Tag Archives: Karen Farbridge

After four years Karen Farbridge is alive and well on the city’s website

By Gerry Barker

August 5, 2018

Contained in a new glossy addition labeled “Working Together” that can be found on the city’s website, we discover the omnipotent presence of the former mayor circa 2007 to 2014.

The following outlines some of the projects and policies of the former mayor. In fact there is a large presence on this new section of the city’s website. Today, we only address some of the topics of interest and concern of citizens in Guelph. There will be more coverage in the next few weeks, exclusively in guelphspeaks.ca.

So you thought when Karen Farbridge was defeated in 2014 the voters rejected her and her policies.

Nope. She’s still present and on the record according to the Guelph city website’s “Working Together” a new remake featuring the Guthrie years as Mayor

Any presumption in early 2015, that new Mayor, Cam Guthrie, would keep his word to end the so-called “Guelph Factor” and keep property tax increase no greater than to the Consumer Price Index. That flew out the window March 2015 when city council passed a property tax increase of 3.96 per cent. The CPI rate at the time was reported to be 1.99 per cent.

It was the beginning of an administration headed by a Mayor who is now described as Farbridge ‘Lite’, and with good reason.

In December 2015, the administration’s greatest test however fell upon the administrative professional staff. Four top city managers were granted, in closed session, huge increases totaling $98,202. Within four months, CAO Ann Pappert, Al Horsman and Derrick Thomson had resigned. Only Deputy Chief Administrative Officer Mark Amorosi remained.

The senior management was gutted and the city council struggled to maintain some form of leadership. CAO Pappert left May 26, 2016. Former senior manager Derrick Thomson resigned in January 2016 to take a job in his town of residence. He was recalled and took command of the professional staff in June 2016. Former Chief Financial Officer, Al Horsman left in August 2015 for the CAO’s job in Sault Ste Marie.

The Sunshine List showed that Ms. Pappert received $263,000 for five months work and Mr. Horsman received $181,000 for his eight months tenure in 2015.

The lady remains a featured player in the Grand Royal City Opera

After reading the details on the city website, one would believe that former Mayor Karen Farbridge was still in charge. Even though she has been gone for almost four years, her imprint remains on the official city website. Yikes!

This can only be described as the current city councillors giving the middle finger salute to the people they work for and are responsible to.

The following is on the city’s website today:

“In November 2008, Mayor Karen Farbridge and Guelph City Council committed to the development of a new ten-year Economic Development and Tourism Strategy for Guelph — Prosperity 2020.

Prosperity 2020 will support the City of Guelph’s vision of being “the city that makes a difference”, and the strategic goal of having “a diverse and prosperous local economy.”

The Phase 2 Economic Development & Tourism Strategy will provide direction, priorities and performance measures for the transformation of Guelph’s economy over the next decade and beyond.

Here are the members of the Mayor’s Prosperity 2020 task force.

Karen Farbridge, Mayor, City of Guelph
Frank Valeriote, Member of Parliament, Guelph
Liz Sandals, Member of Provincial Parliament, Guelph
Dr. Alastair Summerlee, President, University of Guelph
Mark Goldberg, President, GlobalTox International Consultants Inc.
Mike Bouk, Executive Director, Ag-Energy Co-operative
Lloyd Longfield, President, Guelph Chamber of Commerce
Kevin Hall, Vice President (Research), University of Guelph
Dave Smardon, President/Director, BioEnterprise Corporation
Don Drone, Director of Education & CEO, Wellington Catholic District School Board
Kathy Bardswick, President & CEO, The Co-operators Group Limited
Michael Annable, Industry Representative.”

 

Let’s update the ten-year program titled “Prosperity 2020.”

What did the task force accomplish in those ten years? Also where are most of them now? Are we better off today?

Well, it’s what they didn’t accomplish is the real question. It’s fair game for citizens to question why this is still posted on the city website’s new feature presentation ‘Working Together.’

