Council’s financial follies part 1


This is the first in what I expect will be a long series of posts about the financial follies and shenanigans of our council.

Another fine messOur council begins its term not with a bang but a groan and the shaking of heads. To quote Oliver Hardy, “Well, here’s another fine mess you’ve gotten us into.” I’m sure it won’t be the last time I get to say that to this council.

To be fair, the debacle is not the responsibility of everyone at the table – that falls squarely on the shoulders of the four re-elected incumbents. However, since most of the newcomers hitched their horses to the Saunderson Campaign Bandwagon, the continuing debacle is an albatross they too will have to wear this term.

First up, a story in Collingwood Today about the Saunderson Vindictive Judicial inquiry (SVJI) that suggests the SVJI’s skyrocketing costs are just beginning. It notes (sic):

Public hearings will take place from April 15 to 18, April 22 to 25, April 29 to May 3, May 13-17 and May 21-24. The policy phase hearings are expected to take place on June 10, 11, and 1.

(I assume that last number was truncated and should read 12 – and BTW, the story wasn’t even covered in The Connection. Surprise.)*

The SVJI was initially scheduled to begin its hearings last November, but they are running late. Five months late, in fact, and then 25 days of hearings are scheduled from mid-April into mid-June. After that the inquirers have to judge the input, come up with a conclusion, write a report and present it. Likely they will not conclude until mid to late fall. During this time the cash register continues to sing its chirpy song.

Meanwhile the number of documents continues to pile up (more than 400,000 already and more still to come… as I wrote about earlier). So many that the SVJI has had to hire two more lawyers to handle the paperwork. Ka-ching!

Last April, I predicted the SVJI would cost taxpayers at least $6 million, based on comparisons between the Mississauga judicial inquiry and the SVJI. But it now looks like that was a conservative estimate. Its original cost estimate was $1-$2 million, too. Here’s what I wrote back then:

The Mississauga inquiry interviewed nearly 100 people and collected about 35,000 documents and held hearings where 35 people testified over a period of 38 days. And cost the city $6.2 million.

Money grows on trees in CollingwoodThe SVJI has already interviewed more than 60 people (as of early November) and hasn’t even started the public inquiry portion. There are more than TEN TIMES the number of documents involved (so many that the earlier deadline to submit documents had to be extended another six weeks). This suggests to me the SVJI is going to cost us a lot more than we were led to believe. Millions more.

Story number two is also from Collingwood Today, which notes:

The sale of Collus PowerStream has generated gross proceeds of $13,580,188 to date. As of Sept. 30, the town has paid $823,192 in legal fees applicable to the transaction and staff are anticipating an additional $100,000 for closing of the deal. Certain indemnification has been provided to EPCOR in regard to potential legal fees related to the Judicial Inquiry in the amount of $250,000. EPCOR has also donated $150,000 as a contribution to a local project. The current, known net proceeds are $12,256,966.

In my last term we used world-renowned consultants KPMG, the respected legal firm of Aird & Berlis, consulted with some of the most experienced and respected people in the energy sector, all for a small fraction of the recent costs. We held public information and consultation sessions and discussed everything in the open. Then we sold a 50% share to the most promising utility in the province. We had minimal legal and consulting costs. For that we got $14.1 million to put in the bank.

In comparison, in Brian’s first term, there were almost 50 closed-door meetings about the utility, and not a single public consultation. The town used expensive sole-sourced lawyers and consultants and then sold the whole public utility to a for-profit out-of-province firm. And got less money for it. Legal fees alone are almost $1 million. Hundreds of thousands of dollars in consultants’ fees paid last term somehow never got a mention!

The town expects to get $12.25 million for the privatization of 100% of our electrical utility. Compare that to $14.1 million for 50% – $1.85 million more than we’re getting now. AND with the 50% sale we still had local control over rates and service delivery. Now we have nothing. And this is a good deal how? Surprise: local media never bothered to ask that question.

But wait – what about the SVJI costs? How do we pay for them? From the Collus sale, of course. If we subtract a minimum $3 million for the SVJI from that net, we get to bank $9.25 million. That’s $4.85 million less than what we got for 50% in 2012. If the SVJI costs are, as I predicted, at least $6 million, we end up with $6.25 million – less than half of what we got for 50%. And if costs climb even higher – well, we might as well have given our public utility away for nothing.

Great financial management of public assets, eh?

Both the Connection and Collingwood Today write that the town might get $3.6 million from the sale of the airport. But that’s not quite correct. Here’s what Collingwood Today had to say about it:

…the sale of the Collingwood Regional Airport could generate proceeds of $4,100,000. This will be reduced by consulting fees ($100,000), legal fees ($25,000), Building Canada Funding repayment ($87,580 ) and, the provision to repay the remaining term of the debenture on the Airport terminal building ($262,570). Once the sale closes there will be closing adjustments that may increase or decrease the proceeds. The current, known net proceeds are $3,624,853.

