Tag Archives: Karl Wettstein

City staff report places infrastructure bill at $491 million, double recent estimates

By Gerry Barker

March 8, 2017

The city’s Corporate Asset Manager, Daryush Esmaili, told a meeting of council’s Committee of the Whole earlier this week there is $491 million worth of city assets.

The dollar figures only include those assets requiring repair or replacing aging assets including roads, sewer and water services, rinks and technology used at City Hall.

The report broke on Guelph Today Tuesday and was written by Tony Saxon.

Cited by Esmaili as being in “the red zone” with less than 40 years of lifecycle remaining, includes city parking assets, where 72 per cent of those assets have less than 40 per cent of their lifecycle remaining. Other red zone assets include Guelph Transit, information technology and culture and recreation.

The most startling statistic is Esmaili’s projection of keeping up with infrastructure repairs and replacement that will cost the city $125 million a year for the next 100 years.

Last fall, city council approved a 2017 infrastructure budget of $93 million.

Council also approved a special property tax levy of 1 per cent to fund infrastructure. That doesn’t even come close to raising $93 million. But then Coun. Mark MacKinnon moved that the levy of property be increased to two per cent. But the extra one per cent was dedicated to “City Buildings.” The motion passed and Councillors MacKinnon and Karl Wettstein were happy, as more money would be dedicated to the $60 million South End recreation centre.

At the same 2017 budget meeting, council delayed spending $700,000 for new parking meters on Wyndham Street. Instead council would use most of the money to start the architectural planning of the recreation centre in MacKinnon’s and Wettstein’s Ward.

That was a backdoor move to use capital money to fund their pet project.

Those two decisions, made in open council, were, as it has turned out, a monumental error in judgment by a council that had to know what the City Asset Manager and his staff, were working on.

The fall-out is a much needed parking control and added revenue is shelved until next budget. The two per cent property tax levy is halved to accommodate the wishes of the councillors representing Ward Six.

Just for the record, those same supporters of the “City Buildings” levy were told that any pre-contraction planning, estimated to cost $3.5 million, might have to be reviewed and increased because there is lttle hope for the capital spending budget to even think about the south end project. It is particularly important in view of the City Asset Manager’s report on the real cost of infrastructure repair and replacement.

The staff report states that the infrastructure estimates used during the 2017 budget were $259 million, almost half of what the staff is telling us today.

Now, we run a billion dollar corporation like the village idiots who are incapable of making the tough decisions to properly maintain our city and its core systems.

Instead we are trapped in a series of terrible management mistakes ranging from the $34 million police headquarters to the $26.6 million lost by GMHI. Throw in the $23 million paying 50 per cent more for a new city hall, and it’s easy to see that Guelph cannot afford these grandiose schemes any more.

The biggest cost to the city is the overhead costs to run it. Starting with a staff that is bloated and laden with special interest projects that cost money.

Our council, except for a few responsible members, is tone deaf to any criticism. The majority are self-absorbed collection of elected officials. Most of whom are so reliant on staff that much of their judgment is flawed and incompetent.

The loss of management talent, with a few exceptions, has denuded senior staff of key personnel, leaving chaos and mistakes.

The eight-page report by Guelph resident Pat Fung, CPA, CA, that detailed how the city could reduce its overhead but not cut services, was delivered to all councillors and Mr. Fung made a personal presentation to council.

We learned later that council dumped on the report making fun of it after Mr. Fung left the chamber.

Did we elect six-year olds to run our city? Their words and conducting our business behind closed doors would seem to be the case.

October 2018 cannot come soon enough to get the majority of this council out of the civic sandbox.

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It’s time to close Mark Amorosi’s city cheque book

By Gerry Barker

August 1, 2016

This week Deputy Chief Administrative Officer (DCAO),  Mark Amorosi,  announced the appointment of Tara Baker as Chief Financial Officer of the administration. Under the management of the city’s finances, Mark Amorosi has overseen the most cathartic waste of public funds endured in recent memory.

So, in making the announcement of Ms. Baker he proclaims: “I have great confidence that she will provide strong leadership and continue to strengthen the city’s solid financial foundation.”

Ms. Baker is currently on maternity leave and is expected to return next year. Amorosi decides to promote a junior in the finance department so why did he hire a headhunting firm? He doesn’t say exactly when Ms. Baker will be taking over so that gives him more time to manage the city’s finances.

He’s being moderately sarcastic with the last part of that statement about the city’s “solid financial foundation.” That’s Amorosi code for the citizen-guaranteed taxes and user fees is the the ATM machine that never quits. It’s something right out of Mad Magazine — “What, Me worry?” – Alfred E. Neumann

This is not Amorosi’s first rodeo. He’s been in charge of the city finances for 20 months. During that time he was the key player in the great Salary-Gate episode that saw the former CAO, Ann Pappert, receive a $38,000 increase for 2015 and Amorosi and Thomson plus former CFO Al Horsman receiving 12 to 19 per cent increases.

Talk about helping yourself and not telling anyone.

