Talking of debt……………..


I noticed that some of you had been perusing through a few of my old blog posts. The following was forwarded to me anonymously back in February of this year. Being as debt has been a big issue in this election campaign this might be of interest to some of you:

A Response to Chadwick’s Self Serving Blog – 26th February 2014

Collingwood’s Municipal Debt and 2014 Budget: Response to

http://ianchadwick.com/blog/collingwoods-municipal-debt-and-2014-budget/

“In order to maintain a strong financial position, municipalities must be able to continue paying for services that they presently provide. This includes basic services to the public, maintenance and renewal of capital facilities to protect the initial investment and maintain facilities in useable condition” pg 2 Assessment of the Town of Collingwood’s Financial Health January 2014 Prepared by BMA Management Consulting Inc.

The above referenced report was the basis for a 4 page misleading blog post by Councilor Ian Chadwick. To be fair the Councillor did have some facts accurately stated but certainly some of the innuendo and outlandish statements fail to mention him and his pals voting records to accrue more debt. Whether the debt is good or bad that’s something I hope that we the electorate in 2014 can draw our own conclusions. For me good debt can be summarized by buying a house taking out a mortgage investing in your future, that’s good debt. Bad Debt is when the credit cards are maxed out, the line of credit is maxed out and you are living paycheck to paycheck with no real end in sight of how to dig yourself out of the financial hole you have dug yourself into.
“Peer Analysis” pg2
Peer analysis has also been included to gain perspective on the Town’s financial health. The following table summarizes municipalities which are considered good comparators in terms of population growth patterns and proximity.
Assessment of the Town of Collingwood’s Financial Health
Peer Municipalities Region
2012
Innisfil Simcoe 34,310
Prince Edward County Prescott & Russell UCO 25,851
Orillia Simcoe 31,427
Owen Sound Grey 22,226
Springwater Simcoe 18,842
Wilmot Waterloo 20,164
Collingwood Simcoe 19,241

So why is the above peer comparator important? It is used to measure ourselves against similar municipalities. Ask yourself if these are communities you see similar to Collingwood. They are not for me nor did Chadwick. The first glaring mistake is the population of our community is not 19,241!

Growth projection

The Town of Collingwood’s population is closer to 25,000 people. The infrastructure we build in our community is most often for peak usage such as water, waste water and road infrastructure is designed for maximum projected daily usage. So not to include our part-time residents is rather foolish and for our esteemed councillor to ignore them is either ignorance or perhaps it’s politics?
It also matters to all of us because much of the report uses a per capita equation to determine how we compare to others and well you know “garbage in means garbage out!”

There are some good parts to Chadwick’s blog, punctuation and grammar are impeccable!!! Also the concerns raised as to the type of municipal expenditures on the operations sides such as a full-time police force or section 10 contracts like Collingwood has with the OPP and a full-time fire department supported by volunteers have merit. These are significant expenditures and to compare our community to another that does not have similar pressures on their municipal operations budget is just not an accurate picture to measure ourselves by.

Let’s talk about DEBT!
I have to say trying to nail down a figure of the debt in 2006, 2010 and 2014 is very hard. It seems to be a number that can be interpreted by the person who is drafting a blog to accentuate a point, rather than one that accurately reflects financial realities.
Did the Council of 2006-2010 increase the debt from $17 million to $53 million as was stated during the election campaign of 2010, NO! Where those figures came from I have no idea. Our local media (Scoop) did not call out Cooper, Lloyd and Chadwick at the time. The records I have gathered from various sources show the debt in 2006 to be $23.8 million and in 2010 $45.2 million or a 189.92% increase.
What is interesting during the campaign of 2010 these three made a point of decrying this debt. Then voted to approve debentures totalling 14.2 million dollars as soon as they got into council. I mean if they were as concerned as they “pretended” to be during the election campaign was there not an opportunity to make a bold statement that they are not the same as the last group, we will lower the debt as our first act by utilizing some reserves! That kind of of good news would be forgotten by all of us when the 2010 election came around so why not flog to death the old debt number and promote how great this council is at paying down debt. By the way Chadwick and his pals on council did not pay down any debt, WE DID, the taxpayers!
Credit where credit is due though, they did spend $13.5 million and counting on 2 recreational facilities. They did buy a works buildings for $2.25 million. They did build a new fire hall for about $5 million. They still have to replace a baseball diamond! They sold 50% of our electrical utility to the second highest bidder! They gave a local developer everything he wanted and more and we still have a hole in the ground at Hume and Hurontario! We have an OPP anti-rackets investigation into their business practices! They got rid of a CAO and EDO who saved the Barber Glass now Angora from closing! But I digress
The previous council did increase the debt from $23.8 to $45.2 million – $21.4 million of new debt. But we got about $47.3 million of new infrastructure, roads, sewers, library, leisure services, fire trucks, First St. and Downtown revitalization and ………….. no anti rackets investigation!!!
Remember the good debt versus the bad debt discussion? If you invest in infrastructure and someone else pays the down payment of 55% and you can finance the remainder at historic low interest rates, is that sound fiscal management? Plus keep tax increases to a minimum and yes even a small decrease over that same time period. Would you call that investment in our community’s future good debt or bad debt?
Be careful when reading an incumbent/candidates blog post, especially one that tries to distance himself from previous councils that he was very much part of.

