Tag Archives: Guelph Municipal Holdings Inc

History proves selling Guelph Hydro won’t solve the basic problems facing our city

By Gerry Barker

October 30, 2017

Our mayor, a man with perceived municipal fixes and promises, states that he voted against seven budgets over which he participated as a councillor and Mayor in the last three annual budgets. Perception is always accepted when the former administration fumbles multi-million cost overruns building the new city hall.’

In this case, the people voted with their feet and Ms. Farbridge was defeated. The defeat was exacerbated by the Larkin effect in convincing council to completely renovate the police headquarters building at a price tag of $34 million.

The original estimate by the Guelph Police Service Board was $13 million just seven months prior to council approving the former police Chief’s plan. Chief Larkin had already accepted a job as chief of the Waterloo Regional police service and morally had no skin in the game.

Instead the task of selling the new plan fell to former mayor Farbridge and her fellow councillor on the Guelph Police Services board, Leanne Piper. Council approved it in August just before all capital projects were frozen due to the upcoming civic election Oct. 27.

Former Chief Larkin publicly supported the Mayor in her re-election bid, breaking a basic rule of police officers not publicly expressing support for a political party or candidate in a civic election. The mayor was defeated anyway.

They’re breaking up that old gang of mine

But post-election, a group of Farbridge appointed senior managers who, without hesitation in November 21, 2014, after the defeat of the Farbridge universe, in the vacuum of political masters, reorganized the senior management staff. The group, headed by former Chief Administrative Officer (CAO), Ann Pappert, (resigned May 2016); current CAO Derrick Thomson, (resigned March 2016 and returned June 2016 as CAO); former DCAO Mark Amorosi, (dismissed February 2017); Director of Environmental Services, Janet Laird, (resigned November 2014); Chief Financial Officer Al Horsman, (resigned August 2015) Director of Operations, Derek McCaughan, (resigned November 2014); City Solicitor Donna Jacques, (resigned February 2017).

The senior staff re-organization promoted them a higher salary reflecting the new rank, as the scale of the newly named Deputy Chief Administrative Officers (DCAO) replacing the title, Executive Directors.

Two of the three senior managers of Emergency Services, Police Chief Larkin and Fire Chief Shawn Alexander resigned in 2014.

The city did not have a Chief Financial Officer from November 2014 until June 2017. Instead there were three general managers of finance and treasurer during that time, Katrina Power, Janice Sheehy and Tara Baker who coming off maternity leave is the current GM of finance and treasurer. During Ms. Baker’s absence, James Krauter was appointed interim GM of Finance.

And there were others including the firing of veteran Chief Building Inspector, Bruce Poole, who was rewarded by winning a $1 million lawsuit against the city for wrongful dismissal. The settlement was never revealed.

You don’t need an adding machine to figure this out

It all added up in a brief two years as chaos in high places. Most citizens were left in the dark about all this chaotic fallout that affected their daily lives. This was mostly ignored by the local media.

In my opinion, the seven councillors, who vote as a bloc, are overly protective of the senior staff and coupled with the high number of closed-session meetings conducted by council, the public is shut out, shunned and used whenever it is convenient.

It is a very serious culture of entitlement and arrogance that drives the great divide between council and the people they represent. Only we the people can change it and our opportunity comes next October.

Change not only occurred at the senior civil servant level, but also was completed before the newly elected Mayor had a chance to try out the seat in his office on December 1, 2014. It was slick and self-serving move before the new administration was officially in charge.

The question arises, was the incoming mayor and council advised of these major managerial changes and increases in pay? Did the incoming council agree to this before being sworn in?

What motivated the senior management drain?

So the new council approved a budget on March 2015 that reflected the agenda of the seven member progressive majority on council.

Newly elected Mike Salisbury initiated one of my favourite observations. He proposed taking unspent 2014 money for expanding bike lanes on Woodlawn Avenue, adding the 2015 bike lane commitment of $300,000 to spend $600,000. It sums up council’s inability and failure to understand that it is illegal to move money that is unspent in one fiscal year adding it to the current fiscal year. Council didn’t seem to care they passed it anyway.

The Woodlawn job was botched and the engineer in charge left the city.

The Mayor just received his indoctrination that he cannot depend on support of the majority of this council.

The great Salary-Gate cover-up

So, in December 10, 2915, in closed-session, during the final budget approvals, we later learned that four senior administration officials including Ann Pappert, Al Horsman, Mark Amorosi and Derrick Thomson, were awarded a total of $98,202 salary increases. The trouble is they never revealed those huge increases until the provincial Sunshine List published the details in March 2016.

That’s when Derrick Thomson resigned; he received a 19 per cent increase in that secret closed-session meeting Dec. 10. In April 2016, CAO Ann Pappert, resigned and she received a 17 per cent increase totaling $37,000 taking her salary to $263,000 plus a $6,400 taxable benefit. This increase placed Ms. Pappert as one of the highest paid CAO’s in Ontario. It is noted that while only working for five months, the Sunshine list for 2016 shows she received her full salary.

During this time it was odd that Mayor Guthrie stoutly defended Ms. Pappert even to the extent that he threatened legal action against a citizen who published damaging evidence of Ms. Pappert’s performance in the five years of service as head of the city staff.

His defence of Ms. Pappert is even stranger when he knows of her involvement as Chief Executive Officer of Guelph Municipal Holdings Inc. (GMHI). This multi-million dollar attempt by then mayor Farbridge as chair of GMHI has been audited by the KPMG accounting firm. The consolidated balance sheet shows the financial losses including some $63 million in shareholder equity that is worthless because GMHI has no assets or revenues.

So why is GMHI still there?

What follows is strictly an educated theory.

The Strategic Options Committee (SOC) is part of GMHI. The current chair of GMHI is Mayor Guthrie.