So let’s review how ‘Prosperity 2020’ has affected the quality of life in our city in the past ten years.

First, economic development means creating jobs, increasing industrial and business assessment and creating a balance of property tax revenue between residential, industrial and commercial expansion.

That has not changed in 12 years under two Farbridge and one Guthrie Administration. At a ratio of 84 per cent residential and only 16 for industrial and commercial assessment, it has not altered since 2001 when Karen Farbridge was first elected Mayor.

By any measure that does not mirror economic development. Instead, the load keeps falling on the shoulders of those property-taxed owners who have experienced huge increase in taxes on their properties.

The average assessment ratio in Ontario is 60 per cent residential and 40 per cent industrial and commercial.

Think about this: If the ratio increased from the present industrial/commercial figure of 16 per cent to 30 per cent, the effect would be less dependence on the residential assessment. But three administrations, in 18 years, failed to accomplish anything to correct the imbalance.

Just look at why the city administration failed to increase the economic development revenue ratio. The city website remains a mortuary of the Farbridge administrations that has cost we citizens millions.

Taking a trip down memory lane

* Remember the $23 million Urbacon cost overruns?

* The $15 million GMHI? District Energy and geo-thermal plants?

* Natural gas generating plants that were never built?

* Waste management debacles including buying trucks for auto pick-up of bins??

* Spending $5 million to buy two buildings on Wyndham Street to turn the space into    enlarging the Baker Street parking lot?

* Overbuilt organic wet waste processing facility costing $34 million?

* The Detroit recyclable fiasco?

* Closing lanes on major roads to allow bicycle lanes?

* Intensification of residential complexes with little open space and parking?

* The lack of parking downtown?

* Failure to clean up the downtown possessed by druggies, drunkenness, panhandlers and the homeless?

* Failing to build affordable housing for the less fortunate working poor?

* The renovated railway bridge on Wyndham Street that had large trucks crashing into it.

And don’t forget the high increases annual taxes paid by the residential owner and user fees charged for city services. The city is so desperate for revenue that it inflicted a one per cent levy on property taxes allegedly to pay down the $500 million infrastructure deficit. Then Council approved an additional one per cent levy on properties for “City Buildings.”

Truth to tell it was a move to start funding the $63 million South-end Recreation Centre. The two counncillors sponsoring the motion were Mark MacKinnon and Karl Wettstein. Both represent Ward Six. Some $3.5 Million has already been spent on plans for the $63 million recreation  centre in Ward Six.

Until citizens realize that their 2014 vote was wasted when the new mayor capitulated to the demands of the seven-member progressive bloc who are dedicated to preserving the Farbridge legacy.

Otherwise, what more proof do you want that if anything there is a ton of Farbridge’s ill-conceived and executed action plans that have left an indelible historical imprint on the history of our city.

This study of the Farbridge unabridged legacy is far from over, more to come.

Perhaps a website content purge is in order.

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Its time to clean up the Guthrie administration’s inherited train wreck

By Gerry Barker

July 9, 2018

In 2006, some 12 years ago, the Mayor elect, Karen Farbridge, campaigned on the slogan “She will put Guelph back on track.”

Well, eight years with Karen Farbridge and four years of Cam Guthrie, has created the train wreck that is the legacy of three election cycles being dominated by the successive council’s being stymied by the leftist majority In the case of the Guthrie administration the leftist majority driving up debt and escalating property taxes and user fees.

After monitoring and writing this for those 12 years it is not rocket science to know what has happened to successive administrations. Three councils all made promises they never kept. But the two Farbridge administrations set the the downward glide of excessive spending and mismanagement.

Remember the new downtown main library? A promise made by then Mayor Farbridger and not kept. Cam Guthrie made that same promise. We still have no new downtown library.

Remember the Urbacon disaster in which the Farbridge administration wasted more than $23 million to complete the new city hall complex that was originally contracted to cost $42 million?

It cost Farbridge and four of her councillors their jobs in 2014.