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6 thoughts on “Talking of debt……………..

  1. Check out this link – nothing to do with topic but a great example of a City setting up an open and transparent process for feedback and then actively using that feedback to build future plans, address concerns and be inclusive during the planning process.

    Basically 127 Street between 118 Avenue and Yellowhead Trail is a major commuter artery in and out of the downtown. The lanes are the most narrow in the City and the road in general is a huge headache for everyone that uses it. So what did the City do? Confirmed money for a reconstruction effort, posted billboards about a public survey for input, survey for 4 weeks, results e-mailed with key action items highlighted, two concepts to be presented at a public meeting with two separate presentation times to accommodate the busy tax payers and their various schedules. Next steps to be announced after that meeting and more public consultation on the two concept plans.

    Link is here:
    https://gallery.mailchimp.com/7f5fec92b3704efec7186953b/files/What_We_Heard_Fact_Sheet127st.pdf

    You can also view the status of the project here at any time:
    http://edmonton.ca/transportation/road_projects/127-street-reconstruction.aspx

    What’s the point – well beyond the great example of public engagement, it got me thinking a lot of a master plan for Collingwood waterfront or even a Hume Street project.

    It’s not about re-inventing the wheel, many towns and cities throughout the Country do public engagement very well. Collingwood Council and Staff just need to take the time to include this work in the overall scope of any project that is being considered.

  2. Do not forget that the current council has also disposed of a one half interest in a significant income producing asset (Collus) and used the proceeds to acquire assets (the rec tents) that operate at a deficit. The difference between this forgone annual income and annual deficit will need to be met with either increased taxes or increased debt (which will be serviced with increased taxes). A lose, lose outcome, so to speak.

  3. We are look for new accountant

    First applicant walks in, push over a box of paper. How much money do I have? Gets out the calculator $234,651.23
    Second applicant walks in, push over a box of paper. How much money do I have? Gets out the calculator $234,651.23
    Third applicant walks in push over a box of paper. How much money do I have? Push box back. How much do want it to be?

    $35 million, $40 million, $ 50 million… The issue is not the debt. The issue should the ability to support the debt. Now and into future, new revenue comes from a) new development be it commercial or residential b) user fee c) other levels of government.
    You can have all the development plan be it water front, downtown, affordable housing, etc.

    If don’t have developer money nothing will get done.

    So, who bring development to this town?

    I like to know

  4. To give credit where credit is due, this council no more paid down the debenture debt, in that it didn’t add to it. While touting the $7.4 million number makes for good spin, retiring debentures is no more newsworthy than you or me paying down the mortgage. This council did not accelerate payments, or really do anything that would necessitate the current chest-beating. It would have been newsworthy had the town defaulted on its payments.
    I think I’ve sent you this before; we didn’t challenge Sandra on the numbers in 2010, because those were the numbers we published in an article earlier in the year. It was the best available information at the time (it gets screwy in the middle, as a couple of briefs are somehow mixed into the file): http://www.theenterprisebulletin.com/2010/02/05/are-we-in-too-much-debt. BTW, interesting quote from your favourite councillor in the middle of that story: “It looks worse than it really is, because it’s not all on the taxpayers’ burden.”

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