaj Sardana as impaired. In the 2015 city financial statement the loan was listed as $69 million as there had been no repayment by GMHI. That loan is now on the city books listed as an asset. This will eventually have to be written off.

GMHI spent money on solar panels on some public buildings, two gas-fired District Energy pumps, costing $11 million to supply hot and cold water to a handful of downtown and Hanlon Business Park buildings. It was an abortive co-generation scheme to use the pumps to pump the water in underground pipes to the buildings and generate electricity.

For four years, GMHI worked in the dark led by the former mayor and former Chief Administrative Officer Ann Pappert.

The campaign to sell the city’s most valuable and profitable asset

Next Tuesday, June 13 starting at 6:30 p.m. city council, as GMHI shareholders, representing the citizens of Guelph and will hear a review of the project to sell Guelph Hydro by mid-2018, before the city election in October. Prior to the meeting, council will meet in closed session to discuss the all-important details of the project, far from the madding crowd.

Last October, council approved commencing an investigation by the Strategic Options Committee (SOC) composed at the time of Chief Administrative Officer Derrick Thomson as chair, CEO of Guelph Hydro, Pankaj Sardana as co-chair, and Robert Bell, Hydro board member,.Two citizen members, Mark Goldberg and Ron Puccini were also named.

According to the Energizing Tomorrow website, only Mr. Goldberg and Mr. Puccini live in Guelph.

There are no elected representatives on this committee. There are two individuals, Mr. Sardana and Mr. Bell who are closely associated with Guelph Hydro.

So, we can conclude that this operation not only includes the SOC but also Guelph Hydro Electric Systems. The Board of Directors of Guelph Hydro Electric Systems included: Ms. Jane Armstrong. Ms. Judy Fountain, Robert Bell, Bruce Cowan, Ted Sehl, Rick Thompson and Ms. Jasmine Urisk.

Under no circumstances am I suggesting that these folks were complicit in the GMHI financial disaster.

There does not appear to be checks or balances or direct oversight of this potential disposal of the most valuable asset of the city’s assets. Also, the public has had little to say since formation of the SOC. Granted, council must have the final say but its members are not directly involved in this exercise being handled by the SOC and its advisors, a consultant and a Toronto law firm.

It also comes as a surprise that there are certain members of Guelph Hydro Electric Systems who had exposure to GMHI financial disaster that cost the city $26.6 million. These include Jasmine Urisk, Ted Gehl, Jane Armstrong, Judy Fountain and Robert Bell.

Mr. Goldberg of the SOC served on the GMHI board of directors. Mr. Sardana, co-chair of the SOC, was formerly CEO and CFO of GMHI.

Then came an announcement. Mr. Sardana was replaced as co-chair of SOC by Hydro Board chair Jane Armstrong and Mr. Puccini resigned to be replaced by Douglas Auld.

On Monday, June 12, look for Part Two that details the strategy to complete the sale of Guelph Hydro by mid 2018

In the meantime, here is an unedited portion of the 48 pages publish on the city website, of the proposal to be approved June 13 by council acting as shareholders of GMHI.

As determined in Phase 1, Ontario’s energy landscape is changing, and mid-sized utilities like Guelph Hydro are looking for better ways to:

• Meet customer expectations;
• Take advantage of modern technologies;
• Cover costs of delivering safe, reliable electricity service;
• Fund local infrastructure maintenance and upgrades; and
• Prepare and respond to more frequent and severe storms.

I draw your attention to item four – Fund local infrastructure, maintenance and upgrades.

So do we sell a profit-making asset to fund years of neglect of city infrastructure?

I don’t believe this for one minute. As I will explain in the next part of this two-part series, the proceeds resulting from the sale of Guelph Hydro will be primarily used to pay down the accumulated debt of GMHO and the $69 million note owed to Guelph Hydro.

We have never been informed if GMHI spent that loan money and on what?

There are so many questions needing answers.

Part Two will analyse and comment on the nuts and bolts process of moving ahead with this sale of Guelph Hydro.

Denial continues, aided and abetted by the “independent” closed session investigator

By Gerry Barker

March 3, 2017

You have to be amused when the lonely weekly reportedly quoted a report by the so-called “independent” closed session Investigator, chastising the council for holding its meetings past midnight because it denied public participation

The Investigator, London –based Amberley-Gravel, took four months to come up with t its decision that council acted legally December 10, 2015 when, in closed session, it awarded $98,202 to three of the top executives. Two of the three are no longer employed by the city.