The doozy of bad deals occurred December 13, 2017 when by a 10-3 cote, council approved the merger of Guelph Hydro with Alectra utilities in which there was no payment by Alectra for the estimated $300 million Guelph Hydro distribution system.

That agreement is now before the Ontario Energy Board and some citizens have been approved to intervene when the hearing is held.

Turning to Mayor Cam Guthrie’s performance, his penchant to hold closed-session meetings of council led to the infamous secret increases to four senior managers in December 2010. The cost came to $98,202 with Chief Administrative Officer, Ann Pappert, receiving more than $37,000 most of it was a $27,000 retroactive performance bonus.

Pappert resigned four months later but stuck around until May 26, 2016 then left. The provincial 2016 Sunshine List revealed she was paid $263,000 for five months work.

Couple that with the seven months performed in 2016 by her successor, Derrick Thomson, and the cost of paying the two CAO’s in 2016 was $397,166 not including taxable benefits. In Mr. Thomson’s case, his taxable benefit was an additional $11,000.

This all happened under the leadership of Mayor Guthrie. Aside from the Finance department and members of council, 99 per cent of citizens would never know how much that December 10, 2015 closed-session would impact the citizens. That is until guelphspeaks.ca revealed it.

Then a couple of weeks ago, Council by an 8-5 vote approved increasing the Mayor’s salary from $122,000 to 152,000. The 12 city councillors were also given an addition $5,000 increase.

These increases were made to maintain the take-home pay of all councillors because the Federal government has cancelled the one-third portion of their income that used to be tax-free.

Now here’s what happened.

The Remuneration Advisory Committee, appointed by council, recommended that 12 councillors should receive the increases but not the Mayor. Four days after that decision was published, council awarded the Mayor the increase in order to retain his take-home pay.

Then the Mayor voted to increase his new salary and that of the councillors.

The question, was this a conflict of interest? Five councillors who voted against the motion seemed to think it was. These council salary approvals are always a difficult decision. I happen to advocate that all elected position salary should be greater in order to attract qualified candidates but reflect the increasing workload as the city grows rapidly..

In the case of the Mayor he should have recused himself.

It reflects the deep-seated disregard of that business that is troubling and must change.

I don’t disagree with the increases to elected officials, just the way it was handled that leads to public mistrust. Something that’s not a good idea in an election year.

I do not agree with the method of choosing salary and benefit increases by senior management. Those salary and benefits of senior managers should be determined by an outside body to avoid further conflicts of interest.

Final example. When Mr. Thomson was appointed CAO in June 2016, he said his contract was for three years at a salary of $230,000 plus a taxable benefit of $11,000.

The 2017 Sunshine list revealed his salary was more than $260,000.

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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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The GMHI Odyssey: Following the money leads to a staggering hit on city finances

By Gerry Barker

July 24, 2017

The epic unraveling of the Guelph Municipal Holdings Inc, (GMHI) affair is like watching a kitten untangle a ball of wool.

There are so many moving parts, bopping through a dense fog of spin, denial, obfuscation and malfeasance.

What people are expecting is how much did this excursion into a fantasy world of power self-sufficiency coupled with providing co-generated hot and cold running water to buildings actually cost?

Guelph Speaks used two official documents to reach its conclusion that GMHI cost the city $157.422 million most of which is not recoverable. The two documents include the audited consolidated balance sheet of GMHI and the Guelph Hydro 2016 financial report. By any definition losses can only be described as “staggering.”

The long-term effect is a severe restriction of capital and operational spending. That amount represents about 40 per cent of the total 2017 city operational and capital spending budgets.

In my opinion, it has jeopardized capital spending on the $63 million South End recreational centre and the Downtown library (again) of an estimated $60 million. Keep in mind that city council has approved capital projects including the $34 million police headquarters and the $20.5 millionWilson Street parking garage.