Last week with great fanfare, the Mayor announced that Guelph Hydro would merge with Alectra Utilities of Mississauga. A memorandum of agreement has already been signed. The mayor claims that Guelph’s 55,000 hydro customers will witness lower rates as a result of the merger. And there’s more good news, the dividend paid to the city will increase. We learned that the Mayor would be appointed to the Alectra Inc. 14-member board of directors.

First, neither the Mayor nor Alectra have any say in what hydro customers must pay for electricity across the Province. Those rates are set by a provincial agency. Perhaps the Mayor can explain why the city will receive greater dividends as a result of the merger.

What was not discussed in the press conference were the pertinent details such as how much is Alectra paying for Guelph’s Hydro system valued at $228.4 million? What is the book value of goodwill, cash flow details, servicing the customer base, staff layoffs, value of contracts and what happens to Guelph Hydro’s $93 million in long term debt?

In my opinion, that was part of the GMHI salvage job. As I understand it, that money was loaned to GMHI by a subsidiary company of Guelph Hydro. It was in the form of two debentures with no apparent security or collateral. The debt repayment was never made by GMHI and unpaid interest alone was $10 million.

It is apparent that the interest was forgiven and the GMHI debenture debt, was quietly essentially returned to the lender, Guelph Hydro, where it now sits as a long-term debt on Guelph Hydro’s books.

Birds of a feather, flock together

This all happened because the principals, the City, GMHI and Guelph Hydro are all owned by the taxpayers. It became a garden of manipulation, sloppiness and incompetence tilled by a corrupt and secretive administration.

We should not let this occur again and vote to clean up the garden of organized deception and waste of our resources.

Now you have to ask: Is this maneuver linked to the Alectra deal? Until the truth comes out describing the details of this deal, the people cannot support it. The problem is the SOC supports it, the Mayor is effusive in his support but where do the other 12 members of council fit in when they, as our representatives, vote December 13 to approve it or not?

If you believe this proposed take-over of Guelph Hydro is in the best interests of the taxpayer owners, then re-elect those members of council who voted to approve it.

We still say: NO SALE.

 

BREAKING NEWS

Evidence has just surfaced about Alectra Inc’s expansive plan to own and control the second largest community electric distribution company in North America, is about to take over Guelph Hydro. Watch Guelph Speaks for details to be revealed soon.

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Are you ready for another four years of Karen Farbridge as your Mayor?

By Gerry Barker

October 9, 2017

There were some events this past week that confirm that our city is controlled by a political minority that has held power for the past ten years.

The most startling announcement came from a division of Innovative Guelph. Two Guelph councillors, Leanne Piper and June Hofland, were promoting an event that would feature former Guelph Mayor Karen Farbridge. Ms. Hofland is named co-chair of the event while Ms. Piper is serving on a panel with Brenda Halloran, former Mayor of Waterloo and Chris Fonseca, councillor in the City of Mississauga.

As the keynote speaker, Ms. Farbridge, a veteran of 11 years as mayor of Guelph, is being promoted to “Raising women’s voices: Overcoming barriers to Women’s participation in politics.”

The Innovation Guelph (IG) organization is hosting the meeting November 14 at the Farquhar Street offices of IG. That is to set up a campaign school known as “Guelph Wellington Women’s Campaign School” It is a collaboration of several (unidentified) Guelph community partners devoted to helping women overcome barriers and support them through the political campaign.

The promotion is titled: “Ask a female politician.”

Sounds like the Lavender Hill gang is on the warpath.

Since Ms. Farbridge’s defeat in October 2014 there has been a drumbeat of recrimination by Farbridge followers over their leader’s resounding defeat by, horrors! A man.

In years past, Innovation Guelph was a project initially financed by the city during the Farbridge term as a favourite project.

It’s mission statement is: “Innovation Guelph is building prosperity for community wellbeing by providing mentorship and business support services that help innovative enterprises start.”

So, do these lofty goals have anything to do with pure political action?

Let’s check out the composition of women members of council elected in 2010. Including the Mayor, six women were elected to city council. Along came the 2014 election and only four women were elected to serve. Three of the four are supporters of the former mayor and two are involved in the current “Ask a female politician” initiative.

What can I say? Asking the former mayor to speak at a gender-focused event to help women overcome the alleged barriers to obtaining political office is like throwing up a barricade where none exist.

Their motives are entirely sexist. What’s next, a forum for men to overcome the barriers of political office that some women claim exists?

Further, why is IG involved in sponsoring this forum that strays from its own mission statement? Is it not an organization dedicated for all people in the Guelph/Wellington area regardless of gender, colour, or sexual preference?

The program says there is no charge to attend and all genders are welcome.

Her hardcore supporters are still feeling the pain of the Farbridge surprise defeat. As for the rest of us, perhaps we may attend this self-serving soiree and ask some pertinent questions about Ms. Farbridge’s involvement in the Guelph Municipal Holdings Inc. (GMHI) fiasco.

According to the announcement questions from those attending will only be asked of the three-person panel and not the keynote speaker. Of the panel only Coun. Leanne Piper represents Guelph.

Here are some questions that should be asked of the former mayor:

* As chair of GMHI, why were most of the GMHI meetings held in closed session?

* What was the role of CAO Ann Pappert as Chief Executive Officer of GMHI for four years?

* Did she report to you as chair of the GMHI board?

* Did GMHI, under your leadership, ever earn enough revenue to cover its operating expenses and if so, from where and how much?

* How could GMHI send a total of $9 million as dividends to the city’s general revenues between 2012 and 2015 when it was operating with a deficit?

* The shareholder’s equity is listed on the KPMG GMHI consolidated audit as $63 million. What form of equity of the shareholders (i.e. the Corporation of City of Guelph) made up that $63 million and is it recoverable?

* Why did GMHI borrow $93 million in two debentures from a subsidiary of Guelph Hydro? What happened to those funds?

* Why did Ann Pappert resign ten days following the May 16, 2016 report by Pankaj Sardana that she co-signed?

* Finally, is Innovation Guelph just another tool in the former mayor’s visionary toolbox to support her pro-environmental, power self-sufficiency and sustainability agenda to Guelph?