There is still one of three remaining, Derrick Thomson, who, like a Phoenix, has risen from his almost job with another municipality. In the wake of the 2016 provincial Sunshine List revealing in March 2016, the $98,202 2015 increases, he became the Chief Administrative Officer (CAO). His current salary plus taxable benefit is $240,000.

He had the recent distinction of firing one of his colleagues, Deputy Chief Administrative Officer (DCAO), Mark Amorosi, who received a $26,000 increase for his service in 2015 taking his salary to $216,000. The day after firing on February 8, The CAO praised him for his “valuable contributions to the City of Guelph.” Mr. Amorosi had been with the city since 2007. He never explained why Mr. Amorosi was fired. Also, there was no mention of the financial package he received upon leaving.

The CAO also went out of his way to say that Mr. Amorosi would have his legal expenses paid by the city despite being summarily dismissed. He referenced the lawsuit commenced by Mr. Amorosi against me with a claim of $500,000 for alleged defamation.

Would someone explain to me just how that works?

He was apparently fired because he failed to monitor the Information Technology department of which he was responsible. This was because of the 53,000 emails contained in an external drive was sent to former Chief Building Inspector, Bruce Poole’s, lawyer. It was part of an examination for discovery regarding the $1 million lawsuit brought by Mr. Poole for wrongful dismissal.

Now follow closely because events occurred at warp speed

Tony Saxon, columnist in the online Guelph Today, revealed on Friday morning February 3, that the deluge of emails contained all kinds of private information about a large number of people and not related to the Poole case.

This information came from Mr. Poole’s lawyer and Mr. Saxon reported parts of it.

The city went into high operating mode and demanded the lawyer return the drive. It notified the Privacy Commissioner of the error and promised anyone mentioned in the emails would be notified.

That did not occur until a few days later when the Poole case was settled by mediation with the results being confidential. The drive was returned.

Once again, secrecy surrounds the outcome of this chain of events that would display incompetence, sloppiness, abuse of the public trust and yet to be known are further legal expenses by potential aggrieved victims.

In the middle of this, Donna Jaques, the City Solicitor, left her job. The city was forced to hire outside legal counsel to manage the situation.

So the city has no Chief Financial Officer, no City Solicitor. A rookie DCAO, Colleen Clack, was drafted to take over the Corporate Services department that was run by Mr. Amorosi, plus her regular responsibilities as chief of city operations.

The senior management team of CAO Thomson, DCAO’s Scott Stewart and Ms. Clack is running the city that three years ago, had six executive directors running the show.

In fairness, the three top managers have their hands full and it could take months to bolster the top management team. There is talent around but the city’s reputation as being a tough place to work because of the political control and atmosphere makes the recruiting complicated. It’s not a case about the money but the work environment. Losing 12 senior managers in the last two years has not helped the city’s reputation.

I have no confidence that city council will change its reputation or direction. Mayor Guthrie, whom I voted for, has been unable to rein in the spending as he promised. Also he has not been able to convince council to conduct an independent audit along with a staff rationalization.

Mayor took action to disclose the GMHI disaster.

The evidence is there to see that mismanagement of the city continues to spiral down, due to millions lost because of a series of social engineering projects introduced by former Mayor Farbridge. To his credit, Mayor Guthrie did trigger exposure of the Guelph Municipal Holdings/Guelph Hydro financial disaster.

But then he supports the Strategic Options Committee that has no elected officials on it, by agreeing to spend $600,000 to complete it’s work.

Then, he voted to recommend the sale/merger of Guelph Hydro. That 8-5 vote by city council sounded like a rejection, but the comments of councillors negated it because many, including the Mayor, wanted more options.

For another $500,000, we may get a definitive answer: To sell or not to sell, that is the question.

There were five councillors who voted to sell/merge Guelph Hydro. They are the Mayor, Councillors Phil Allt, Mark McKinnon, Karl Wettstein and June Hofland.

By mid-year (whatever that means) the SOC is to report its findings.

Here are some predictions:

First, a lot will depend on how much pressure is brought by citizens on members of council to reject selling or merging the utility.

Next, is the timing of the SOC recommendations following a series of closed session meetings of council. It won’t be in August because council is at the beach. It might be in July when a lot of citizens are watching their lawns and gardens wither from water restrictions or they are on vacation. These could include the members of the SOC.

The only card the administration has is to convince the citizens that they have negotiated this great deal that will flood the coffers of the city with cash.

