Renfrew – Last Tuesday’s series of Renfrew council meetings will long be remembered as the day WSCS consultants Tammy Carruthers and John Skorobohacz revealed countless examples of sheer managerial incompetence, several violations of the town’s procurement policies and conflict of interest infractions by the former recreation director, and a breakdown in mandated financial reporting which contributed to the implosion of the $18.9 million Ma-te-Way project.

Although today the project cost hovers around $35 million, Ms. Carruthers stated during her appearance before council that there is still $2.15 million forecast to complete all aspects of the project. 

If her predictions are accurate, the final project cost will be around $37.5 million when the official opening of the myFM Centre is scheduled to take place by December. That is 195 percent over the original $18.9 million construction budget.

Renfrew is responsible for making up any financial shortfalls and will be forced to enter into a 30-year debenture to pay off the $17 million budget deficit. There is no opportunity to make bulk payments or early payments to reduce the overall debenture costs. When the 30-year debenture ends in 2054, the town will have paid an additional $15.2 million in interest payments. 

The total price tag for the 96,000 square foot myFM Centre will be $53 million.  

To make financial matters worse, the building will eventually have to undergo expensive mechanical replacements as part of maintaining a proper asset management plan. That is in addition to spending an estimated $925,000 annually just for basic operating costs such as hydro, ice-making equipment, staffing, landscaping, snow removal and other daily functions. 

In the 2024 budget, an overage of $100,632 from the previous year represents a one-percent increase on the levy. Using that model beginning next year, if the annual operating cost at the myFM Centre is $925,000 that would result in an immediate 9.2 percent levy increase before any other town expense is reviewed. 

When a by-law was passed on July 5, 2021, it authorized the Mayor and Clerk to sign a contract on behalf of Renfrew with representatives from Ottawa-based construction firm Buttcon and it would include the amount of $18.9 million.

Five months later Buttcon provided Renfrew elected and staff with its first progress report. Buttcon staff informed the town during the December meeting that the project was already $800,000 over budget. 

The meeting also revealed that neither the town, nor Buttcon, had an original copy of the signed contract between the two parties. Ms. Carruthers said her investigation suggested the town’s legal representative made changes to the contract, but she cannot verify that claim.

Despite reviewing 80,000 documents, Ms. Carruthers and her team have been unable to locate the original contract has never been located.

Doomed From The Start

Members of council began last Tuesday in a closed session shortly after 8 a.m. and then spent the next 12 hours in and out of closed sessions reviewing the scathing independent third-party review of the Ma-te-Way expansion debacle and the long-term consequences it will bring for the 8,100 residents of the town.

When council emerged from the morning closed session and sat down for an afternoon public meeting that attracted about 30 residents, many just shook their heads as the auditors spent the next five hours and 38 minutes delivering a non-stop barrage of their findings. The firm was commissioned to review the project after council unanimously called for an investigation on April 25, 2023.

When WSCS Consulting presented an interim report on December 19 it included more than 60 areas of failures/recommendations and hints of managerial incompetence. Last week’s updated report contained a further litany of systemic failures and many of those examples were carried out by the town’s former recreation director.

The auditors pointed their finger at the very onset of the project when it was announced that Kevin Hill, the town’s former recreation director, would be lead staff on this $16.1 million project. Part of the project was funded with federal ($6.4 million), provincial ($5.3 million) and municipal ($4.2 million) contributions. Although council approved a $16.1 million budget, a contract was awarded to Buttcon and the contract amount was based on Buttcon’s bid of $18.9 million. 

The expansion included a second ice rink, a Native Cultural Centre, a modern fitness room and a full gymnasium for basketball and other activities. 

Mr. Skorobohacz was asked by Councillor John McDonald who ultimately must accept responsibility for the failure to complete the project on time and on budget. He replied there was plenty of blame to go around. 