There is no easy solution to this. The project is a failure financially and leaves the city with few alternatives to recover the losses of GMHI. Increasing debt, property taxes and user fees are not alternatives. Rationalizing cost of operations is now a necessity to reduce overhead costs. It’s the only way out of the situation because the city cannot win the lottery.

It all started in April 2007 when the new city council unanimously approved Mayor Karen Farbridge’s proposed Community Energy Initiative (CEI).

Here are the goals set by the CEI to achieve by 2031:

* Use 50 per cent less energy per capita

*   Produce 60 per cent less greenhouse gas emissions per capita

*   Encourage and facilitate community-based renewable and alternative energy   systems.

The staff report at the time, said the CEI would position Guelph among the top energy performers in the world.

Today, the key management players are no longer employed by the city, leaving behind a multi-million dollar losing legacy that has challenged the most skilled financial practitioners among us. Item: The city has spent more than $2.8 million just to have the KPMG accounting firm perform a financial autopsy on this turkey, aka an audit.

The people associated with the GMHI project, have left the building. They include the former mayor, Karen Farbridge, and Chair of the GMHI Board of Directors; former Chief Administration Officer and Chief Executive Officer of GMHI, Ann Pappert; Former Chief Financial Officer Al Horsman; City Solicitor, Donna Jacques and Jasmine Urisk, who at the time, was Chair of the board of directors of Guelph Hydro. Other peripheral managers have also departed at all levels of the City of Guelph Corporation.

These include members of the city administration, Guelph Hydro, GMHI and Envida Community Energy Inc. and Guelph Hydro Electric Services Inc. (GHESI), the operating division of Guelph Hydro. In addition, GMHI and Guelph Hydro entered into contracts to supply power and co-generation thermal heating and cooling system.

These contracts were never fulfilled and the city has negotiated settlements, it is reported.

The Guelph corporate family of companies

So here is the cast of operational participants, all belonging to the City of Guelph’s corporate family.

GMHI was set up under the express direction of former Mayor Karen Farbridge. She took on the job of Chair of the GMHI board of directors in 2011. She handpicked her board thereby maintaining complete control. At the time of formation the assets to be managed included the Guelph Junction railroad.

Her mission was to implement the CEI announced in 2007. It was the product of a series of meetings with many of the leading citizens in the city described as stakeholders. They included members of the city administration, Union Gas, Guelph Hydro, business and industrial representatives, the University of Guelph, School Boards and the Guelph Chamber of Commerce.

It was an all-star cast that produced the agreement and thrust of turning Guelph into a world-class jewel of conservation, self-sufficiency in power, renewable energy sources, total management of waste and the gradual reduction of the use of fossil fuels to reduce the effect on climate change.

It was dreamy, heady stuff that stirred the environmental souls of those participating. But little happened for four years until the corporate vehicle, GMHI was established in 2010. In 2013, the Farbridge-dominated council approved moving Guelph Hydro unto GMHI.

The wheels of this ignoble experiment started to come off in 2009 when Guelph Hydro’s subsidiary, Ecotricity Corporation reported a loss of $3,945,000. The report said the loss was due to declining methane gas from the Eastview landfill. An impairment charge of $2.984 million was taken that year.

Update: Guelph Hydro has paid to take over the Eastview gas generating plant paying some $550,000 for it. Now which city corporation gets that money?

What is the interpretation of an ”impairment” charge? If the recoverable amount of an investment is less than its carrying value, then the asset is deemed to be impaired. The value must be written down to the recoverable amount.

It’s not difficult to understand that when assets are wriitten down, that’s real money lost forever.

There is more on this to come

Suddenly, the door was shut to public participation. Only a few politicians and civil servants were in on the plan’s execution.

It is now believed that Guelph Hydro was the banker for GMHI. The first step was to have Guelph Hydro form Envida Community Energy Corporation to be the hands-on builder of new projects, including installing solar panels on the roof of the Sleeman Centre and several public building throughout the city. Envida now owes millions in debt to GMHI.