Wettstein and McKinnon will get their $65 million South End recreation centre.

The Mayor will have a good news story to get re-elected in 2018.

Phil Allt will ask for more options.

June Hofland, well, she will feel vindicated of her role as chair of finance.

Happy days are here again!

And our electricity and water bills will soar under new ownership of Hydro. Water bills go up every year regardless of a diminished use of the stuff. In the summer we can shower but cannot water the lawn when it needs it.

We can’t blame that on Nestle.

 

 

 

How ten years of socialistic fascism has dominated and cost Guelph citizens millions

By Gerry Barker

February 28, 2017

Judging from the comments on the guelphspeaks blog, there is a lot of confusion about what happened to the Guelph Municipal Holdings Inc. (GMHI) and its control of Guelph Hydro and the Guelph Junction Railroad.

Remember, confusion is the tool of authority.

But what is socialistic fascism?

The fabric of political socialism is a fair description in which most Canadians believe. Fascisim means total control. And the two previous admiistrations were experts at denying the right of the public to know, using closed sessiona to discuss important public business.

Even afrer 11 years of the former federal administration led by Stephen Harper, our basic beliefs in socialism pervaded. Remember Mr. Harper steered Canada through the world’s greatest global economic disaster. Canada survived for the most part thanks largely to the Canadian Banks that were not exposed to the mortgage-backed worthless securities securities that were being flogged by the major U.S. Banks as well as many banks oversears.

But when you drill down to the municipal level, Guelph’s two Farbridge administrations have introduced and then concealed projects by adding radical energy and environmental projects that, by latest count, have cost $96 million with miniscule tangible return.

I know there is the doyens of the socialist Left, including the former mayor and her supporters, who disagree with this. There is the old expression in the financial business, “you can’t fight the tape.” But that’s what is going on right now as our elected officials, aided by senior management, are fighting the tape by trying to seek solutions to avoid what has already been revealed.

The shades of grey and black of the cover-up

A former mayor created it. Her ambitions of energy self-sufficiency and unproven theories of accomplishing her goals have led to this debacle.

It ended October 27, 2014 when she was defeated as mayor of Guelph by Cam Guthrie by more than 5,000 votes.

In early 2015, Mr. Guthrie suffered through a couple of political events as council approved the 2015 budget including a property tax increase of 3.96 per cent. It was not what he campaigned on, promising voters that he would keep property tax levels at the rate of the Consumer Price Index. The second shock was the state of the city-owned GMHI, that had been chaired by the defeated mayor.

What they learned was GMHI was a money losing, failed operation that was virtually bankrupt. The one big GMHI asset was Guelph Hydro that the former mayor had quietly incorporated in GMHI.

Protected by a closed-mouthed administration, who knew of this development?

Guthrie became chair of GMHI along with Councillors Cathy Downer and Karl Wettstein.

Wettstein, a four-year member of the GMHI board, told the October 24, 2016 council meeting that he and Guthrie had “ a negative impact” on GMHI operations.

Mayor Guthrie angrily replied: “That is the most inaccurate statement I’ve heard in the past two years.”

Wettstein knew what GMHI was up to because he was on the board. To now say that he played a role in its discovery of waste, secrecy and politics, is the height of arrogance and of covering his behind.

Then, at the same meeting, Coun. June Hofland made the following statement: “I feel very sad because I feel we have been moving backwards but we don’t have the sophistication or leadership at this time to move forward with the holding company.”

Okay June, as chairperson of Finance, you get two minutes for forgetting your fiduciary reponsibility to the citizens as their elected representative. And June, this is a game for adults.

These are comments from two members of council who were paid to serve on the GMHI board for four years. Did they sit on the board like birds on a wire? Did they not realize what their sworn responsibility was to the citizens who elected them as their representatives?

And on the February 15, 2017 they voted to sell Guelph Hydro as recommended by the Strategic Options Committee (SOC).

But wait! This 8-5 vote not to sell Guelph Hydro was not necessarily a vote not to sell Guelph Hydro, according to some councillors. Coun. Phil Allt voted to sell the utility but then hedged his decision by saying he wanted more alternatives. Some councillors who voted not to sell Guelph Hydro also said their vote depended on the SOC phase two report in midyear.

Was this motiob a vote to instruct the SOC to “explore further options?”

Huh? While it was an up and down 8-5 vote not to sell Guelph Hydro, or so we thought, it was not necessarily a vote by council to not sell Guelph Hydro.

Are you still with me?

Why are there no council representatives on the SOC? Any volunteers?

