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 Two – Why it’s now necessary to put Guelph on a financial diet

By Gerry Barker

Posted October 22, 2015

Yesterday, we showed how the City of Guelph’s operating costs per-person are 50 % higher than its two largest neighbours, Kitchener and Cambridge.

Today we will discuss how the current city administration including staff and elected officials must take action to stop the growth of operating costs.

This year the city has budgeted $207 million in operating costs and $52 million in capital spending. As of June 30 the operating budget was $867, 200 overspent. The capital budget was $839,155 overspent. That totals $1,701,355. It is indicative of the way the city is being managed including its budget forecasting.

We are beginning to see where the money goes.

Guelph, under the leadership of former mayor Karen Farbridge, was a virtual dictatorship because of the dominance of a majority of councillors who supported the mayor’s agenda. Also there was the influence of the various labour unions employed by the city. The financial decisions made in eight years involved a majority of council obsessed with turning the city into a world-class environmental community.

Much of it was generated by the belief of its adherents that Guelph must become a leader in imposing left-wing policies on the city at any cost and without support of the people.

What were these policies?

For starters the newly elected Farbridge council in 2007 focused on two major capital projects. The first was initiated by Coun. Leanne Piper who persuaded the council to renovate the empty 150 year-old Loretto convent on Catholic Hill and convert it to a new city museum. That project ended up costing $16 million plus being subsidized annually by taxpayers. We still don’t know the terms of the lease with the Church who owns the property or the operating costs.

The second 2007 decision was to change the $42 million contract for the new city hall and renovation of the old one. In order to meet a higher environmental standard this created more than 300 change orders, resulting in delays of completion and the premature firing of the general contractor, Urbacon Buildings Group Corp., in September 2008.

Seven years later, we now know the cost of the Urbacon firing has reached $23 million over the original $42 million contract. When the court case was decided in March 2014 in favour of Urbacon, it resulted in the Mayor being defeated plus four other councillors who either quit of were defeated last October.

These two events were the catylist in 2007 that led to reckless spending and lack of accountability of a regime that lacked financial discipline or responsible direction.

Case in point, the city is currently without a Chief Financial Officer. In the eight-year term of the Farbridge administration there were four CFO’s plus one who was a senior financial department official. She resigned and is working for Wellington County.

So how do we reduce costs?

Mayor Cam Guthrie has experienced a rough first year in office. His attempts, along with a minority of council have been unable to inject change and financial responsibility to the city administration.

The chief reason is there are seven members of council who vote as a bloc, frustrating change and progress. They include Leanne Piper, Cathy Downer, Karl Wettstein, Mike Salisbury, June Hofland, Phil Allt and and James Gordon.

This city can no longer tolerate plus 3 % property tax increases every year, or a police headquarters renovation that will end up costing an estimated $39 million, $5 million more than the original estimate. Farbridge legacy costs include an estimated $75 million spent on a waste management system that doesn’t serve an estimated 13 per cent of households and businesses; downtown residential intensification; creation of the Guelph Municipal Holding Corporation with 132 employees, that lost $2.8 million last year.

These items are only the tip of the iceberg that is about to do a Titanic number if there is no attempt to avoid a financial disaster.

The first place to start is executing a management review to reduce staff costs. This is the gtreatest expense the city faces both in the short and long term. We cannot continue using 85 per cent of the property tax revenues to pay the staff. This year the staff budget is $31,050,000. It is the greatest expense in the city budget.

It explains how the growth of the city staff and the exponential increasing costs for salaries and wages, pensions, medical and overtime impacts your property tax bill.

So, let’s get serious

Step one, shut down the Guelph Municipal Holdings (GMHI) operation. There is no direct benefit other than sending a $1.5 million dividend to the city’s general revenues despite losing $2.8 million in 2014. In the past five years $9 million has been moved over to the city as dividends from GMHI.

The source of these funds is from the GMHI-controlled Guelph Hydro. So we end up paying for it as it represents another form of taxation specific to all citizens.

There are many programs that the Farbridge Bloc of Seven on council is insistent of maintaining. In fact, Coun. Karl Wettstein insists that council must maintain the same level of services provided by the previous administration of which he was a part.

Step Two, simply, we can no longer afford spending millions on bike lanes; downtown secondary plans including reconstruction of St. George’s Square; spending millions to provide thermal-based heating and cooling to the Hanlon Business Park and Downtown: the wellness program; the transit system; offering money to home owners to upgrade their homes including windows, doors, insulation and toilets that use less water.

These programs must be severly pared back or eliminated until we can replenish the reserves that were raided to pay off the $8.9 milliom Urbacon settlement.

Step Three, put a hiring freeze in place. Also reduce the number of staffers by at least 5 per cent in the 2016 budget. This action can br spread through every department with the managers in charge being responsible for staff reductions.

Until these steps are taken to reduce costs, there will be no Wilson Street parking garage, no new downtown library, no South-end Recreation Centre and no revitalization of the Baker Street parking lot property.