Regardless, three years ago voters soundly rejected Ms. Farbridge’s performance in retaining power by shutting down public participation using closed-session meetings. To now participate in a meeting to have women encourage you to run and donate to your campaign is not only premature but in my opinion, politically stupid.

But perhaps the announcement makes it clear what your intentions are concerning the October 2018 civic election with the following exhortation:

“ASK HER TO RUN AND SUPPORT HER CAMPAIGN.”

Come to think about it, perhaps Ms. Farbridge is setting the stage to run as a Liberal in the June 2018 provincial election to replace the retiring Liz Sandals.

Now, wouldn’t that be special.

 

 

 

 

 

 

 

 

 

 

 

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This is what the provincial Sunshine List doesn’t tell you

By Gerry Barker

July 4, 2017

It was 21 years ago that former Ontario Premier Mike Harris’s government introduced the provincial Sunshine List naming all public employees earning $100,000 or more. The first list contained the names of every public employee who was paid from the public purse. That includes municipal employees.

The List also included the taxable benefits received by those employees earring more than $100,000list

What were never included are the benefits that municipal council is contracted to pay. These benefits include pension contributions, vacation and sick leave not used during employment. Throw un-paid health care upon retirement and in the case of non-union management employees, special contract terms applicable to their position.

Guelph management considers these accumulated management benefits confidential and negotiations are conducted in closed sessions. The fly in the pudding is the argument that such secret details are to protect the taxpayer. From what? It’s all about revealing too much detail for other management employees now and in the future.

Let’s look at a recent example. Our former Chief Administrative Officer (CA) was promoted to succeed Hans Loewig in 2011. As a result, her salary increased by more than $40,000 and she did not live in Guelph. A year later, she was advised by council to make Guelph her permanent residence moving from nearby Waterloo. As a special consideration, council agreed to give her $20,000 moving expenses if she moved within 90 days, and she did.

Ms. Pappert was also named Chief Executive Officer (CEO) of the newly formed Guelph Municipal Holdings Inc. This was an initiative by former Mayor Karen Farbridge using the Community Energy Initiative to make Guelph a world leader in environmental and renewable energy self-sufficient.

She remained CEO for four years up to her April 2016 resignation and leaving May 26, 2016. In 2013, her salary was listed in the 2013 Sunshine List as $214 thousand. The 2014 Sunshine List showed her salary to be $219,657. Apparently Ms. Pappert’s salary and benefits were discussed, again in closed session, prior to council approving the 2015 budget, March 25, 2015.

Then a closed session of city council, December 10, 2015 awarded the four top city managers a total of $98,202 in increases. But this was not exposed to the public until March 2016 when the provincial Sunshine List was published. One of the four, former Chief Financial Officer Al Horsman, resigned in August 2015. The 2015 Sunshine List revealed in March 2016, that he received $188,999 for eight months on the job.

Ms. Pappert, who worked for five months in 2016, received $263,757.32. From January 1, 2015 to May 26, 2016, Ms. Pappert was paid a total of $489,818.26 or $28,812 per month. Plus she received an estimated $8,783 in taxable benefits.

This placed her as being paid more than the Premier of Ontario.

Part of her resignation package included unused accumulated sick and vacation day payments and a retroactive performance bonus of some $26,000.

Looking at her salary and taxable benefits for her five years as CAO of the city, her gross salary and taxable benefits exceeded more than $1 million.

But that’s the tip of the iceberg. There are the pension benefits that citizen are obligated to honour. Lifetime ealth care plus other perks embedded in her contract.

The underlying problem is that council has failed to review and control these management positions based on performance and professionalism. In 2016, there were 96 non-union management positions. This is the underlying problem of the high cost overhead of operating the city.

Police and fire department salaries are excessive and citizens are helpless to do anything about it because salary disputes are settled by outside arbitrators.

Guelph has become a Mecca of public employees who enjoy unfettered salaries, benefits and job security. Also what most citizens don’t realize is the long-term liability of overly generous pay packages that include, in most cases, hidden perks. The public servants of our city collectively represent the costliest item in which more than 80 per cent consumes most of the operational and capital budgets.

The size of the staff today (2,235) is some 850 more than it was in 2007 (1,450). That’s an increase of 58.6 per cent. This data comes from a city report.

The latest Statistic Canada census figure states Guelph’s population is 131,000. In 2007 the city population was some 119,000, an increase of 12,000 since or 10 per cent.

Tell me, how does the administration justify a staff increase of 58.6 per cent when the city population only increased by 10 per cent? Did it require an additional 850 employees to handle the12,000 new-comers to the city?

For every new full-time employee, the citizens are responsible to guarantee millions in future pension benefits. Yet three councils in those 10 years have failed to understand the long-term liability of staff. In fact, even when informed by the Fair Pensions for All group, they refused to believe it.

With the millions of dollars wasted on their watch, it only points to the total ignorance and failure to maintain their fiduciary responsibility to the citizens. Remember them? They just pay the bills and deserve better representation.

Not all councillors are financially challenged. Next year, it is important to elect councillors who are not isolated by dogmatically-possessed individuals who are thick as treacle on a cold winter’s day.

We deserve better.

Climate change anyone?

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Just when you believed the influence of Karen Farbridge was over, read this

By Gerry Barker

April 24, 2017

How the worm turns.

Tonight is our last chance to support online voting next year

Before the 2014 civic election, council voted to allow online voting. This was a forward-looking approach to allow more voters to cast their ballot just like they did in Toronto and Ottawa. In fact, some 13,000 did use the system. There was no voter fraud, very few hitches; it exceeded all expectation by being available, fair and without problems.

Oh, there were naysayers. Today the majority of naysayers are all sitting on council with the majority voting to ban it. For some it is a classic flip-flop.

In a recent city council Committee of the Whole meeting, a non-binding vote was held to approve allowing online voting in the 2018 civic election. To the surprise of most people the following councillors voted to disallow online voting for the 2018 civic election.