And they never told anyone until the Ontario Sunshine list let the cat out of the bag last March when it identified every public employee earning more than $100,000. At least Ann Pappert had the courage to resign, why won’t Mark Amorosi?

Who can forget the Community Energy fiasco perpetrated by Guelph Municipal Holdings Inc. (GMHI) in partnership with Guelph Hydro costing an estimated $37.1 million? Deloitte, the city’s hired consultants, agreed with the staff report that only an investment of $60 million can make the two District Energy Nodes profitable. When asked about their fee, Deloittle said it will cost between $130,000 and $160,000.

Did we really need to pay that money when the staff, in detail, reported the financial situation with GMHI and where the money went? It was classic Amorosi to order an independent consultant in to review the situation. For the $210,000 a year we are paying Amorosi we should, in this case, expect a staff report to suffice in explaining the debacle to the citizens. No. it’s called protecting your behind by using a paid third party to do the deed.

Capital plan is underfunded by $170 million

Even his boss, Chief Administrative Officer, Derrick Thomson, says there is no money to carry out the nine-year capital-spending plan that is currently underfunded by $170 million.

We know that Amorosi hired a headhunting firm to seek a CFO. So why was a financial analyst in the city finance department chosen to be General Manager Finance, CFO and Treasurer? Why was it necessary to hire consultants to make that decision?

The city finance department has experienced a revolving door of financial managerial staff since the senior staff reorganization that occurred within a few weeks of the civic election on October 2014. Ms. Baker is number three.

Al Horsman was shifted from finance to replace the retired Janet Laird to waste management and environmental services. But he left last August for a new job in Sault Ste Marie. Amorosi got his hands on finance in November 2014.

This past two years has been a nightmare to residents. First, there was the Urbacon ruling that resulted in CAO Ann Pappert revealing that the new city hall project cost $23 million more than the original $42 million contract. Then it was revealed that the maze of some 97 dedicated reserve funds had been tapped too often because of failure of city management to balance the books as required by provincial law. Instead, the management consistently over-spent their own budgets and used money from the various reserve funds to balance the city books.

Auditor warned about using reserve funds to balance the books in 2011

They  administration was warned in 2011 by the city audit firm Deloitte and Touche, that using the reserves to balance the books was a bad practice. That did not stop the practice.

Since the civic election, property taxes have increased by 7.41 per cent; water bills increase 4.11 per cent; and electricity bills by 15 per cent. That doesn’t count the increases in user fees.

Nor is the unusual financing of renovating the downtown police headquarters. The Farbridge council passed a budget of $34.1 million in August 2014. It was financed by $14.8 million of borrowed money; $3 million from a police capital reserve fund and $16.3 million to be repaid by future development fees to be diverted to pay for this police project.

Talk about a small down payment! It will take years to pay for this and the risk is high depending on development fees that have yet to appear.

The interest on the $14.8 million is calculated at 2 per cent over five years and is estimated to be $29,600 a year, not including reduction of principal. What happens when interest rates increase? The lender gets the chance to boost the interest rate. We are not talking about tomorrow or the day after, we’re talking probably 10 years to pay off that loan.

Karen Farbridge and former Police Chief Bryan Larkin convinced the council and the Guelph Police Services Board (GPSB) that this renovation was badly needed. Yes, again their figure was supported by a study conducted by KPMG, Why, did the GPSB, eight months before August 2014, state that $13 million would be needed to renovate the headquarters building?

Along comes the Community Energy Initiative that stunned the public

This became a legacy issue for both Larkin, who resigned in July 2014 and the former mayor. There was a little help from Coun. Leanne Piper who supported the proposal both at GPSB and city council.

It was the last major Farbridge spending before losing the election. But there is more. Not quite, as it has now been revealed. For almost five years, the former mayor had personally chaired an off-the-books corporation called Guelph Municipal Holdings Inc. The plan was to create and execute a Community Energy Initiative that featured District Energy Nodes downtown and at the Hanlon Creek Business Park.

These Nodes consisted of pumps fired by natural gas that were hooked up to a grid of thermal underground piping that delivered hot and cold water to buildings nearby. The Nodes were also supposed to deliver power to the Hydro grid bit that requires more investment.

All this planning and execution was done behind closed doors. There was no public participation, no environmental assessment or a business plan. That’s where Guelph Hydro came in as the former mayor’s board amalgamated the Hydro operations that the city owned through GMHI.

Today, GMHI has no financial capacity. The Guelph Hydro subsidiary, Envida Community Energy Corporation, also has no money and owes GMHI $11 million.

The bottom line  resulted in a $37.1 million loss

Bottom line: It has cost $37.1 million so far and there is no money available to finance keeping the system going. So when DCAO Mark Amorosi says the city finances are on a solid foundation, maybe he should turn over the books. Turn them over to someone who is experienced and independent and preferably not with child, to straighten out the financial mess that has been created under his watch.

Finally, Coun. Karl Wettstein has again distinguished himself by stating that the in future, the investment in the Community Energy Initiative should be on a “firmer basis and be predicated on a strong business case.”

Gee! Why didn’t he consider that when he sat on the GMHI board for five years and witness it descend into financial chaos?

