Town of Pelham’s Financial Affairs Could Hurt Niagara Region’s Credit Rating, Port Colborne Regional Councillor Warns

David Barrick To Introduce Motion To Regional Council Urging Pelham to Disclose its “2015 annual audited financial statement,” among other things

A News Commentary by Doug Draper

Posted March 27th, 2017 on Niagara At Large

Of all the motions listed on the agenda for Niagara Region’s upcoming Thursday, March 30th, the one I am positing here struck me the most.

The motion, according to the agenda, is being brought forward by David Barrick, a Niagara regional councillor for Port Colborne who is chair of the regional government’s Corporate Services Committee and who also holds a senior management position at the Niagara Peninsula Conservation Authority.

Port Colborne regional council and Niagara corporate services committee Chair David Barrick.

The motion, posted in its entirety below, highlights what are characterized as a number of concerns around the financial health of the Town of Pelham that could, as the motion reads on, contribute to a potential for Niagara’s regional government “to receive a negative credit rating” which, as this reporter of municipal news understands, is not a good position for any government to be in.

Therefore, the motion – if approved by a majority of regional councillors at its March 30th meeting – would see the regional government asking the Town of Pelham to publicly disclose its 2015 annual audited financial statement along with the corresponding management letter with staff responses as well as the same documents for fiscal years 2016 and 2017.”

It would also have the regional government asking the town, which is governed through its mayor, Dave Augustyn, and six local councillors, to “develop a taxpayer affordability guideline that includes an evening public meeting to ensure Pelham’s operating levy remains below 25 per cent compounded for the 2015-2018 term and its annual repayment limit does not increase above 20 per cent.”

After this reporter and others contacted the Town of Pelham earlier this March 27th for a response to Barrick’s motion, the mayor, Dave Augustyen, circulated the following statement

“The motion is pure fantasy from someone who cannot read financial statements,” said Augustyn. “Further, the motion’s preamble is formulated to mislead and misrepresent the Town’s financial position.

Pelham Mayor David Augustyn

While there is no point in getting into each assertion, let me give two examples of the basic errors in the motion:

While the motion states the Town had a significant deficit for three years, the fact is that the Town posted surpluses totaling $176,200 in those years.

Further, the motion asserts a $7 million increase in debt over three years, where the statements clearly show debt increased $3.4 million during that time.

We have forwarded the motion to the Town’s Legal Counsel and Independent Auditor and have asked the Auditor to provide a letter responding to the allegations.

Aside from the motion being riddled with errors and misrepresentations, the motion is clearly a politically motivated attack on the Town of Pelham because of Council’s strong stand with other Niagara Municipalities over significant financial and governance concerns with the Niagara Peninsula Conservation Authority (where Mr. Barrick has worked since being hired from that Board in 2013).

Further, the motion attempts to distract from the community’s legitimate concerns about the Burgoyne Bridge and the recently revealed $2.8 million Niagara Regional Police deficit for 2016 (where Councillor Barrick is a member of the Board).

The Town conducts all business in a very open and transparent manner by providing all financial information publicly at Council meetings and on the Town’s website.

Sincerely yours, Mayor Dave

Further to the statement released by Mayor Dave Augustyn, this reporter wishes to add that this is the first time I can remember in the more than three decades I have spent working in and with news organizations covering municipal government in Niagara, that a motion put forward at the regional government level has outlines so many concerns and claims about the financial health of a single local municipality in the region, and asks for audited information about its financial operations.

Further to that, any suggestion of financial mismanagement by a local municipality that could have a negative impact on Niagara’s credit rating and potentially hit every tax payer across the region in the pocket book should receive a full and open airing at regional council.

And anyone who makes such a suggestion should be held completely accountable

I find it interesting that when a delegation of Niagara citizens raised concerns last year about the operations of another public body in the region – the Niagara Peninsula Conservation Authority – and asked the regional council to approve a full forensic audit of that body, a majority of councillors, including a number who sit on the NPCA’s board of directors, fell short of giving their approval

So it will be more than a little interesting to see what happens with Barrick’s motion at the regional council meeting this coming Thursday (March 30th) night. We’ll be watching.

Now here, in its entirety, is the motion –  

“In accordance with the notice and submission deadline requirements of Sections 18.1 (b) and 11.3, respectively, of Niagara Region’s Procedural By-law, the Regional Clerk received from Councillor Barrick a motion to be brought forward for consideration at the March 30, 2017 Council meeting respecting Regional Taxpayer Affordability Guidelines.