Councillors opposed included Phil Allt, James Gordon, and Mike Salisbury, who were not members of the 2014 council that voted for online voting. So what’s their beef?

Then the following councillors who did vote for online voting in 2014, June Hofland, Leanne Piper, Karl Wettstein are now voting against online voting. Why? Other than adhering to a misguided ideological rationale, why the flip-flop? It seems silly in that all three benefited from online voting in their 2014 re-election.

How Coun. Bob Bell voted no to online voting this time is both baffling and not known how he voted when the former council approved online voting. He also benefited from it, winning re-election in 2014.

Coun. Cathy Downer was the only member of the progressive majority who voted to allow online voting next year. Coun. Mark MacKinnon also voted to allow the online voting system.

The future of online voting is now

Tonight, April 24, council will vote to allow online voting, or not. This is necessary because the original vote was conducted when the council was in the committee of the whole. I know, procedural bylaws can be confusing but tonight is the night for the final decision.

It will take two defections from the “no” side to let it proceed. Of course the risk the “no” faction faces is diminished chances of re-election next year.

So what influenced new councillors Gordon, Allt and Salisbury to vote against it?

Was it the influence of that ardent socialist Susan Watson who urged council to reject online voting? You remember Ms. Watson who, between she and her husband, donated thousands to elect former Mayor Farbridge and loyal supporters.

She will also be remembered as the social activist who persuaded the city to order an independent audit of former candidate Glen Tolhurst’s election financial report. It showed a donation of $400 from GrassRoots Guelph, an incorporated citizen’s activist group.

The auditor, William Molson of Toronto, said the donation was legal, however the $11,000 cost of this “frivolous and vexatious” exercise was not paid by Watson but by the citizens.

But you have to hand it to Watson. I so hope she decides to run for council. She is chairperson of the Fair Vote movement in Guelph. This is a New Democratic Party national organization to encourage voting reforms. They include proportional voting to replace the system of the first candidate past the post, winning the election. It’s system that has been in place since 1867.

The Trudeau Liberal government ran on reforming the Canadian voting system, recently walked away from it, much to the rage of the New Democrats.

So, now Ms. Watson is trying to convince council to suppress voting by not allowing online voting.

Words escape me to describe this two-faced attempt to force restrictive policies on the electorate by forcing reform of the voting system and at the same time, disallowing online voting.

The Farbridge legacy lives on

What it really illustrates is the collusion and conviction of the majority group of city council to carry on the leftists’ policies of the defunct Farbridge administration. It was one of failure not only at the polls, but resulted in millions being spent on the Mayor’s personal agenda to impose unwanted social and environmental projects.

In her eight years in office, the former mayor inveigled her supporters to tap into reserves to balance the city accounts due to excessive overspending of budgets. The assets of Guelph Hydro and wasting public funds on giveaways to developers to encourage high-density development were part of the Farbridge agenda to turn the city into a vibrant place for all citizens. How did that work for you?

It was the Farbridge plan to turn the city into an exciting urban downtown without the input6 from asking the residents. Earlier this year the Chief Administrative Officer, Derrick Thomson, announced the city was pursuing the Reformatory lands, owned by the province, to build a modern high-density complete community. The plans were to develop a community without cars, walking distance to shopping and jobs. Trouble is the city has spent millions planning an urban design for those lands but doesn’t have the money to buy the property.

You know, I keep thinking of Kevin Coster in the movie “A Field of Dreams” who believed converting a cornfield into a baseball stadium: “If you build it, they will come.” Trouble is, we don’t have a Shoeless Joe Jackson to seal the deal.

The real issue is where did the money go when the former mayor ran Guelph Municipal Holdings Inc. GMHI for four years?

How does this affect online voting or visa-versa?

In 2010, shortly following the civic election, the Mayor informed council she was setting up GMHI to manage city assets. This was to be an independent, incorporated body operating separately from the city, although owned by the city. Here’s the organizational set up for GMHI as reported in a news release:

“GMHI is a holding company set up by Guelph City Council to manage select City of Guelph assets, which currently includes Guelph Hydro Incorporated and its subsidiaries, for the purpose of maximizing revenue potential and strengthening community prosperity. GMHI is governed by an eight-member Board of Directors including the Mayor as Chairperson, four City Councillors, the Guelph Hydro Incorporated Chair and two independent community members.”

The Board appointed Chief Administrative Officer Ann Pappert, as Chief Executive Officer of GMHI. Operations started in 2011. From the start, GMHI was the corporate vehicle to continue the mayor’s Community Energy Initiatives. In July 2013, GMHI filed an annual report as follows:

“Guelph, ON, July 10, 2013 – Guelph Municipal Holdings Inc. (GMHI) held its second Annual General Meeting today to update shareholders on its 2012 accomplishments and 2013 future directions.

“A top priority for 2013 is addressing a recent Ontario Distribution Sector Review Panel recommendation that a number of local energy distributors, including Guelph Hydro, be consolidated into larger regional distributors. Given the possibility that this situation could be provincially mandated or driven by the regulator, the Ontario Energy Board, GMHI has endorsed a Guelph Hydro staff investigation of solutions that may include sharing services and resources, or more formal mergers and acquisitions. “Consolidation is a distinct possibility regardless of how it is achieved. We will continue to be well prepared to respond to all opportunities for lower energy costs for customers, improved efficiencies, better access to technology and sustainable solutions.” (Signed) Karen Farbridge, Chair of GMHI.

“An additional priority for GMHI this year is to pursue a new energy project designed to create a thermal (heating and cooling) distribution network – often referred to as District Energy – that will allow for flexible, efficient, competitive and secure local supply and delivery of thermal energy to Guelph in the future. About half of Guelph’s total energy demand is for thermal energy. The District Energy project represents a significant opportunity to ensure a reliable local supply a midst economic uncertainty and increasing climate change concerns.”

Part of those unfulfilled grandiose plans by GMHIL was to build two large natural gas generating plants, one in the Hanlon Business Park and the other on city owned land. These units were to make Guelph self-sufficient producing its own electricity.

