Tag Archives: Guelph Muncicipal Holdings Inc

The meeting that left the GMHI eight ball still on the table

By Gerry Barker

February 17, 2017

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Thank goodness there were eight councillors who voted not to sell Guelph Hydro plus 11 delegates saying the same thing. The city spin does not quite describe it this way but as a vote against selling the utility as recommended by the Strategic Options Committee (SOC).

The more than four and a half hour meeting failed to discuss the Guelph Municipal Holding Inc, (GMHI), financial disaster that has left a $26,637,244 million loss in its five years of operation plus a stranded debt, a $65 loan from Ontario Hydro. It has been artfully morphed into an asset now parked on the city books, one that is “impaired” because GMHI is bankrupt and cannot even pay the interest.

In the city’s 2015 Financial Information Report this ”asset” was listed at $69 million.

Yet GMHI was not discussed during the meeting that was called by council representing the shareholders of GMHI, that’s us. The topic was on the city agenda for the Wednesday meeting but never brought up.

Checking with Bloomberg Financial Services, there are no executives listed. GMHI is defunct and as a wholly owned subsidiary of the Corporation of the City of Guelph. And on Wednesday, there was no discussion, of the status of this company by city council, aka GMHI shareholders. It was to be discussed at the February 16 special meeting of council according to the council meeting agenda.

GMHI is dead

Now we know why. GmHI was not discussed. It’s dead without identified officer of the corporation, no apparent surrender of its charter. Next question, where does the city-owned Guelph Junction Railroad fit into the new order?

The former mayor created the Municipal Energy Initiative (MEI), using the city-owned Guelph Hydro. Part of the plan was to create, through GMHI a $37.1 million District Energy system that combined electricity and co-generation to supply hot and cold water to nearby buildings.

The cost of this failed, massive project was not made public until May 16, 2016, following four years of operation and development, in closed session meetings of GMHI and city council. The secret GMHI plan included the construction of two, large natural gas-fired generating plants. One was to be built in the Hanlon Business Park and the other on city-owned property downtown. It is possible that the Hydro loan was to be used for these separate district energy plans.

It was the GMHI plan to make Guelph self-sufficient by creating its own power. What is this SOC bunch thinking are they trying to convince council and the public that we must endure another scheme to improve Guelph Hydro? The ramblings of the committee offering electrcity storage batteries in every basement are something out of Star Wars. It’s that spacey.

The citizens have just gone through a pricey, failed plan to turn Guelph into a community of self-sufficient power. Thanks, but no thanks.

The complicity of Guelph Hydro in this convoluted secret project is apparent and contributed to the soaring costs of electricity, up 45.5 per cent in four years, to its more than 55,000 customers.

Wearing two hats can be a recipe for disaster

Council and the city-owned Guelph Hydro, did not question the former mayor’s decision to amalgamate it with GMHI, of which she was chairperson before her defeat as mayor in 2014. That’s when the people decided enough was enough.

So why is this minority of council, led by a Mayor who wants to sell Guelph Hydro is the right thing to do?, paying another $500,000 to continue this examination of the future of Guelph Hydro?

While council, by an 8-5 margin, voted not to sell Guelph Hydro, it failed to even discuss GMHI, the MEI and District Energy system. Why is an independent committee composed of citizens with special interests and futurism, examining the operations and making recommendations?

Another odd element was the absence of CAO Derrick Thomson who is co- chair of the SOC composed of Pankaj Sardana, Hydro Board member Robert Bell (not Coun. Bob Bell) Richard Puccini and a former GHMI board member?

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. Presumably, there are no hard assets underlying this $69 million because GMHI is essentially bankrupt.

So the city takes on this debt, lists it on its books as an asset. Since 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,

Because of the operational secrecy employed by GMHI over the 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. That’s a “Ponzi scheme” in which shareholders are repaid with their own money that is, paying through your hydro and water bills.

Writing off $96 milliom has cost every citizen

I don’t know how you feel about this, but the prospect of writing off some $96 million is one of the main reasons that the administration has no money for needed capital projects such as a new Downtown Library, Wilson Street Parking garage, and the South End Recreation Centre.

Another odd element was the recommendation of Mayor Cam Guthrie urging council to vote to sell Guelph Hydro. Councillors Mark MacKinnon, Karl Wettstein, Phil Allt and June Hofland joined him.

Two councillors, Karl Wettstein and June Hofland had a lot of nerve even participating in the Hydro vote. For four years, they were GMHI board members who were paid to serve on the board and never questioned or revealed the growing financial disaster of GMHI. Is this not an abuse of the public purse?

With MacKinnon and Wettstein, both representing Ward 6, they were salivating with the belief that the sale of Hydro would lead to building the $60 million South End recreation centre. Phil Allt’s said he was firmly opposed to selling Guelph Hydro but wanted more options. So why did he vote for the sale? Along with the Mayor who also said he was in favour of having the committee come up with more options.

The SOC has spent $100,000 since it inception Last September and is now projecting spending another $500,000 to complete phase two and report to council mid-year. So the $600,000 cost of all this jerking the public around will change the minds of those who voted against selling the utility?

It only points to the sheer desperation that the city administration is facing due to the GMHI financial disaster. Selling off Guelph Hydro is not an option to fix the mistakes of the past.

There was still no reference to the defunct GMHI situation.

But Panaj Sardana warned that the various merger options were not a slam-dunk. He said that on the negative side of the merger option, “Lots of mergers fail.”

“You’re talking about bringing cultures together and that has a huge impact on people, on companies, and you could have a very real culture clash,” he said. “If you don’t get this right, then you have challenges down the road.”

And the Mayor and certain members of council believe that investing another $500,000 will change things?

And how does a five-man (gender imbalance) committee justify spending $500,000 in the next four or five months?

Could it be that certain former officials of the city are complicit in corruptive practices and this failure to investigate the GMHI financial disaster is part of the cover-up?

Thanks to all you folks who influenced this Hydo NO Sale vote. As citizens we do have power the trick is how and when to use it.


Filed under Between the Lines