The audited GMHI balance sheet revealed a startling statement that concerned two senior unsecured debentures taken out by GMHI totaling $103.612 million as of December 31, 2016. The largest was for $65 million, due 2030 and no interest of the debenture has been paid for two years, increasing the principal due by $8.612 million. The other debenture is for $30 million and is due in 2045. Both these obligations carry interest rates of 4.012 per cent and 4.112 per cent respectively.

The source of these debenture loans is described in the audit as the CDS&CO. As both are unsecured, the loans were made because of the City of Guelph’s owneship of GMHI and Guelph Hydro. It is difficult to imagine any financial institution committing $95 million without the assurance of repayment by the city. Regardless, the loans are unsecured. One can only conclude that a corporate relative within the city’s corporate family guarantees the liquidity of GMHI. The audit also revealed that a $20 million credit facility was arranged for GMHI but the source is not revealed. As of December 31, 2016, there has been no draw down on that facility by GMHI.

It is now clear that there was a lot of money flowing between various city-owned corporations. It was a five-year irresponsible mismanagement of public funds that has left the citizens with a $157.422 million price tag with no benefits to show for it. And, also there remains no possibility of repayment of rapidly depreciating assets.

Adding up the numbers

The balance sheet of GMHI shows assets of $230.596 million of which $162.653 million is composed of property, plant and equipment. Conversely, in my opinion, many of these assets are depreciating and failing to provide adequate cash flow to allow GMHI to pay its bills and continue to exist. The real cash liabilities of $163.474 million closely match the value of the total assets. The inclusion of shareholder equity of $67.122 million, according to the audit as a liability, is enough to match the total assets of $230.596 million to balance the books.

In my opinion, the shareholder’s equity, and that’s you and me, is virtually worthless because there is not enough cash from operations and assets to allow redemption of the shares. The record now shows that GMHI is so intertwined between various city-owned corporate entities that disclosure of the facts is an expensive and difficult task.

It would appear the debenture funding came through Guelph Electric Services Inc., the operating arm of Guelph Hydro. Envida was involved in other projects including the District Energy nodes set up in the Sleeman Centre and Hanlon Business Park.

Through all this GMHI activity, the public had no clue as to what was happening with their money. Item: Hydro bills for the 55,000 clients of Guelph Hydro increased electricity fees by 42 per cent in four years. In the past year the billing has decreased.

Today, Guelph Hydro reports a total of $228.3 million in assets. Its long-term debt is listed as $94.3 million and net income for 2016 was $7.1 million. It would take 13.28 years of $7.1 million in net income to repay it. Amazing coincidence! That’s 2030 the year the $65 million unsecured debenture is due for redemption.

Would you or I want to merge with a utility that carried an impaired debt of $94.3 million? How does the city merge or sell Guelph Hydro with that problem?

Now this is when it gets interesting. In May 16, 2016, Pankaj Sardana, CEO and CFO of GMHI, said there was an impaired charge to GMHI of $68 million. He explained that this was provided by a group of investors, without naming them.

Accounting for those pesky two unsecured debentures

But on the audited GMHI consolidated balance sheet there is a liability of $95 million composed of two unsecured debentures, one being $65 million and the other $30 million. The auditor reported the source of the debentures was CDS&CO. Remember this is now an impaired asset.

It is apparent from the audit by KPMG and the Guelph annual 2016 financials that Guelph Hydro has assumed the hit on the debentures and lists $94.3 million as debt.

Is it coincidence that the GMHI debenture debt has morphed over to Guelph Hydro who lists it as debt? Why would Guelph Hydro, well established with earnings of $7.1 million report debt of $94.3 million? If these figures are accurate, according to official public audits and financial documents, then the total GMHI loss includes the worthless shareholder equity, $63.122 million and the Guelph Hydro debt of $94.3 million totals $157.422 million.

On a historical note, some members of the Gang of Seven city councillors walked out of a closed session in January 2016, preventing council to continue its business because of a lack of quorum. Interviewed later, Coun. Phil Allt said their action was to “protect the staff and the corporation.”