The fallout of these schemes was loses of $26.6 million and being stuck with an impaired investment of some $69 million, borrowed from Guelph Hydro, as of 2015 in which GMHI has no revenues to even pay the interest. It’s held on the city books as an asset but that will be written down over time. The  reason is that GMHI has no income to even pay the interest on the loan.

Are you beginning to see the corporate anxiety to sell Guelph Hydro?

As a shareholder in the City of Guelph Corporation, I now understand why the GMHI annual report failed to contain the following important details that were in the public interest and ignored.

There is no operational financial information provided in the former mayor’s 2014 annual statement of GMHI including an audited balance sheet, a listing of expenses and revenue; The status of the annual $1.5 million dividend paid to the city by GMHI; a statement of the “accomplishments” reported by Chair Farbridge; no overall statement of operations and future plans of GMHI; No indication of taxes collected and paid; no identification of the auditor as appointed by the Board or evidence of an audit. These details are required under the provincial Corporations Act and are public documents.

The most interesting part of the Chair’s 2013 report was the long dissertation about how Guelph Hydro may be merged or sold if the province mandates it. Four years later, the correct council, through its Strategic Options Committee, is shopping Guelph Hydro. I know, they don’t like that description but that’s what the majority on council authorized it to do.

In almost seven years, the fallout from the GMHI operation has cost the city some $96 million. May 16, 2016, Pankaj Sardana, Chief Executive Officer and Chief Financial Officer of GMHI revealed much of the disastrous cost of this misadventure conducted at the taxpayer’s expense. He told council much of the details of an ill-planned project that was shrouded in secrecy and described as a project that should never have been started in the first place.

In July 2016, a staff report revealed additional information that was equally devastating. Ten days after the Sardana GMHI report, co-signer CAO Ann Pappert, left the city. The only remaining city councillors who were paid to serve on the GMHI board for four years, are Coun. June Hofland and Coun. Karl Wettstein. They both remain on council and are silent on their involvement.

It’s ironic that Ms. Hofland was chair of the council finance committee for those four years and failed to express concern about the downward financial spiral of GMHI and its management.

So why do these events worry the anti-online council majority? Regardless of the outcome of the vote, the GMHI debacle will be a major issue in the 2018 election. The memory lingers on the effect of online voting in the 2014 civic election in which mayor Farbridge and seven councillors were defeated or retired. The exception was Mayor Guthrie who moved from council representing W4 to the Mayor’s chair. Mike Salisbury took his seat.

The five-vote victory of June Holand in W3 gave the progressives the majority on council. So that’s why the left do not want online voting because of the fear it may lead to their defeat.

And that folks, would be a good thing

Let your councillors know before tonight’s meeting that you favour online voting.

 

 

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Running a city is easy, just don’t tell the citizens what’s going on

By Gerry Barker

January 30, 2017

We live in a liquid society in which change is constant, unsuspected and starkly inconsistent.

In the past ten years, our city has experienced this. A minority of citizens and their elected representatives has dominated our lives with their visions imposing change in which the vast majority of citizens do not agree.

People are always on the move; they sell and leave, people move here to obtain cheaper housing only to discover their costs are too high. People die, babies are born and businesses come and go. It’s a fluid condition that is constant.

Briefly, here are some of those policies that have failed not only operationally, but with multi-million dollar losses of public funding. The Community Energy Initiative (CEI) is currently holding the record for wasted time and resources. So far, losses by Guelph Municipal Holding Inc. (GMHI), total more than $26 million and is still increasing daily. It was founded and chaired by former mayor Karen Farbridge who created GMHI under the guise of managing city-owned properties including Guelph Hydro.

Keep in mind the taxpayers of Guelph are still responsible for GMHI’s finances.

Let’s just stop there for a moment. Guelph Hydro has an estimated book value of $170 million. Its monthly cash flow from more than 55,000 customers is estimated to be more that $13 million. Of that, Hydro must pay for the power it distributes, staff and overhead.

A few years ago, the former mayor, a member of the Guelph Hydro board of directors, attempted to convince council to merge with Hamilton and St. Catharnies distribution systems. It was one decision her council did not support.

Now Hydro is asking citizens to indicate preferences for selling or keeping the utility. It could be a prelude to selling the utility and using the money to bolster city finances. Wonder if GMHI is transferring that $1.5 million annual dividend to the city’s coffers?

The GMHI effect on city finances looks like, and smells like a gigantic Ponzi scheme in which the shareholders, that’s you and me, are repaid with our own money.

As chair of GMHI and a member of the Hydro board, Ms. Farbridge, with the support of four members of her council serving on the board, transferred the assets of Guelph Hydro to GMHI. Over four years it paid the city $9 million in “dividends.”

It is important to note that the Guelph Hydro Board does not hold public meetings. So the details of transferring Guelph Hydro are not known.

Then Guelph Hydro loaned $65 million to GMHI. When asked, CEO Pankaj Sardana said the money came from investors and did not identify Guelph Hydro or Guelph Hydro Electric Services subsidiary as the contributor. In 2015, that loan appeared on the city’s Financial Information Report as an “impaired asset” valued at $69 million.

Mr. Sardana and former CAO Ann Pappert reported to council May16, 2016 that GMHI

had no financial ability to even pay the interest on the loan. This is a liability, not an asset. It will never be repaid to Guelph Hydro because of the GMHI financial collapse in 2015.

With both Ms. Farbridge and her CAO Ann Pappert gone, there are only two members remaining of the GMHI board who served for four years. Neither Coun. June Hofland or Coun. Karl Wettstein is talking about their participation.

Mr. Sardana said the business plan was flawed and stated that the CEI project, the two district energy nodes (pumps) built in the Sleeman Centre and the Hanlon Business Park, have failed to meet contracted targets and performance. Most of the $8.7 million cost of these pumps has been written off or down.

But no one on Council or the staff is talking about the $65 million loan to GMHI.