“I would suggest to you that the accountability piece is owned jointly by the entire council and part of it perhaps is a lack of understanding of the governance model,” he said. “I would suggest to you that you have two pieces of work going on here at the same time. They had standing committees and they had committees of the whole and ad-hoc committees but they required more rigorous exercise for them to understand their roles and responsibilities.”

Former Director Ignored Policies

The 89-page report lists several examples of Mr. Hill violating pretty much every standard and mandatory procedure that is used by most municipal governments in terms of awarding tenders and contracts to third-party contractors. 

The auditors examined more than 80,000 documents and interviewed 200 former staff and councillors to determine that Mr. Hill did not advertise for tenders, RFPs and site jobs as is standard practice. Instead, he sent a handful by text or email. Major firms were excluded and that resulted in less competition and the bids came in overbudget.

Mr. Hill sent out the offers primarily to “friendly” firms and ultimately awarded them based only on his decision. Ironically, the former director of Parks and Recreation declined to be interviewed unless he was paid $1,500/day for his time by the consultants. He further requested that any information he provided be included in the report. 

“There was no accountability for staff and reporting was very poor,” Mr. Skorobohacz said. “You had the former director of recreation delivering more verbal reports as opposed to written reports. What’s that mechanism that should have been triggered in place that is triggered to say ‘hey…hang on a second. We as a committee have the responsibility to understand what this topic and this issue are all about. And if we are not getting that information in writing then we are not going to accept it submitted verbally’. There should have been some pushback in my view by council to senior staff, but they did not do that.”

Council Showed Favouritism

He said there was an appearance of favouritism towards the former director as opposed to other senior staff who were obligated to deliver written reports while Mr. Hill was not held to the same standard. He said the inability of council to hold Mr. Hill accountable in terms of accurate financial reporting was a failure of council to fully understand their roles and the enormous responsibility they have to represent the ratepayers and demand accountability from staff.

“This culture led to rivalries among the Senior Leadership Team with one director denying council the ability to fully examine the project because he delivered the majority of his reports verbally,” Mr. Skorobohacz said. “Other directors were required to deliver written reports and this led to a bullying environment.”

Treasurer Shut Out of Financial Oversight

Another major flaw the auditors uncovered was the practice of purposely excluding the former treasurer from all tendering, RFPs, and awarding of contracts without financial analysis. Ms. Carruthers referred to the Municipal Act in terms of involving the treasurer.

“A municipality shall appoint a treasurer who is responsible for handling all of the financial affairs of the municipality on behalf of and in the manner directed by the council of the municipality,” she said. “The treasurer will provide the council with such information with respect to the financial affairs of the municipality as it requires or requests.”

Mr. Skorobohacz reinforced how the lack of treasury involvement was denying the council and residents full accountability and transparency which ultimately leads to mistrust and suspicion within the town hall and the town itself.

“It is vital that the treasurer should have been much more involved,” he said. “How do you expect the treasurer to provide council with financial advice when the reports by the former director were delivered verbally and leaving the treasurer with no written record?”

Mr. Skorobohacz said the former treasurer was not included on tender packages sent out from the former rec director to select companies and prequalified contractors. He said excluding anyone from the treasury department in the process denied council the opportunity to be fully informed with the most current financial data. 

No Project Manager

One of the major conclusions involved the absence of a qualified, experienced project manager who would have full authority to schedule weekly meetings among various stakeholders and to be present onsite every day to ensure that the proper labour was delegated to various jobs and there was no double-staffing among contractors. 

The previous council’s reluctance to invest in a full-time project manager, instead handing it to the then director of Parks and Recreation, was the first of many bad initial decisions.

The report notes that “there were instances where questions about the project were not welcome and there was no ability for peers to offer suggestions or provide advice” under the senior management model of delegated authority that was in place at the time.

When other town staff raised red flags about the project, including those who had prior experience with major construction in Renfrew, the senior management dismissed the matter as rivalry between two competing members of staff.