Wonder how that worked out for them now that the details of the GMHI debacle is being revealed?

 

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Audit of GMHI and Guelph Hydro reveals $161.483 million losses by the municipal holding corporation

By Gerry Barker

June 22, 2017

What follows are highlights of a devastating audit by KPMG of Guelph Municipal Holdings Inc. (GMHI) and Guelph Hydro. The audit revealed a total of $161.483 million that was wasted by the Farbridge administration’s secret and abortive attempt to force the city to make Guelph self-sufficient in terms of electricity and other spin-offs.

One of the most startling statements concerned two senior unsecured debentures taken out by GMHI totaling $103.612 million as of December 31, 2016. The largest, due 2030, was for $65 million and no interest of the debenture has been paid for two years, increasing the principal due by $8.612 million. The other debenture is for $30.000 million and is due 2045. Both these obligations carry interest rates of 4.012 per cent and 4.112 per cent respectively.

The source of these debenture loans are described in the audit as the CDS & CO. As both are unsecured, the loans were made because of the City of Guelph’s ownership of GMHI and Guelph Hydro. It is difficult to imagine any financial institution committing $95 million without the assurance of repayment by the city. Regardless, the loans are unsecured. One can only conclude that a corporate relative within the city’s corporate family guarantees the liquidity of GMHI. The audit revealed that a $20 million credit facility has been arranged for GMHI but the source is not revealed. As of December 31, 2016, there has been no draw down on that facility by GMHI.

The balance sheet of GMHI shows assets of $230.596 million of which $162.653 million is composed of property, plant and equipment. Conversely, in my opinion, many of these assets are depreciating and failing to provide adequate cash flow to allow GMHI to continue to exist. The real liabilities of 163.474 million closely match the value of the total assets. The inclusion of shareholder equity of $67.122 million, according to the audit, is enough to match the total assets of $230.596 million to balance the books

In my opinion, the shareholder’s equity, and that’s you and me, is virtually worthless because there is not enough cash from operations and assets to allow redemption of the shares. This enterprise is so intertwined between various city-owned corporate entities that disclosure is inevitable.

This party needs wrapping up ASAP to avoid future cost blowouts.

This misguided project has been held up by the ability of Guelph Hydro to be the bank for GMHI. A search of the mysterious issuer of $95 million in debentures has been unsuccessful so far.

This audit reveals just how serious this experiment was mismanaged; how Guelph Hydro, wholly owned by the city, was sucked into the blind ambition of a mayor determined to turn the city into a world-class leader in power self-sufficiency.

It turned out to be a dismal, waste of the public’s resources and abuse of the public trust.

The audit performed by a respected auditing and financial management firm, KPMG, cost $2.8 million in 2016 and $2.5 million in 2015. These two audits totaling $5.3 million, were the cost of measuring the financial details of the failed projects initiated by the Community Energy Initiative (CEI) promoted by the former mayor as far back as 2007.

Here’s a note from the auditor’s report concerning fraud risk: “The audit team rebutted this presumption due to: “The majority of revenues are driven directly from the purchases of hydro with little judgment over revenue recognition required by management.”

Yes I know, I had trouble following that comment.

From 2011 to 2014, former Chief Administrative Officer of the city, Ann Pappert, served as Chief Executive Officer of GMHI. One would conclude in that position, both the former mayor who was chair of GMHI and Ms. Pappert would be in a position to know about the degree of “judgment over revenue recognition required by management.”

Keep in mind that this entire operation was cloaked in secrecy. It only started coming out of the closet when the GMHI CEO and CFO, Pankaj Sardana, reported the costs of poor planning and management of GMHI and its partner Guelph Hydro (GH).

May 16, 2016, Mr. Sardana and CAO Pappert both signed the document that revealed the estimated loss of GMHI to be $26.6 million. Ten days later Ms. Pappert resigned.

