Just last week at my State of the City address, I talked about how, when I was first elected as your Mayor, I also for the first time became a member of the board of the City’s holding company – GMHI – Guelph Municipal Holdings Incorporated. During my speech I stated that after my first full board meeting in Feb 2015, I felt changes were needed immediately to improve transparency, accountability and greater oversight that would help lead the company to more positive financial performance for the City of Guelph.
This coming Monday, May 16th, City Council will meet in its capacity as the sole shareholder of GMHI, where we will receive a report, that for the first time details a full financial history, and a full accounting of GMHI and its group of companies. We have never seen this level of transparency before.
The report will reveal what I had suspected for quite some time – As many of you know, I have raised questions publicly about district energy and whether we were obtaining value for money and positive environmental benefits. Through blog posts and in media interviews, I have shared my concerns with you and council regarding large capital projects that were undertaken in conjunction with the city’s community energy initiative. Yet as I had suspected, the development of district energy projects in the Hanlon Creek Business Park and the downtown core were experiencing serious financial problems. What will be important for the community to digest is this:
These projects will now require them to be “written down” by over $8.7 million dollars.
I want to be clear about what this write down does and does not mean. This does not mean that we owe $8.7 million. It means that the district energy systems built downtown and at the Hanlon Creek Business Park currently do not have enough earning potential to recover the costs of building them. At this point its value is less than what was spent for it. Unlike the Urbacon fiasco I inherited where a judgment was imposed upon us and funds were raided from reserves to pay for it, these district energy projects are already paid for.
The 2015 GMHI board of directors inherited the previous commitments and directions under the oversight of the previous 2011-2014 GHMI board and its group of companies . It is due to the good work and fresh set of eyes of the 2015 GMHI board that this situation was brought under control and brought to light.
In my role, I wear different hats simultaneously. I am the Mayor and Head of Council for the City of Guelph. With council approved changes to the structure of GMHI earlier this year I am honoured to now be the Chair of the Board. I have a responsibility to GMHI, and to the City of Guelph and its citizens. In seeing this information brought forward, I am striving to best serve both GMHI and its future, and the people of Guelph.
So what now?
The current state of affairs is that district energy continues to operate for existing customers.
In June – a business case will be coming to Council to look at options for the future of district energy.
I’ve also said many times that our City needs to be brave enough to learn from past decisions, and move forward with eyes open. That’s exactly what we need to do here and that is exactly what we’ve done.
It’s an interesting position to inherit things of this magnitude. It takes time to get to the bottom of things, and to understand all the moving parts. It can be disappointing when trying to share information that some do not want to hear. There may be more to uncover here and more lessons to be learned, yet sharing this with you today is a critical first step in starting to tell the citizens of Guelph what’s really been going on, and I’m glad I’m your Mayor at this time to do just that.
This is also a critical reason why I wanted the community energy initiative updated and its capital projects audited.
Looking forward, this is why we need metrics, measurements and proper business cases imbedded into all of our processes. Working alongside the community with this shared understanding will help us make better decisions that balance both the environmental and economic outcomes we all wish for.