For baseball fans, this is called a politiclal squeeze play. This is when a runner is trapped between the first and second basemen and is tagged out., because there is no place to go.’’

In this case, the metaphor seems to fit.

No elected official wants to be caught between selling Guelph Hydro or not. What they do know is the people they represent are dead against selling the utility. Councillors wanting to sell Guelph Hydro are motivated by the cash the city will receive from the highest bidder, It is estimated the proceeds could be as high as $150 million.

Is this any way to run our city? Do we have to spend $600,000 to get some outsider advisor to tell us about the options? We just lost $96 million on the abortive GMHI schemes. Why are we now spending more money to placate those councillors who still believe the Community Energy Initiative was an important contribution to the city?

Remember, confusion is the tool of authority.

It remains the most epic mismanagement of the operation of this great city in its 200-year history.

Last October, the strategy of unwinding the money-losing GMHI entwined with Guelph Hydro was discussed by city council. A staff report to council recommended to “shelve, cease or park” the failed city-owned corporation.

Mayor Guthrie was thrilled when council voted 10-2 to investigate the future of GMHI using the term “rationalization.” That’s muni-speak for investigation and taking action.

That action has wrapped up GMHI by about 90 per cent. The remaining obligation to support the District Energy Nodes (pumps) is to continue supplying hot and cold water to five buildings downtown. The Hanlon Business Park Node has been written off.

It all started with the Community Energy Initiative (CEI) created by the former mayor, Karen Far bridge, in 2007. In 2011, the then mayor, supported by her majority of council, approved setting up GMHI. The first board of directors included the Mayor as chair, four members of council, June Hofland, Karl Wettstein, Todd Dennis and Lise Burcher. There were two independent members and the CEO of Guelph Hydro.

The Mayor also brought in her city Chief Administrative Officer, Ann Pappert, to be Chief Executive Officer of GMHI. She remained in that job for four years. On December10, 2015 in closed session, council awarded Pappert with a retroactive pay increase of some $26,000.The reason for this was never disclosed.

Is it possible that this incresse to the CAO, that totalled $37,501, was followed four days later when council approved a new Indemnification bylaw, It stated that the city would reimburse legal expenses of any elected or staff member if they were the subject of a legal procedure initiated against them.

Guess you may describe that timely action as locking the barn door after the horse has been stolen.

On May 16, 2016, council, acting as shareholders, was told that GMHI had lost $26.6 million and had no financial ability to pay off a loan from Guelph Hydro.

Now that loan sits of the city books as an “impaired” asset totalling $69 million in 2015 as reported by the city.

Now, supposing you are a major Canadian bank risk manager and based on the GMHI business plan, considered loaning the money to GMHI. With the state of the GMHI balance sheet showing a loss of $26.6 million, would you take the risk and loan GMHI the money?

It is safe to conclude that the former mayor, having control of Guelph Hydro, convinced the publicly-owned utility to use its credit rating to allow the loan of some $60 million.

Here are two city-owned corporations, both controlled by the former mayor as chair of GMHI and serving on the Guelph Hydro board.

This action was all done in secrecy over four years. The public was not informed nor participated in the merger of the two corporations owned by the citizens. Nor was there any information regarding the justification for obtaining the loan.

There are no underlying asssets of GMHI to justify calling the loan an “impaired” asset.

The citizens were double-duped by the whims of an eco-centric former mayor whose actions went far beyond her capability to manage fiscal responsibility. It was a monumental echo of the Urbacon affair that cost the city more than $20 million to complete the new city hall. It occurred on the former mayor’s watch.

Fortunately, her blind ambition was halted upon her defeat in 2014. By then most of the damage had been done.

In my opinion, I believe the SOC and Community Energy Initiative should be scrapped. In its place we need an independent audit of the financial impact of the Governmental and financial relationships of the three three public institutions, the Corporation of the City of Guelph, GMHI and Guelph Hydro.

Why, you may ask? Guelph currently has no Chief Financial Officer or City Solicitor. They are key players in administering life support to an administration that is bereft of qualified senior management.

If council is ready to spend $500,000 to obtain additional information on how to deal with Guelph Hydro and wrap up GMHI, the money should be spent on the audit.