The utility’s operating arm, Guelph Hydro Electric Systems Inc., included the wholly owned Envida Community Energy Systems that was virtually broke. It owed $11 million to GMHI with no ability to even pay the interest of the debt. It had been involved in establishing the rooftop solar arrays on a number of public buildings; the setting up of the District Energy Nodes linked to the cogeneration system to supply hot and cold water to selected buildings.

But it was interrupted by the defeat of the former mayor in the October 2014 civic election by Coun. Cam Guthrie. It started an investigation about the role of GMHI and the link with Guelph Hydro. Now, a year and a half later, the truth is known about the cost of $161.403 million.

The unraveling of the GMHI and Guelph Hydro axis started shortly after the defeat of the former mayor.

The audit examining GMHI/Guelph Hydro operations for 2015 and 2016, commented:

“The district energy segment has continued to experience negative cash flows which are projected to be insufficient to recover the carrying value of the related assets.

In four years, the GMHI management failed to recognize their primary District Energy scheme was failing to meet profitability. Yet they kept spending public money of future large-scale projects including building two large natural gas-powered electricity generators in the city to achieve power self-sufficiency.

“Management has assessed Envida’s district energy property, plant and equipment for impairment and evaluated the cash flows associated with the Hanlon Creek Business Park, Galt District Energy (Sleeman Centre), and West End Community Centre. Based on value-in-use net present value calculations, management has determined that the carrying value of all the nodes are fully impaired.”

We now learn according to the audit, that there were not just two District Energy Nodes (pumps) in the Sleeman Centre and Hanlon Creek Business Park but a third in the West End Community Centre. The impaired value of the three is $12 million.

“Further, based on the obligations for contracts in place and the related estimated unavoidable costs of meeting the obligations exceeding the economic benefits to be received by approximately $50K annually over the life of the contracts, a provision has been recorded for $540,000 (18 years).”

This is another example of financial mismanagement by GMHI based on false assumptions.

“Management’s cash flow projections were based on the business plan for the segment for the upcoming years. Their analysis took into account factors including the remaining contract periods for agreements in place with current customers (approximately 18 years), history of revenue and expenses to date, and the useful lives of the equipment. Further, based on current plans and direction from the Board, the analysis includes only minimal additional investments required to service current customers.”

Why then did the experience and track record of the GMHI Board and that of Guelph Hydro, make so many devastating mistakes that have resulted in the loss of millions of public funds?

The audit statements include an estimate of future employee benefits totaling $10.297 million. Again, the citizens of Guelph will be paying for this for years.

Why Did GMHI send $1.5 million to the city each year, (total $9 million) when it consistently lost money?

How can GMHI or the city afford to repay that $103.612 million in debentures owed to CDS & CO, the lenders?

Who are the owners of the CDS & CO?

With the shareholders equity of $67.122 million be written off in the years ahead, impairing the city’s ability to carry out the ten-year capital-spending plan?

CAO Derrick Thomson has already stated the capital plan is $170 million short to provide for major capital projects, including the South End recreation centre, new downtown Library and infrastructure demands.

Is the real goal of the Strategic Options Committee (SOC) charged with seeking candidates to sell Guelph Hydro or merge it with another utility, or to raise capital to recover the losses incurred by GMHI?

When will those councillors who served on the GMHI board of directors plus another independent member now serving of the SOC, be held accountable for what happened?

The audit documents can be found on the city website under the heading Agenda June 28.

It is the most shocking report that I have ever witnessed in my years of journalism. The secrecy resulting in an abuse of power should be a wake-up call for all citizens. The council should be held accountable to maintain the public treasury and never allow this to occur again.

This makes the $23 million cost overrun construction of the new city hall look like penny ante compared to the $161.403 million spent on this rape of the public purse.

The audit is first step. Now we know what happened, What is need is an independent investigation into how it happened and the impact on the citizens. More important, question those responsible and make them accountable.

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What happened to those dedicated reserve funds totaling $77,782,000 in 2011?