Whereas the Town of Pelham’s operating levy increase since its 2015 budget is approximately 20% (2015 – 3.46%, 2016 – 9.69%, 2017 – 6.61% compounded) which is cause for concern;

Whereas the Town of Pelham’s most recent three published financial statements from 2013 – 2015 outline annual budget shortfalls totalling almost $1.0 million which is cause for concern;

Whereas the Town of Pelham’s most recent three published financial statements highlight a 402% increase in net debt from $2.3 million in 2013 to $9.2 million in 2015;

Whereas the statutory annual repayment limit for municipalities is 25% of own source revenues;

Whereas the Town of Pelham approved an additional $21.2 million in further debt in 2016 attributable to a single municipal project that increases Pelham’s annual repayable limit to 18.1% and represents a 1326% increase in debt since 2013 which is a cause for taxpayer concern;

Whereas should the other funding sources fail to materialize for the aforementioned municipal project, $36.2 million would need to be borrowed placing Pelham’s annual debt repayment at 23.2% and will represent a 1980% increase in debt since 2013 which is cause for concern;

Whereas the Town of Pelham conducted a land transaction using a development charge scheme that does not accurately reflect its true debt levels in a transparent manner;

Whereas the current fiscal situation has resulted in a loss of public trust in the Town of Pelham’s ability to manage taxpayers’ money;

Whereas property taxes are a key consideration for first time home buyers and existing property owners when balancing household budgets;

Whereas Niagara’s Local Area Municipalities are fiscally prudent with their annual repayment limit circumstance (as of Q2 2016) such as Lincoln (2.82%), Thorold  (2.15%), Wainfleet (1.10%), West Lincoln (4.41%), Niagara on the Lake (3.96%), Grimsby (3.78%) and others;

Whereas a portion of Niagara Region’s debt load consists of debentures issued on behalf of the Town of Pelham and thus has an interest in their corporate financial wellbeing;

Whereas the 2017 Standard & Poor’s report highlights a potential for the Niagara Region to receive a negative credit rating action if debt levels reach an identified threshold;

Whereas the Niagara Region recognizes and supports prudent fiscal planning, strong financial management, and fairness with respect to taxpayer affordability;

Whereas a key performance indicator of the 2015-2018 Niagara Regional Strategic Plan measures taxation in Niagara;

Whereas the Town of Pelham’s taxpayers are also Niagara Regional taxpayers;

NOW THEREFORE BE IT RESOLVED:

That the Niagara Region REAFFIRM its support for the current Regional Taxpayer Affordability Guidelines requiring operating levy increases to be at or below the rate of inflation;

That the Niagara Region REQUESTS the Town of Pelham to publicly disclose its 2015 annual audited financial statement along with the corresponding management letter with staff responses as well as the same documents for fiscal years 2016 and 2017, once published;

That the Niagara Region REQUESTS the Town of Pelham develop a taxpayer affordability guideline that includes an evening public meeting to ensure Pelham’s operating levy remains below 25% compounded for the 2015-2018 term and its annual repayment limit does not increase above 20%; and

That this motion BE CIRCULATED to Niagara’s local area municipalities, the MPP for Niagara West-Glanbrook, the Minister of Municipal Affairs and Housing, Standard & Poor’s Ratings Agency, the Auditor General of Ontario, the Premier of Ontario, the Canadian Taxpayers Federation, all local Chambers’ of Commerce in Niagara, the Ontario Chamber of Commerce, Canadian Federation of Independent Business, the Pelham Business Association, the Niagara Industrial Association and the Niagara Homebuilder’s Association.

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 “A politician thinks of the next election. A leader thinks of the next generation.” – Bernie Sanders

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4 responses to “Town of Pelham’s Financial Affairs Could Hurt Niagara Region’s Credit Rating, Port Colborne Regional Councillor Warns

  1. If attendance targets are far from being met at the First Ontario Performing Arts Centre it is because it is in direct competition with Regional Niagara and the NPCA where satire, intrigue and gall have me salivating! In my most creative moments I could not write the drama they keep dishing! And best of all, the seats are free! Come one, come all for the best political burlesque since Sarah Palin!!

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  2. It is amazing how the jackals come out of the woodwork when cornered and how they strike out at truth, I remember something of that nature happening in Port Colborne a few years ago, Yes!!! Truth is a wonderful equalizer when one remembers certain despicable incidents, acts and actions that tragically cut short the political will of a truly respectable gentleman who had for years devoted his life to the betterment of his fellow man. I think attaching names to this script would be a waste of time and energy for without a doubt the perpetrator is without an ounce of moral integrity….
    Thank You Dave Augustyn for your truth and integrity….And my Friend you are truly respected.

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  3. Gail Benjafield

    Yes yes yes, to the above. Well said, both of you. Loved the picture too, Doug. Does this man look somewhat haunted, you think? Got a secret, maybe? Just asking. And to Mayor Augustyn, kudos. Keep on it.

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  4. It’s interesting to note which councilors the NPCA targets. I’ll be sure to advocate for and support them in the next election. Let’s hope there is enough sense at the regional meeting to request an apology of Dave Barrick and from Sandy, for attempting to bypass democratic process and protocol.

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