Since October 2014, there is evidence that an independent audit is indicated. Here are the 11 senior staff managers who have left:

Janet Laird, Executive Directort of Environmental Services; Derek Mcaughhan, Executive Director of city Operations; Dean Wyman, General Manager of Solid Waste management; Al Horsman, Chief Financial Officer; Bruce Poole, Chief Building Inspector; Don Kudo, Deputy City Engineer; Janice Sheehy, General Manager of Finance and city Treaurer; Ann Pappert, Chief Administrative Officer; Mark Amorosi, Deputy Chief Administrative Officer of Corporate Services; Donna Jaques, City Solicitor.

If the audit reveals criminal action by the three corporations, the Ontario Attorney General should order a police investigation.

 

 

Tonight, it’s time to tell the truth about the failure of GMHI and Guelph Hydro

By Gerry Barker

February 15, 2017

Check out guelphspeaks.ca on Facebook and Twitter

Tonight’s meeting, starting at 6 p.m. at city hall, will be a challenge for council and the administration to tell the truth about the huge losses encountered by the Guelph Municipal Holdings Inc. (GMHI) and Guelph Hydro. And include future liabilities to the taxpayers.

It’s time for the administration to level with the people and tell them specifics about the multi-million losses that the Community Energy Initiatives cobbled together by the former mayor. Her agenda was to make Guelph a world-class leader in energy efficiency and its environmental bedfellow.

Here’s what we do know.

On May 16, GMHI CEO and CFO Pankaj Sardana, along with former CAO Ann Pappert revealed that GMHI had accumulated losses of $26,637,244 million. Both officials signed the report tendered to city council. Ms. Pappert resigned 10 days later.

On January 12, it was revealed that the former mayor had even bigger plans. GMHI secured two parcels of land in order to build two Natural Gas-fired generation plants, one in the Hanlon Park and the other downtown. The cost of these plants and the two parcels of land needed to build them have not been disclosed.

Here are the write-offs. The capital cost of the Hanlon District Energy Node of $5.1 million will be written off. With only two customers, it loses a reported $55,000 every year. The Sleeman Centre Node cost was $6.1 million with $3.6 million being written down. The Sleeman Node makes some $127,000 a year.

Next, we are not told the cost of the underground thermal energy system connected to two Tricar condominium buildings, the RiverRun Theatres and the Sleeman Centre. Instead, we are told that the thermal system, powered by the Sleeman Centre District Energy Node will continue to supply hot and cold water for heating and cooling. Again, there are no details of the cost to citizens. What does that commitment accomplish in perpetuating GMHI, at the public expense?

At this point, we should be told of the total and ongoing cost of these misguided projects now and in the future

Here’s what we don’t know.

Because of the operational secrecy employed by GMHI over four years, there are still many questions that need answers. The ultimate hypocrisy employed by GMHI was sending a so-called $1.5 million dividend to the city each year to justify its existence. It was just a return of our money while GMHI in its entire history never made a dime.

In polite circles, that would be described as a “Ponzi” scheme. Paying off the city or the city-owned Guelph Hydro with its own money.

Because the former mayor and chair of GMHI, did not allow public participation in her management of GMHI, we have been handed one of the most serious financial

operating deficits in the city’s history.

Then there is that $65 million borrowed from Guelph Hydro by GMHI. In his May report, Mr. Sardana admitted that neither GMHI nor Envida Community Energy, a subsidiary of Guelph Hydro, had any financial resources to even pay the interest on that loan.

In the 2015 Financial Information Report, the city reported that there was an “impaired” asset outstanding of $69 million. The reason the amount had increased was because there was no money in GMHI to pay the interest. Simply, there are no hard assets underlying this $69 million loan because GMHI is essentially bankrupt.

So, the city takes on this debt and lists it on its books as an asset. As the city has folded Guelph Hydro into its financial orbit, it’s only a matter of time before the “impaired” asset becomes a liability and will have to be written off by fitire councils.

The questions remain, where did the money go? Was it spent? Is it a legitimate asset of the city? Is it no longer on the Hydro books?

Is it possible that the city financial managers have conjured a plan to keep the loan off the hydro books because the council committee is preparing us for the sale/merger of our electric distribution system?

The temptation of getting its hands on the proceeds of a sale on Guelph Hydro that could reap more than $150 million to solve all its wasteful spending problems and mismanagement of our affairs.

We are not the lost tribes of Carden Street. We are all the citizens impacted by this impending bad decision.

Make no mistake. This plan is in a full court press to selloff the jewel of our city assets to right the wrongs of the past.

My advice? Only the people can stop it by pressuring the council by email, telephone, Twitter and Facebook to say no and demand the truth of what has happened to our city.