All this happened behind closed doors with no public participation or information.

Ms. Farbridge set up a system of conducting council business in closed session. She did the same thing chairing the GMHI board.

Today, little has changed. Mayor Cam Guthrie has a dilemma. He is trying to maintain his base that includes former Farbridge supporters. He talks about reducing overhead but turns around and votes to hire 13 additional employees and level a two per cent property tax levy described as replacing the infrastrcuture. Except half isgoing to “City Buildings.”

He could have said: No.

The evidence shows that her eight years in office was a disaster of the former mayor’s own making as she attempted to change the city regardless of what the people favoured or cared about. Millions were spent and misspent on her agenda.

But her councils were unable to build a new city hall without going over budget by $23 million; could not install public washrooms downtown to meet the needs of visitors and folks out for the evening. In 19 years, her council did not build a new downtown library but spent $5 million for three lots facing on Wyndham Street that are now used for parking cars.

Along comes the planned Wilson Street Parking garage in which there is a pedestrian bridge between the Garage and City Hall. Question? Is this for the use of the public or to serve the staff working in City Hall? And whatever happened to that Canada Revenue charge when the city was offering free parking to its employees but not charging it as a taxable benefit?

It’s time for a new deal

We must work to encourage independent candidates to run in every ward seat. People with common sense who can establish a fresh responsible direction for our city, have business experience and who understand a balance sheet.

They should run on cutting the operational overhead, shutting down those closed session meetings, emphasizing accountability and open government. Past management practices have contributed to the drain of our reserves to balance the books and pay for ten years of mistakes.

We need new ideas, new direction and appeal to the younger demographic who will inherit the future by dealing upfront with the mistakes of the past.

These closed session meetings have to stop. Only those authorized session meetings concerning employee relations (not salary negotiation), public contracts and labour union negotiations.

From personal experience, I asked the city clerk, November 7, to request that the city appointed closed session investigator to open council’s closed session meeting Dec. 10 2015. This was the meeting that approved the $98,202 increases to three top staff executives.

I’m still waiting.

 

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Who were the enablers and what did they do to lose $26 million?

By Gerry Barker

May 22, 2016

It isn’t too difficult to figure out now that the former Farbridge administration, on its misguided zeal to impose a radical and expensive underground energy system, was enabled by an assortment of civic staff and elected officials.

Official written statements released by the Chief Administrative Officer, Ann Pappert, and co-signed by Pankaj Sardana, Chief Financial Officer and Chief Executive Officer of Guelph Municipal Holdings Inc (GMHI); Chief Executive Officer of Guelph Hydro Electric Services Inc. (GHESI) and Envida Corporation.

Their statement included the following admissions. There is $17,937,244 in “tax losses” being carried on the books of GMHI. If you do your own income taxes you know that a tax loss is generated only by a real loss. It can only be used to offset capital gains. Thinking about this, don’t hold your breath.

Then the two district energy pumps and equipment cost another $8.7 million. The total loss is $26,631,224. It was revealed that some $3 million reduced the cost of the two district energy units. Where did that money come from? And the cost of those pumps was some $12 million, not $8.7 million as the Mayor stated.

Folks, the CAO told council that district energy is still in play. How can that be? The Godmother of GMHI must know that the company has no money and has consistently lost money for five years. Is the CAO expecting a financial resurrection of a dead dream of the former mayor, her friend and mentor?

A day of reckoning is reaching warp speed

During the presentation by Mr. Sardana to the members of council who represent the citizens as shareholders of GMHI, he was frank. Essentially, the concept of the Community Energy Initiative (CEI) and the two district energy units was poorly planned and executed.

Asked about what analysis was done before the plan was launched; the CEO replied, “If we now had done it again, we would never have embarked on it.” Mr. Sardana replied. He was not involved with the original planning of the CEI and the two district generating units.

His knowledge and expertise paints a picture of careless planning, sloppy execution, record keeping, and lack of oversight. Most of the execution of the plan was done in secret and off the city books. You didn’t have to read between the lines to understand how this happened over such a long time.

I contend that there were enablers that force-fed this now discredited and costly exercise down the public’s throats.

The path leading to a failed initiative was enabled by a segment of councillors and staff who were bound by secrecy.

Let’s take the present city council. Three members of the Bloc of Seven were supporters of the CEI along with the former mayor, Karl Wettstein, Leanne Piper and June Hofland. They not only knew what was happening but also as members of the GMHI board, enabled the process. For example; they had to know about the millions in so-called dividends paid to the city by GMHI. Did they not realize that those dividends came from borrowed money from GHESI and its start-up donation of more than $20 million paid to Envida Inc?

Did these three councillors deliberately neglect their fiduciary responsibility to their constituents? Of course they did, in the name of misguided political expediency.

The other four members of the present council’s Bloc of Seven, were all rookies including James Gordon, Phil Allt, Mike Salisbury and Cathy Downer; the last two had previous experience on council. They were not involved in this debacle that started in 2011. Also newcomers Dan Gibson, Mark MacKinnon and Christine Billings were not aware of the GMHI financial disaster. None of these councillors were involved when GMHI was started up in 2011.

But, the members of the Bloc of Seven, all supporters of the policies of the former mayor, are now caught between the rock and a hard place … support or shut up?

It remains that one of the chief enablers of this operation is CAO Ann Pappert. She had to oversee the operation as the first CEO of the city-owned GMHI. It’s her job to track the money and ensure that it is properly budgeted and accounted.

Another major enabler was the former Chief Financial Officer, Al Horsman. he was there when the CEI went south in terms of financial disaster, He was shifted in November 2014 when the suffen reorganization of the senior staff management occurred in the final days of the Farbridge administration. He took over environmental services including waste management, planning and engineering. It is now obvious he realized that finances were in disarray due to the Urbacon fiasco and the raiding of reserves to pay for the lawsuit settlement. He had to also know what was gong on over at GMHI.

Mr. Horsman left in August 2015 to take over as CAO in Sault Ste Marie.