Ms. Carruthers noted that Mike Asselin, the former director of Public Works, recommended not to proceed through the winter months. He made the recommendation based on his decades of experience overseeing major road and bridge projects. 

“The former rec director had a two-year recreation programming diploma and claimed to be involved in the building of an ice arena in Napanee while employed for the local government and the advice from Mr. Asselin was ignored.”

The audit revealed Mr. Asselin emailed his concerns to then councillor Sandi Heins who constantly requested written documentation from Mr. Hill. He also emailed his concerns to then mayor Don Eady. Ms. Carruthers said former Mayor Eady addressed the situation with Mr. Asselin and told him to “get on board” and not issue criticisms towards the oversight process. 

The auditors noted this led to a form of bullying within the management team.

Flawed Contract

Ms. Carruthers said town staff had almost no understanding of their liabilities and areas of responsibility within the CCDC-5B contract and although Whitewater Region promoted a workshop designed for municipal staff to understand how the new contract system worked, no Renfrew staff attended the workshop. 

“A project manager in place would have been well versed in the complexities of a CCDC-5B contract and all areas of responsibility would have been clearly defined,” she said. “The lack of experience had town staff eager to build the complex through the cold winter months to meet a fall 2022 grand opening.

“Somehow staff were under the impression the grant money ($11.1 million) awarded by the upper levels of government had to be spent by 2023. To make these deadlines Mr. Hill and the Buttcon group purchased a generator in order to provide heat so that the concrete slab could be poured to have the ice rink ready. The generator and fuel used to heat the area was $800,000, which the town paid for and there was no 2023 deadline for using the money.” 

Although the auditors did their best to make this the final report, they conceded they will be back before the end of the year as they expect the official opening to take place in December, more than two years from the original grand opening date.

The report noted there was a rush to get the project completed because town staff believed the grant money had to be spent before 2023 when in reality the money was available until 2027.

Business Interests

The report also noted Mr. Hill had a number of business interests while employed with the town and built personal relationships with vendors, “which impacted both competition and pricing.”

There were also a number of competing interest groups, such as the Aquatic Committee, Second Ice Pad Committee, and Tennis Club, who were all working towards ensuring their own addition to Ma-te-Way was part of the process.

He said the grant money led staff and council to make Ma-te-Way the top priority despite the knowledge that the public works garage and the fire hall are both scheduled for major overhauls and rank much higher in terms of the asset management plan.

When asked for their opinion on why Ma-te-Way was suddenly the top priority, Mr. Skorobohacz suggested that chasing grant money without due diligence and an “abject failure on the part of council” to prioritize what it wanted allowed an ad hoc committee to make decisions that allowed the project to creep forward.

Ms. Carruthers said the true cost to the town (not including the 30-year debenture for the $17 million overage) will be close to $7.3 million, not the roughly $4.6 originally stated. She said the lack of timely drawings caused unnecessary delays and costs. The new Native Centre was placed on the same site as the existing tennis courts but the drawings were incomplete and late and those overseeing the project recommended moving the tennis courts instead of requesting the architects to redesign the plan.

The added costs for the tennis courts and staff time devoted to the move was over $1 million and she added the auditors are still waiting on documents from Buttcon. 

“We received a box of documents last week and it contained invoices from nine months ago,” she said. “It is impossible to go back and verify the work was done so we still don’t know the final costs to the town.”

When the public meeting ended at 7 p.m., council again went into a closed session and when they emerged around nine o’clock, a resolution was introduced calling for a forensic audit to be undertaken and if there is proof of criminal activity, the town will seek legal advice in terms of criminal charges being brought forward.

The vote was a recorded vote and passed 7-0.

To access the report including recommendations and areas of fault, go to https://www.renfrew.ca/news.cfm?newsid=413

By Bruce McIntyre, Local Journalism Initiative Reporter

Original Published on Mar 27, 2024 at 15:16

This item reprinted with permission from   The Eganville Leader   Eganville, Ontario
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