Tag Archives: Guelph Municipal Holdings Inc

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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How your Hydro bills were used to finance a failed plan to push sustainable energy

By Gerry Barker

May 16, 2016

Documents released Friday night reveal how, starting in 2011, the Karen Farbridge administration created an off-the-city books corporate rabbit warren to deceive and push up your Guelph Hydro bills.

And it happened right under our noses.

Here’s a snapshot of the convoluted corporate tangle that was created by Guelph Municipal Holdings Inc. by Mayor Farbridge. It happened after her defeat to sell Guelph Hydro in 2009 to a consortium composed of Hamilton’s and St. Catharine’s Hydro systems. It was a rare occasion when her own supporters refused to support her proposal.

Why? She needed the money to pay for the city’s share of the 2009 federal/provincial shared infrastructure program in which the city was to pay a third of the approved $66 million cost. Unfortunately, reason failed again and the city’s share grew to $28 million with added projects. These included $2 million for bicycle lanes on Stone Road and a new $750,000 time clock in the Sleeman centre.

So, Ms. Farbridge tapped into Guelph Hydro Inc (GHI), for $30 million that was owed to the city through another convoluted scheme that turned over ownership of GHI to the city. She redeemed a $30 million note to bail out the city of a serious financial bind.

In 2011, Guelph Municipal Holdings Inc. (GMHI) was incorporated with then mayor Farbridge as chair and Chief Administrative Officer (CAO), Ann Pappert, as Chief Executive Officer. The board was loaded with her fellow council supporters, plus a couple of friendly outsiders.

There was a series of corporate changes that resulted in GMHI taking full control of GHI and its subsidiary Guelph Hydro Electric Systems Inc (GHESI). This corporate body was the revenue producer of GHI. Why GHI management did not balk at this take-over, remains a mystery.

Just days after delivering his “state of the city” address last week, Mayor Cam Guthrie now says there is an $8.7 “write down” of the costs of building the two natural gas-fired district energy systems. One was built in the Hanlon Business Park and the other in the Sleeman Centre downtown. Both provide heated water to businesses and two new high-rise condos built by Tricar downtown.

So while the mayor says in that this is not a charge to taxpayers such as occurred with the Urbacon settlement, it was taxpayer money spent on building these gas-fired plants. Using the term “write-down” really means write-off. We presume the $8.7 million was posted to the GHI balance sheet.

The word is we the people will never recover those costs. Poof! They are gone along with the means to repay it.

So the balance sheets of GMHI and and sister corporation, Envida, are really a sham. The losses are horrendous in both corporations. It’s difficult to believe that any respected Chartered Accountant would not question the finances before signing off.

But now we drill down a little deeper. l give Mayor Guthrie credit for tackling this financial disaster that has driven up Hydro bills to pay for the abortive dreams of a distrusted administration. It did not occur on his watch.

The Mayor’s ongoing support of the CAO is questionable particularly her 17.11 salary increase approved December 9, 2015 in a closed-session that he chaired. The large increases to senior management were not revealed until the provincial Sunshine List of civic employees, earning more than $100,000, was released in late March this year.

Here’s more: There is an item in the report of the GMHI operation in the past five years that reveals damage to the credibility of a number of people.

The first item in the statement to be presented Monday night is “tax losses” by both GMHI and Envida Corporation, the stepchild of GHI. The tax loss amount for GMHI is $10,595,931. In the case of Envida it’s $7,341,313. That totals $17, 937,244.

To clearly understand the implication of those “tax losses,” is that those are operational losses in the past five years. When a corporation has tax losses it is because it lost money. The only way those losses can be recovered is by making profits to reduce tax liability. Trouble is the claimed losses disappear. Under the circumstances, these losses will never be recovered.

Those are, plain and simple, real losses by the various corporate bodies set up to fulfill the ego-driven dream of the former mayor. She was determined to create the Community Energy Initiative, (CEI). She planned it to keep it off the city books.

The reason why is that under her watch, the city’s credit rating was overtaxed due to excessive spending and mismanagement of finances.

Despite her overt attempt to hide the real story from the public, the city is still liable for the losses incurred by GMHI and Envida. The Royal Bank of Canada loaned money to these organizations. The bank would never have done so without the guarantee of the city to repay the loans.

Again, it’s more of our money down the rabbit hole

Now when you toss in the “write downs” of $8.7 million building those two gas-fired generating plants, the cost of which will never be recovered, there is a total hidden liability of some $26,237,244. The chances of ever recovering that money are zero.

Despite five years of towering losses, GMHI sent a so-called $1.5 million dividend to the city. In the 2014 annual GMHI report, it stated that GMHI had sent dividends totaling $9 million since its 2011 start-up. When you add the $3 million sent in the last two years it comes to $12 million. Will someone explain how a money-losing operation can afford to send dividends to the city when it is losing millions?

Or are they just moving the deck chairs around the sinking Titanic, aka the City of Guelph?

Here’s why. The so-called dividends were used by the city to balance its books as required by law at the end of each calendar year. The trouble is that the city for the past five years has generated large negative variances each year because the administration overspent its own budgets. Instead, the city administration used the GMHI dividends plus raiding reserves to claim a balanced Financial Information Report to the province, as required by law.

Three members of the city council, Leanne Piper, June Hofland and Karl Wettstein, were part of that administration. Do they still believe that supporting GMHI was a worthwhile project? They had to know of the write-downs and tax losses but remained silent, as did their leader, Karen Farbridge and CAO Ann Pappert.

We now learn that Ann Pappert has been reappointed CEO of GMHI and is working closely with the mayor to resolve the financial morass created by the previous administration.

Mayor Guthrie should ask the Minister of Municipal Affairs and Housing to request an independent investigation by the OPP of this off-the-books financial situation and its management.