This foolish comment is coming from a man who received a stipend for sitting on the Board of GMHI and never said a word about it. He cloaked himself in the Farbridge procedural rule that nothing may be revealed to the public that is discussed in a closed-session.

He betrayed the trust of the people who elected him, the public at large and his own conscience, if he has one.

Karl, you should resign. But that would take guts, right?

As for Mark Amorosi, it’s time to move on

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2016 city budget countdown resembles a demolition derby

By Gerry Barker

Posted November 27, 2015

Guelph city administration is running the city like it’s Black Friday – taking advantage of citizen’s lack of understanding of the “Let’s Build a Budget” routine that staggers any reasonable sense of what in heck are they doing?

Let’s start from the beginning of the budget process that began when the administration hired the BMA municipal consultants to conduct a review of city operations.

The BMA report detailed some serious shortcomings in terms of financial management and action taken previously.

One of the key findings of the BMA report was the caution issued about the depleted city reserve funds, estimated to be some $23 million short of established city guidelines. A large piece of that shortfall was the $8.96 million taken from three unrelated reserve funds to pay the Urbacon lawsuit settlement. Now that was an unbudgeted expense.

When Justice Donald MacKenzie asked the city solicitor why it took the step of firing the general contractor of the new city hall, the answer was reported; “Because we believed we would win.” (Urbacon Buildings Group brought the lawsuit).

Well, they didn’t and we the people lost $23 million over the original budget of $44 million as a result of that decision. Total cost of the new city hall and courthouse, is $67 million.

It happened last year in the middle of the election campaign.

But new information has arisen that proves that Guelph, compared with Cambridge and Kitchener, has the highest per capita costs of the three municipalities. Here are some examples:

The Guelph 2015 budget shows that the city per capita cost for capital spending and operations was $3,859. That’s compared to Cambridge, $2,525 and Kitchener, $2,528. That includes the two city’s regional tax contribution.

Living in Guelph costs $1,300 more per person than Cambridge and Kitchener

The difference between Guelph and the other two cities is $1,300 per capita times 120,000 population equals $156 million!

Is the description “staggering” an exaggeration?

But it doesn’t stop the architects of the Build a Budget for 2016.

Disregarding the warning signals from the BMA report, the administration is presenting a budget that ignores the data supplied by its own consultant and annual Financial Information Report  mandated by the province.

Instead it’s business as usual as the city staff senior management recommends a budget that would increase property taxes by 1.58 per cent. Then along comes stage two of the staff recommendations, described as “expansions” adding more staff and programs that boosts the new rate to 2.83 per cent.

What’s the point of striking a lowball staff budget increase then recommending approval of expansions of staff and programs? Is this the result of the new open and transparent government action plan, or just manipulation?

Monday night, the public get’s its chance to present requests for funding, complain about the budget and demand answers to the high costs of living in Guelph. It’s interesting that a citizen must register by today to speak. The following are the instructions from the clerk’s office on your presentation.

Knuckling under the Clerk’s demands

“We will list you as a delegation for the November 30th meeting.  Please advise what subject area of the budget you wish to address as we are trying to group speakers with similar concerns together to help streamline the flow of the meeting.  Each delegation is allotted five minutes to address Council and we ask that delegates do not repeat what others have stated.  If you have an electronic presentation or written material you wish distributed to Council, we must receive them in the clerk’s office no later than 9:00 a.m. on Friday, November 27th.”

This direction is offensive and controlling. It’s a public meeting and it’s not up to the clerk’s office to direct what may be said and be ordered not to repeat another delegate’s opinion to “ streamline the flow of the meeting.” Having witnessed past budget meetings where the public may submit opinions, ideas and protest the system, it is, to be charitable, a charade as council and staff sit and stare for the most part.

Most councillors would be happier Monday night at home watching Dancing with the Stars than sit and listen to their constituents. There is little interplay between delegates and council.

Coun. Karl Wettstein, predictably, will demand that if a delegate asks for reductions in spending, will say it would require a reduction in services. His most recent pronouncement was about the effect of increased assessments on property does not automatically increase taxes.

Let’s listen in: “One small clarification – It sounds like David (David Starr commenting on the effect of rising assessments in the city) is assuming market value increases automatically increase taxes.

As you know this is not accurate,” Karl

The civic world according to Karl

Well Karl, please explain in language we all understand, when last March you voted to increase property taxes by 3.55 per cent. Then about a week later it was revised upward to 3.96 per cent when the increases in city assessment were added into the costs to property owners.

Yes Karl, it’s about the bottom line, not what you neglect to include in your claim that increased assessments do not automatically increase taxes.

Hey! Are you playing with the reserves again Karl? For eight years you were part of the administration that used the tax stabilization reserve fund to put an artificial lid on the tax increases. Now there is little money left to continue the game, Shame!

As long as there is no control by the administration to reduce costs, the gap will widen between what it costs to live in Guelph compared to Cambridge and Kitchener.

We have an administration that refuses to recognize the depth of the problem thereby does nothing but increase spending.

We only have ourselves to blame. We elected them.

 

 

 

 

 

 

 

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