The enabler superstructure began to crumble

After Horsman’s transfer, Deputy Chief Administrative Officer, Mark Amorosi, took the city financial department under his Corporate Services responsibilities. Since November 2014, the City of Guelph has not employed a qualified Chief Financial Officer. Since then, two general managers of finance, hired by Amorosi, left the city.

The last one, Janice Sheehy, also figured out what was happening under Amorosi’s leadership. She left last March after a year on the job. The Region of Peel hired her.

It is easy to understand that Amorosi was in on the failed GMHI experiment and enabled it to continue losing money for five years. He was a Farbridge loyalist who supported her CEI baby, no matter what the cost, as it now turns out.

Then there were the minor league enablers who were believers in energy sustainability, reduction of the use of fossil fuels and pedaling your way around the city on your bicycle.

Their beliefs have some foundation. The problem on this case, is blind ambition, which is not matched by the ability to pay for it. Under the eight-year leadership of Ms. Farbridge, it’s the reason why Guelph’s property taxes and electricity rates are among the highest in the country.

The operating and capital costs of Kitchener and Cambridge are 50 per cent less than Guelph. That difference comes out of every Guelph citizen’s pocket either through property taxes, user fees e.g., excessive charges for electricity, water, and storm drainage, even parking on major streets.

Now, the staff is proposing a ten-year special levy to finance acutely needed renovation of the city’s aging infrastructure. They propose, to place a surcharge on property owners of two per cent, in addition to the regular tax liability each year, starting in 2017 … if council dares to approve it..

With losing millions in mismanagement, the property tax levels have reached the breaking point. There is no evidence that the present CAO-led management team is unwilling to reduce operating and capital costs. The costs of operating the city are way out of line with a bloated staff that is demoralized and in some cases inefficient.

Only a change of staff leadership will bring true reform. Its byproduct will reduce the suffocating multitude of tax burdens prevailing on the citizens. There is a dire need to conduct an independent review of the governance rules installed by the previous administration. These rules are stifling the work of council including accountability to the taxpayers.

The staff management people that floated this tax levy plan are the same bunch who enabled the failed CEI debacle.

As for Karen Farbridge, she knew full well that her grandiose CEI would stall the needed work to fix the city’s proven infrastructure shortfall. That wasn’t glamourous enough for her ego and legacy.

But her legacy remains in tatters and is still being propped up by seven members of council who disregard their sworn duty to the people who elected them.

Karen would be proud.

As a public service, GS is listing the members of council and their contact points including their city-supplied phones, fixed and cell, email address and fax number. The more people contacting their representative the more they will become awarw of your concerns about mismanagement and financial losses sustained in the past five years..

Between Urbacon and CEI, those loseses are more than $49 million.

email                                    Office                   Cell            Fax

Mayor Cam Guthrie mayor@guelph.ca 519-837-5643 519-822-8277
Ward 1
Councillor Dan Gibson dan.gibson@guelph.ca 519-822-1260 x 2502 519-827-6407 519-822-8277
Councillor Bob Bell bob.bell@guelph.ca 519-803-5543 519-803-5543 519-822-6152
Ward 2
Councillor Andy Van Hellemond andy.vanhellemond@guelph.ca 519-822-1260 x 2503 226-820-5073 519-822-8277
Councillor James Gordon james.gordon@guelph.ca 519-822-1260 x 2504 519-827-6481 519-822-8277
Ward 3
Councillor Phil Allt phil.allt@guelph.ca 519-822-1260 x 2510 519-827-6579 519-822-8277
Councillor June Hofland june.hofland@guelph.ca 519-822-1260 x 2505 519-822-8277
Ward 4
Councillor Christine Billings christine.billings@guelph.ca 519-826-0567 519-822-8277
Councillor Mike Salisbury mike.salisbury@guelph.ca 519-822-1260 x 2512 519-827-7398 519-822-8277
Ward 5
Councillor Leanne Piper leanne.piper@guelph.ca 519-822-1260 x 2295 519-835-1136 519-822-8277
Councillor Cathy Downer cathy.downer@guelph.ca 519-822-1260 x 2294 519-827-8390 519-822-8277
Ward 6
Councillor Mark MacKinnon mark.mackinnon@guelph.ca 519-822-1260 x 2296 519-829-6285 519-822-8277
Councillor Karl Wettstein karl.wettstein@guelph.ca 519-763-5105 519-822-8277
 
 
 
 
 

 

 

 

 

 

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How a flawed Community Energy Initiative wasted $26 million with no material environmental benefit

By Gerry Barker

May 18, 2016

The Chief Executive Officer of the Guelph Municipal Holdings Inc. (GMHI), Pankaj Sardana, CFO, GMHI, CEO, Guelph Hydro Electric Systems Inc (GHESI). and Envida Community Energy Inc., spent almost two hours explaining how the previous administration pushed to develop district energy units costing $8.7 million without having a comprehensive business plan.

Mr. Sardana pulled no punches except one. He did not name the political author who was pushing a failed multi-million dollar community energy initiative that resulted in a massive loss of some $26, 637, 244 million, provided the audit does not establish the same figure.

Former Mayor Karen Farbridge was determined to establish a Community Energy Initiative (CEI) that Mr. Sardana described as flawed from its inception in 2011.

Her name was never mentioned during the shareholder’s meeting. But following the GMHI CEO’s remarks, it was clear that there was no doubt who was pushing to adopt the flawed CEI and the district energy plants.

At the beginning of the meeting Coun. Karl Wettstein, out of the blue, made an unrelated comment: “I don’t believe the Urbacon decision (to fire the general contractor building the new city hall), was an error.”

Where does he get this stuff?

Well, Karl, describe to us why it cost an additional $23 million over the contract price? It is clear that Justice Donald Mackenzie ruled there was an error and it cost the citizens big time.

Wettstein’s comment clearly illustrates why the city is in such dire financial shape. There is slavish support of councillors such as Wettstein, Leanne Piper and June Hofland of their former leader. It demonstrates their lack of basic financial understanding and denial of serious mistakes in judgment.