Is it time for an OPP investigation for fraud?

There is strong evidence that the former administration knowingly used GHI to supply the funding for this abortive plan orchestrated by the former mayor. In my opinion, it is tantamount to a criminal act to defraud the more than 50,000 retail Hydro customers by taking control of GHI and using its cash flow to finance the CEI.

Today, Guelph has one of the highest retail electricity rates in North America. Now we know why.

The first step is to ask CAO Pappert to take a leave of absence because of her connection to GMHI from its 2011 inception. Deputy Chief Administrative Officer, Scott Stewart would manage the CAO responsibilities until Ms. Pappert’s return. Mr. Stewart joined the senior staff last December and is immune from any responsibility for this $25,237,244 hidden liability.

The second step is to close GMHI down before it loses more money.

From the evidence that has been made public, there is no hope for GMHI to become profitable under its existing organization.

In the end, the people will have to pay the bills. What a minute! We’ve been paying for it all along through our Hydro bills. It is just painful that GHI and GHESI were used to allow Farbridge to push a failed dream of energy sustainability. It occurred under the CEI.

Even today, the CEI is supported by the seven Farbridge supporters on council we call the Orange Crush because of their shared political ideology, rigidity and obstructionism.

This city can ill-afford another multi-million dollar financial disaster fostered by the former mayor, Karen Farbridge.

 

 

 

 

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Shake-up of Guelph Municipal Holdings Inc. as mayor becomes chairman

By Gerry Barker

Posted March 9, 2016

The pieces are starting to fall in place regarding that January 25 walkout by five members of council following a closed session of council. You’ll recall that they refused to return to the regular council meeting.

When asked, Coun. Phil Allt said he could not “reveal what occurred.” He later added that the action was taken to “protect the integrity of the corporation and staff.”

Citizens were left wondering what really happened.

It now appears the reason for the closed session was to discuss the future of the Guelph Municipal Holdings Inc. (GMHI). It was another incident of using closed-door meetings to discuss matters that may be politically dangerous.

As guelphspeaks pointed out yesterday, the Ontario Municipal Act, is often used to justify calling a closed meeting. In fact, this has been the trademark of the previous administration in which much of its business was conducted behind closed doors, far from public exposure.

This is known as “controlling the message” and has been abused by councils in the past nine years to the detriment of the public’s interests.

In 2014, GMHI, operating off the municipality’s books, announced a loss of $2.8 million. Then it donated a $1.5 million to the general revenue account of the city of Guelph. The annual report also stated that some $9 million had been sent by GHMI as dividends to the city since the inception of GMHI in 2011. It defies explanation.

GMHI was set up by the previous administration to manage the city’s assets. Mayor Farbridge chaired its first board and the board consisted of city councillors plus two outsiders. The purpose, allegedly, was to buy, sell and create corporate organizations that the city owned or was to own. That’s the asset part and it included Guelph Hydro, the Guelph Junction Railroad and some properties. The crown jewel was Guelph Hydro that services more than 50,000 households and businesses in Guelph and Rockwood.

Yesterday, the city announced sweeping changes to the structure of GMHI.

The previous board was dismissed with the exception of Mayor Cam Guthrie and Coun. Karl Wettstein. Mayor Guthrie became chairman of the new board and Councillors Wettstein and Cathy Downer were named to the board. The city’s Chief Administrative Officer, Ann Pappert, was named interim CEO of GHMI.

“The change reflects this Council’s philosophy about governance. Direct Council oversight of GMHI decisions that affect the City of Guelph will ensure better alignment of City assets, resources and strategic planning,” says Mayor Cam Guthrie.

The intent of these changes is to provide more council oversight of GMHI operations. Now GMHI will report quarterly on operations, including compliance, and financial performance.

On the surface, this appears to be a step to making GMHI more transparent and accountable by reporting to council. The question remains, will its operations still function behind closed doors? There is now ample proof of the abuse of the Municipal Act rules governing closed-door meetings of council. It’s not just happening in Guelph but the Ontario Ombudsman has been given the mandate to investigate closed-door council meetings across the province.

Why is it necessary to even have a GMHI? Its only real source of funding comes from Guelph Hydro. The danger of this is the possibility that Guelph Hydro will pass through the funding it sends to GMHI to its customers. The revelation that $9 million has been sent to the city masquerading as “dividends” from GMHI indicates this operation is a money-losing charade.

It’s interesting that the subsidiary GMHI corporation, Envida, was set up to spend millions of citizen’s dollars to install a geo-thermal heating and cooling network in downtown Guelph and the Hanlon Business Park.

That plan is presumably dead, hopefully.

Council has set an 18-month deadline for reviewing GMHI operations. This whole operation, a signature project, was planned and executed by the previous administration. It remains an example of the self-serving policies of a mayor and council that has cost Guelph’s citizens untold millions in a variety of schemes and projects all in the name of wellbeing, environment and sustainability.

We now know the folly of these policies that left the city with a $23 million unbudgeted overrun cost of the New City Hall. It has left a legacy of costly systems and operations that we are stuck with, supporting a failed attempt to create a new city. Trouble is, that administration also left an aging infrastructure that the staff estimates will cost more than $250 million to fix.

That’s why our operating and capital spending costs are 50 per cent higher than Cambridge and Kitchener. That’s why we pay $28,000 per kilometer for road repairs and the provincial average is $11,000. That’s why an estimated 13 per cent of city households and businesses have to pay private contractors to remove garbage. Yet they still pay for those services through their property taxes.

It remains a legacy of financial mismanagement that citizens will be paying for the next 20 years.

Note: Read more about how the city uses closed-door meetings to conduct the public’s business, posted March 8.

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