By Gerry Barker

May 11, 2017

It’s the stuff that happened six years ago that we soon forget. What stuff? Let’s start with the annual 2011 financial sitrep (situation report).

A check of the GS archives produced a column reporting the December 31 city financial data. It included a status of the city’s reserve, all 97 dedicated cash resources that totaled $77,782,000. Stating in the now defunct Mercury, Coun. Leanne Piper chided those naysayers who opposed the budget. She went on to say, nothing to worry about here because the city had $83 million in reserves. Yep! Nothing to worry about here.

This cavalier attitude was reported in the Mercury by former city hall beat reporter Scott Tracey. He said there was nothing new about using reserve funds to reduce the impact of property taxes on the budget. Okay, which of the 97 reserve funds was to be tapped to reduce property taxes?

Well, it turned out the tax stabilization reserve fund only had $1,383,000 in December 2011. That is a drop in the bucket to stabilize a budget in which the city had a major $2,571,000 negative budget variance in 2011. Five budgets later, in 2015, the negative budget shortfall was $1,143,123. In that five year period there was only 2014, election year, where the city declared a surplus of $1,O85,153. You will recall that year was the first in which the property tax rate was, for the first time, below 3 per cent.

Regardless, that was the years Mayor Karen Farbridge was defeated by Coun. Cam Guthrie.

In 2011, the accounting firm, auditing the city’s finances, stated that it was “a poor way to run the corporation.” It went on to say that using dedicated reserve funds to balance a budget is like borrowing an your credit card at 22 per cent. The effect is the same.

Sadly, nothing has changed except that there are only 26 reserve funds today with an estimated value of $11,000,000. In just a little over six years, the destruction and mismanagement of the city’s finances has cost millions of the public money. Those who are accountable are gone and there is no recourse available to the public.

As Chief Financial Officer, Derrick Thomson, put it, any attempt to commence a legal action against city employees or elected officials, akkdefendants’ legal expenses will be paid by the city. This indemnification bylaw also extends to former employees or elected officials.

This bylaw is nothing short of suppression of the rights of the public to take appropriate legal action against some 2,100 city officials from top to bottom.

The 2018 campaign has already started

Turning to an important aspect of how the Bloc of Seven is working hard to ensure their re-election next year.

The local weekly covered a meeting of the Guelph Neighbourhood Support Coalition (GNSC). The Guelph Civic League (GCL) organization founded 10 Carden Street, a community activist group. GCL supported former Mayor Karen Farbridge and a number of like-minded councillors in 2006. One of GCL founders is Coun. James Gordon.

GNSC is based in offices at 10 Carden Street across from city hall. Meanwhile, 10 Carden Street applied for a Trillium Foundation grant to operate a civic support group to promote greater participation in public affairs and elections. A few years ago the group received a $135,000 grant to promote greater public participation.

That was then. A couple of weeks ago, the majority of council voted not to allow online voting in the 2018 civic election. It does seem strange and awkward for the GNSC, a second cousin to 10 Carden Street, to be linked to the online voting ban. It further exposes the real purposes of 10 Carden Street and the GNSC. It is cloaked in the murky business of political action.

One would agree that the newspaper article pointed out some details of the work the Coalition does, providing food to children and the less fortunate. It appears it has grown sufficiently to build an activist organization consisting of 13 neighbourhood membership groups available to participate in the 2018 election.

There is little we know of the officers of GNS. What is its status as an organization, budget, staff, finances or mission statement. Besides the city and United Way are funding GNSC Carden along with unnamed grants. That does not exempt it from its links to the left’s political action group, the Guelph Civic League, which seems to resurrect itself prior to every election since 2006.

Bottom Line? There is no way this city can survive another four years maintaining the policies of the previous administrations. They willfully spent millions on self- serving, narrow gauged projects that often failed.

The time has come to stop the hardcore, ideological activists who have controlled our city for too long. This election has already started.

There will be more on this later.

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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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