If they don’t understand it, how do they expect us to understand it?

This became shockingly apparent Monday night at a meeting of the GMHI shareholders, aka city council; Mr. Sardana carefully walked the shareholders through the labyrinth of corporate involvement that had been established by GMHI.

The more he spoke, the more it became apparent that this whole GMHI partnership with GHESI was a rogue operation. GMHI activities were shrouded in secrecy. It is now apparent that senior managers in both the city and Guelph Hydro knew what was going on. They are complicit because they received quarterly GMHI financial statements. This multi-million dollar operation functioned not only in secret but also off the city and Guelph Hydro books. Hydro used GHESI to be the conduit for financing the project.

In order to accomplish that, there were a number of people in on the deal. The result is there are more total loss numbers flying around about how much money was wasted.

GuelphSpeaks uses the figure $26, 637, 244 already announced and signed off by the CAO and Mr. Sardana. However, there have been other numbers bandied about ranging from a loss of $11 million to $40 million.

The Sardana presentation detailed an accounting of the mish-mash of corporations involved in the operation of establishing the real loss figures. On June 13 there is another shareholder’s meeting to receive the audit of the whole operation.

Will the audit of this affair reveal the truth about the losses?

Hopefully this will confirm the loss plus the causes of it. Make no mistake, there was substantial loss but we don’t yet know how much.

There are two important points to be made. Mr. Sardana was not involved in the creation or subsequent errors in judgment made by the former Farbridge led GMHI board. Second, the meeting, while open to the public, was not televised. Wonder why not?

Coun. Christine Billings asked the CEO about what analysis was done before the plan was launched.

“If we had done it again, we would never have embarked on it,” he replied. He went on to say that if the there were a full rollout of the planned district energy operation, the required base of thermal customers would not support the cost of the project.

He said the CEI drove the project from the beginning.

“We paid $5.5 million on the Hanlon district energy system with no environmental benefit? Coun. Billings asked.

“We understand now what we didn’t know before,” The CEO replied. He added that GMHI is cleaning up the finances and moving on. He referenced the $18 milliohm in tax losses but there was no equity in GMHI to support those losses. He said there is an outstanding loan made by the Royal Bank of Canada that must be paid off.

One of the accounting moves was to convert debt into equity. That may have the effect of making the books look good, but the money that created those debts has been spent. That’s why they are on the books as tax losses. But there is little or no revenue to offset them.

Wettstein said the GMHI consortium understood the role of CEI

Coun Wettstein said the board members of GMHI, GHESI and Guelph Hydro Inc (GHI), understood the role of the CEI. He added that some of those involved in making the decisions were “no longer with us.” Is it any wonder?

“Cam and I had little to do with the 2015 budget,” he said. Excuse me, both of you were on the council that initiated this GMHI sponsored scheme. You had to receive quarterly financial reports on the activities of GMHI and its holding corporations, including GHESI and GHI.

Tell us Karl, where did you think the financing for this preposterous adventure was sourced? As a councillor, one would believe that you were on top of the city’s overall finances, including the abortive creation of GMHI.

Coun. Phil Allt, who was not part of this CEI plan commented: “I hope this doesn’t turn out to be Guelph’s “Avro Arrow”. The Hanlon/downtown (district energy units) was not a good decision.”

Coun. Dan Gibson commented that the data was flawed and administrative interference pressure made things happen. But he never mentioned the name of the person exerting the pressure.

Coun. Billings said it has cost $14 million and it should have been no more than $1 million.

Coun. Leanne Piper, who was involved in the GMHI board and its operations, said the people in Guelph wanted the CEI. She failed to explain why more than $26 million has been spent. Nor why with flawed planning, spending $8.7 million on two district energy plants will never produce adequate funding to replace the original costs.

We still don’t officially know the source of the CEI funding

During his presentation, the CEO never explained the sources of funding the CEI project. It is apparent that it did not come from city property tax revenues. The whole project was maneuvered off the city books.

It is obvious, that it came from Guelph Hydro Electric Systems Inc, allied with GHI. It appears that some $23 million was transferred to GMHI from GHESI in the period following absorbing GHI into GMHI.

This is an alarming revelation of total misuse of publicly owned assets to foster a poorly planned scheme to establish an alternative community energy plan.

It is becoming more evident that there should be an investigation by the OPP to determine if this is fraud, perpetrated in secret by elected officials, on Guelph Hydro’s more than 50,000 customers.

The opportunity for public participation and independent investigation is fast approaching, as there will be an audited statement presented June 7. This statement will be the subject of a public shareholders meeting Monday, June 13, 2016.

I urge citizens to attend this meeting and judge for themselves what has occurred to affect their costs of electricity, since 2011, today and in the future. This was a deliberate attempt to use GMI to pay for a poorly planned and executed plan that has already cost citizens more than $26 million.

Remember there is one person in the administration who has been intimate with the details of this financial disaster, she is the one who council gave a 2015, $37,581 salary increase, December 9, in closed session before the discussion on the 2016 budget began.

The CAO knows more than she is letting on

CAO Ann Pappert was there from the beginning in 2011. In my opinion, she knows more than she is prepared to reveal.

We repeat, there is now ample evidence that, if a project of this magnitude occurred in private corporations, the evidence points to dismissal of those responsible and closing down of a gravely failed operation.

Trying to pinpoint those responsible is difficult due to the absence of those who made the decisions that led to this. But, the CAO knew, Ann Pappert, and with respect, so did the DCAO, Mark Amorosi. The new board has flushed out those former board members and staff members who were involved.

Regardless, the buck stops with Ann Pappert and Mark Amorosi, and the CEO of GMHI from 2011 to 2014, all of whom received quarterly financial reports of the status of GMHI and GHESI.

The only remnants of this raiding of the public purse are those councillors who were on the original GMHI Board of Directors. There were five councillors on that board plus the mayor.

The buck(s) stop with all of them.

 

 

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