If you turn up tonight at 6 p.m. in force, council will listen.

If council fails to listen to the people, then they are all in peril in October 2018 of being re-elected.

That I can guarantee.

I know there are some coucillors who understand the ramifications of tonight’s decisions. But the majority of progressives can be defeated by the people.

I don’t know about you, but this is a no-brainer. Stop, tell the truth and lets start the process of returning Guelph to fiscal responsibility and meet those targets that almost all people want that are bring denied.

You know what to do.

 

Guelph’s high electricity bills can be traced back to the losses of the Community Energy Initiative

By Gerry Barker

November 22, 2016

If I was running Burger King, Premier Kathleen Wynne told 850 Liberal delegates just told a whopper! I made a mistake she told delegates to the Liberal Convention over the high cost of power to the people.

I don’t know about you, but our two-person household received a Guelph Hydro bill that was $95.83 less than the previous month. The adjustment over the month before and the month before that when our monthly bill averaged $340 including water. How about you? Did your hydro bill take a sudden drop in power costs?

Water is a small amount of the bill considering the city would not let us water for five months.

There’s something fishy here. Are the smart meters over billing?

How about all that money that Guelph Hydro sent over to Guelph Municipal Holdings Inc (GMHI) at the bequest of the former mayor, chair of GMHI with a majority of her supporters basking in her environmental radiance.

That all changed following the 2014 election when it was discovered that GMHI had bungled a scheme under the umbrella of the Community Energy Initiative to create alternative energy systems downtown and at the Hanlon Business Park. The plan called District Energy natural gas-fired Node pumps was to power a co-generation thermal hot and cold water system to a handful of nearby downtown buildings including the Sleeman Centre and RiverRun Theatres. GMHI, through its partners, entered contracts to supply 10 megawatts of power from each of the Nodes annually

I have written a lot about this financial debacle, one that the citizens of Guelph are going to be paying off for years to come. Suffice to say the costs are running close to $107 million and counting. There is little return to support the investment.

It’s sad that the city administration is not leveling with the people who pay the bills.

Instead, it is now scurrying to cover it up. Here’s how they are doing it.

Where does the city find $106 million? Well, Premier Wynne in her mea culpa explanation to the Liberals says they are going to seek efficiencies by streamlining the 70 small municipally owned public utilities in Ontario.

That’s Wynne-speak for amalgamate or else. Remember when former mayor Karen Farbridge tried to sell off Guelph Hydro to a consortium of Hamilton and St. Catharine utilities? The people said “no” and it was one of the few times her loyal caucus turned on her proposal.

Now we have the Premier trying to unwind ten years of Liberal mismanagement of electric power in Ontario by forcing amalgamation of Guelph Hydro with larger distribution utilities.

Sure, there is a lot of money in it for the city. The estimated book value of the city-owned power distribution system is around $170 million.

The city has already brought Guelph Hydro into city control as just another department controlled by city council. They did this by wrapping up GMHI in which the former mayor folded Guelph Hydro into GMHI with its enormous debt.

Then, the city absorbed the $69 million impaired investment from GMHI, posting it as an asset. That money came from a Guelph Hydro subsidiary.

Are you starting to get the picture?

The so-called asset now sitting on the city books cannot be supported by GMHI that has no financial ability to even pay the interest. The original loan was $65 million. In the 2015 annual financial report, it had grown to $69 million.

The problem is that asset sitting on the city books has no underlying hard assets, particularly now that the city has it sitting on its books.

What a dilemma! Along comes the provincial government to the rescue, led by a premier with a 14 per cent approval rating. Her so-called streamlining of the 70 municipally owned electric distribution centres would see Guelph Hydro disappear when pushed into a Hydro distribution consortium.

Fasten your seat belts! This selling of Guelph Hydro is going to be presented to a council that has squandered millions of poorly planned and executed projects. The loss of this $170 million facility may suit the administration in the short term but the fallout will affect the ability of life in Guelph for years to come.

The irony of this is that two members of the present council were on the GMHI board for four years and never said a word about the money flying out the door to create an environmental nirvana.

Last, but not least, the former Chief Administrative Officer of the city, Ann Pappert, was the Chief Administrative Officer of GMHI for four years. So, ask yourself, why did city council, in closed-session Dec. 10, award her with a retroactive pay increase of more than $18,624, a vacation pay-out of another $18,580, plus a 2 per cent increase that took her 2015 pay to $257,248?

Where is the oversight? Where are the checks and balances to prevent the abuse of the public trust?