BrainiacAs I understand it, the town ALSO has to pay HST on the sale because it’s being sold to a private firm (there’s that nasty privatization of public assets ethic at work again…). By my calculations, the town has to cough up another $533,000 (which of course they would not have had to pay if they had sold the airport to Clearview Township). So the net is actually $3.1 million. For a property that was assessed at about $6 million in 2012 or ’13 (Clearview’s assessment of the property done in 2015 or ’16 was, I believe, $5.9 million. Collingwood did an assessment too, last term, but like everything else that council did, kept it secret from the public). We’re selling our public asset for about half of what it was worth a few years ago – another Brainiac financial deal.

But hold on – the town and the potential buyer are being taken to court by the flight school over a contested lease agreement for runway access. from which fight the flight school also expects to recover their legal costs. What will THAT fight cost taxpayers? Another $100,000? More? **

Planning on that income is like paying your mortgage with lottery tickets. My sources in the aviation sector suggest the deal is not likely to go through.

And neither story mentioned that the airport sale was another back-room deal by Brian and his Block without any public consultation, or that the secrecy made both municipal partners angry enough to pull their funding from the airport .

Meanwhile the Connection published a story that gives away one of the not-so secret agendas The Block has nourished these past four years: build a Taj Mahal recplex with public funds and turn it over to the YMCA. Now owning the council, they can push it through with almost no opposition (and like always, no public consultation).

In the piece titled “Here are eight ways Collingwood could use its new-found cash,” it noted the option:

Multi-use recreation facility. Collingwood has had two failed attempts at constructing a facility. In 2005, when they had $8 million in government funds and 2013, when council decided to build two fabric membrane structures — a pool and an arena as opposed to a proposed $35-million facility at Central Park. This decision is part of an OPP investigation.

First, those weren’t “failed attempts.” They were decisions of the councils of the day not to submit the taxpayers to the burdens of massive debt and expense. Both decisions were made openly and in the normal democratic process. It’s not a failure to protect the community from crippling tax increases: it’s a council’s duty. 

The decision itself wasn’t the focus of the OPP investigation, at least according to how I read the OPP’s own documents submitted to obtain a search warrant (the ITO). That decision was made after public presentations, a fulsome staff report and analysis, the options were discussed in public and the vote taken in an open session. The OPP did look at the finances of the transaction in 2014, but found no criminal wrongdoing then or since. Curiously, the Connection failed to mention that last bit.

Nor did the story explain that the two Sprung structures were turnkey facilities, cost about $11-$12 million for both, were supported by local swim and hockey associations, and were entirely paid for from the sale of 50% on Collus – so they didn’t impact taxpayers. The facilities remain in public hands, are much liked and constantly used these days.

Building a $35 million recplex for the Y, on the other hand, would have meant a minimum 10% tax increase on local residents with nothing to show for the expense and we still wouldn’t have had a competitive-scale swimming pool like we have now. Didn’t I write something about local media credibility recently? Oh well…

The final story was in both Collingwood Today and the Connection – about the overcrowding in town hall. What neither of these stories explained is the reason for the space crunch (you know, that important “how” question…). Let me enlighten you.

Crowding began when the previous council (in one of their many secretive, closed-door meetings) stopped getting the town’s IT services from Collus-PowerStream at $140,000 a year, and instead hired three new town staff and bought new equipment to do the work. This cost taxpayers more than $600,000 a year plus hardware costs: more than four times the annual cost of the previous service agreement! That new department consumed crucial office and meeting space in an already cramped town hall.  Ka-ching!

Also last term, the previous council hired several new people for the treasury department. Ka-ching!

On top of that, when the Saunderson Vindictive Judicial Inquiry (SVJI) launched Brian’s mayoral election campaign, the town had to allocate so much space for the lawyers and judges and filing cabinets that the town’s entire treasury department was forced to move out of town hall into commercial, leased premises further downtown. They’ll be there for at least another six months, perhaps much longer – at your expense, of course. Ka-ching, ka-ching!

Funny that the local media never mentioned any of this.***

* The previously-scheduled council meeting for Dec. 10 was re-scheduled to Dec. 17. The date conflicted with the Christmas party for our new mayor’s employers. Apparently the consumption of eggnog takes precedence over public service and civic responsibility.

** You might note the unexplained inconsistency of the previous administration putting together a deal for runway access with the flight school that didn’t even have a termination clause in it – while the same administration refused to approve a non-binding letter of intent to negotiate runway access in the future with the Clearview Aviation Business Park (CABP) – a development that could have created hundreds of local jobs. This was despite support for the letter from the airport service board, Wasaga Beach and from Clearview Township. I wouldn’t be surprised if CABP also sued the town over prejudicial treatment now that this has come out in public.

*** Maybe I’m being too critical, but  I can only measure these curious omissions against the statement the Connection put right on its front page a few weeks back: “Our relationship with our readers is built on transparency, honesty and integrity.” You’d almost think there was some personal relationship someone didn’t want to upset by digging deeper into the background or pointing fingers at a flawed and frequently secretive process.

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