A News Commentary by Doug Draper
Posted October 6th, 2017 on Niagara At Large
Niagara, Ontario – Niagara’s regional councillors have ok’d a plan put forward by Pelham’s town council to have a third party audit done on all documentation to do with the development of a new community centre and arena just east of Pelham’s Fonthill downtown.
The audit was first called for by David Barrick, Port Colborne regional councillor and chairman of the regional government’s corporate services committee, in a blistering motion he tabled earlier this year that accused Pelham’s mayor, Dave Augustyn and his council of operating in such a reckless way that they are imperilling their town town’s financial health and placing the regional government’s credit rating at risk.
Augustyn repeated at a regional council meeting this October 5th, what he has said before – that he and the town council welcome such an audit if it will clear the air and convince at least some critics that his council has invested tax dollars responsibly.
In that spirit, the Pelham council approved a plan this October 3rd to hire one of Canada’s largest financial firms, KPMG, to come in and review all relevant documentation with one of that corporation’s senior forensic auditors in charge. Augustyn promised the auditor will do the work with no interference from him or the council, and that the town will be publicly posting contact information for KPMG so that town residents or any other parties across the region can communicate any questions and concerns to the auditor directly and in privacy.
It is an audit plan that was approved ,once again, by regional council this October 5th, but reportedly did not cut the muster with Rainer Hummel, a Niagara-on-the-Lake developer who has some land holdings in Pelham and who raised eyebrows late this September when he held a cheque for $50,000 above his head at a meeting of the region’s audit committee, offering to pay for the audit – an offer, by the way, that Augustyn and his council said no to at their recent meeting.
“The town deciding to do their own audit and deciding on the terms of reference and the questions that are going to get asked is just like asking if dandelions are yellow,” Hummel was quoted saying in an October 4th story in The St. Catharines Standard, adding that “Pelham’s motion (to go ahead with a KPMG conducted audit) looks to be more about damage control than addressing the issues.”
Damage control, indeed.
One might ask what damage he is referring to and where the damage may have originated?
Some argue that if damage has happened here, at least some of its origin is contained in the motion Barrick read aloud at a regional council meeting last spring – a motion containing his recommendation rfor the audit on Pelham, following one scathing “Whereas” after another that pretty painted the municipality as some kind of fiscal train wreck.
It was a motion, by the way, that had members of Augustyn’s council charging that town councillors and staff were being defamed by it in ways that might warrant some counter legal action.
Who knows? Counter actions may yet come following the results of the KPMG audit, which Augustyn said the town hopes to see completed and made public before the end of this year.
Niagara At Large certainly plans to be there to report the results. So Stay Tuned!
In the meantime, what follows is a re-run of Barrick’s original motion for the audit, tabled and approved at a March 30th, 2017 regional council meeting, for your information.
Here it is in its entirety –
“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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