The infrastructure of this 200 year-old city is in disrepair. Old sewers, watermains, and streets need replacing. It’s not glamourous stuff like the Waste Resource Innovation Centre on Dunlop Road that is mismanaged and operates in secret. Or the Market Square project that is the expensive centre-piece of the Farbridge legacy.

Mayor Guthrie was elected last year on the promise to keep property tax increases to the Consumer Price Index (CPI). Last year that was 2.4 %. The Farbridge Bloc however used its council muscle to shove a 3.96 % property tax increase in this year’s budget.

The only way this group can stop obstructing and start cooperating is to let them know the people want change. You can do that by sending a letter, or email to express your concern about the high cost of living in Guelph.

All it would take is just one councillor to recognize his or her responsibility to work creatively and responsibly as a group on behalf of their constituents and not on a broken idiology that has created this financial mess.

This beautiful city and its people deserve better.

Tomorrow, October 23, Part Three of this series discusses how public money is shifted around behind closed door creating financial confusion and hiding excessive costs. It’s a practice known as “Fungible Finances.” It has been used extensively in the past eight years by the previous administration.

 

If it’s broke, here’s how to fix it

Let’s start by saying there are a lot of smart people who run our city.

The problem is that the political ruling class – the council gang of eight – has dominated and controlled public business. This has been the case for the past five years.

Under the leadership of Mayor Karen Farbridge, programs of grandiose schemes and social engineering policies has brought the city to a state of dangerous financial condition.

There is little disposable cash to meet the growing demands of the city. Assessment is only increasing at a rate of 1.5 per cent per year. Taxes are increasing exponentially at a rate of 3.5 per cent per year. The city has one of the highest per capita debt rates in the entire country.

Spending is out of control as major projects initiated by this council have failed to meet budgets or performance.

So what do we do about it?

1. Demand that council reduce spending by reducing staff in all areas of public employees including police, fire and EMS. Freeze all hiring across the board including part-timers and occasional staff. Specifically, demand all departments to reduce staff in two stages: Three percent in the first six months of 2012 and four percent in the last six months of the year. Total 105 employees.
2. Instruct legal staff to negotiate outstanding legal suits to bring to a conclusion.
3. Do not hire consultants for 12 months. Close out current contracts.
4. Instruct all departments to reduce non-staff costs by 3 per cent in 2012.
5. Have a staff report to the status of all stimulus projects and future cash flow required.
6. Cut city advertising and public affairs budgets by 50 per cent.
7. Require River Run Centre and Sleeman Centre to be self-sustaining within six months.
8. Cancel all financial support to community groups. If you have a cause support it, do not expect taxpayers to do it.
9. Get aggressive with the provincial government to increase the property tax deal enjoyed for 29 years by the University of Guelph to help meet the city’s 2012 financial needs.
10. Review all donations to organizations to reduce spending.
11. Pass a by law to cut the number of councillors to six in 2015 and make the job a fulltime position with appropriate remuneration.
12. Abolish the executive director system. Replace it with department heads reporting directly to the CAO.
13. Curtail all travel and associated expenses. Cancel all staff credit cards.
14. Appoint a cost czar to review all accounts and claims.
15. Appoint a citizen’s committee under the leadership of a qualified and respected library expert to study and recommend a public private partnership for a new downtown library.
16. Form a task force composed of citizens and staff to study a public and private partnership to build the south end recreation centre.
17. Get aggressive to collect taxes in arrears and uncollected traffic fines.
18. Take action to encourage a large grocery chain to establish in the east end of the city.
19. Hold a conference with property developers and builders to explore ways and means to increase assessment through careful planning.
20. Speed up the approval process for developers and new businesses.
21. Provide budget support and incentives to the staff commercial and industrial development team to seek business and encourage candidates to settle in Guelph.
22. Renegotiate the deal with Maple Reinders re operation of the wet waste plant.
23. Invoke a sunshine bylaw that opens all council meetings to the public. Cancel all in camera council meetings held before the public council meeting. Exceptions would be negotiations regarding real estate and problems associated with employees. Council would have to explain to the public why such an in camera meeting was necessary.
24. Invoke a bylaw to publish dates and times of committee meetings with ten days notice on the Internet and public media.
25. Have the Mayor give a monthly status report on the city with an overview of finances and status of major projects. It should be real news oriented and not propaganda.
26. A customer service team should be set up to answer public questions and complaints. This group would follow-up to ensure the query was handled promptly by the affected department.
27. Abolish the present security system at city hall so that any person can enter and access council and staff at any time. This is a public building owned by the taxpayers.
28. Amalgamate the response teams for police, fire and EMS to a singular call centre.
29. Review the operations of the fire department to reduce operations that are often duplicated by other public safety services.
30. Review all bylaws with the city legal team to reduce the obfuscation and redundancy of current business practices.