Of fibre optics and financial skeletons in the St. Thomas utility merger closet


city_scope_logo-cmykFrom the promise of a downtown fibre optic network to assurance the St. Thomas office of Entegrus is under no threat of closure, the future is one of exceptional service, according to the top brass at the merged utility.
The trio of heavyweights – including president and CEO Jim Hogan – appeared before council at Monday’s (March 18) reference committee meeting to update members as the one-year anniversary of the St. Thomas Energy/Entegrus merger approaches on April 1.
Their message was one of corporate goodwill. Everything’s going to be fine, Jack. The kind of pat-on-the-head pep talk you get when your share of the pie is only 20.6 per cent.
And, nary a word on why the city received such a minority share when it serves 30 per cent of the total 59,000 customer base.
But more on that financial skeleton in the closet in a moment.


It would be a surprise if the status of the St. Thomas office was originally part of the presentation.
It surfaced as a question from Coun. Linda Stevenson in an attempt to quell the rampant rumor the local service centre – as it is now called – has a limited shelf life.
A three-year guarantee is believed to be one of the conditions of the merger.

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Matesic

Tomo Matesic, vice president of information technology, assured council Entegrus plans “to maintain the same level of service as the other two centres (in Chatham and Strathroy). There are no plans to close this office at all.”
In fact, he added, three employees have transferred to the St. Thomas office.
The goal is to link the local office with the other two centres to provide “exceptional service” to city customers.
Entegrus is planning to invest heavily in a fibre optic network for the downtown core to serve business customers, as Matesic outlined.
Access to high-speed internet has been a bone of contention for some time in the business and commercial community and the project, scheduled to begin in June, should prove a welcome relief. 
Other large undertakings, according to chief financial officer Chris Cowell, include upgrades along Southdale Line, Highview Drive, Sunset Drive and work on the social services hub under construction at 230 Talbot Street.entegrus
To further support the community, Cowell advised Enegrus is donating to St. Thomas Elgin General Hospital, the St. Thomas Sports Spectacular and the St. Thomas Outdoor Recreation Complex now under construction.
Cowell noted the dividend paid to the city last year was $1.25 million (which includes a supplemental payment of $90,000), and that is projected to be $1.17 million this year and $1.19 million in 2020.
It is worth noting, in its heyday, St. Thomas Energy used to deliver to the city a dividend in the $750,000-plus range.
Which raises the question, how much did the city have to contribute financially to become a 20.6 per cent shareholder in the merged utility in order to receive that annual dividend?
A clue can be found in the March 4 annual report for investments presented to city council by director of finance David Aristone.

“We had to deal with the debt at Ascent. We made a contribution to Ascent to lower their debt before we sold it.”

As part of the merger last April, the city received 679 shares of Entegrus, converted from 494 common shares of Ascent Group and 1,495 shares of St. Thomas Energy.
“We just swapped our shares for their shares,” is how Aristone described it when we talked to him shortly after the March 4 meeting.
According to Aristone, Entegrus places a market value of $33.3 million on those 679 shares or 20.6 per cent ownership in the merged utility.
The book value, as per Aristone’s investment report, is $13.6 million.
So, how were those share numbers determined?
“It was some kind of estimate by the consultant as part of the merger,” advised Aristone. “Entegrus is going to give us a number of shares based on their market value and the market value of our company.”
With a heavy debt load, the value of the St. Thomas Energy/Ascent shares could not have been substantial, which prompts the question did the city have to sweeten the deal financially?
“Not to Entegrus directly, I don’t think,” responded Aristone.
“We had to deal with the debt at Ascent. We made a contribution to Ascent to lower their debt before we sold it. There were some transactions between the city and Ascent before the merger.”
And where did that money come from to lower the Ascent debt?
“Through the city,” explained Aristone. “That will all be disclosed in our 2018 financial statements. That will be made available to the public.”
Bingo.
For the first time, a city official has admitted the city had to “contribute” financially in order to consummate the utility merger.
The question now is how much and from which city account did the money come from.
Just how much will that 2018 audited financial statement reveal.

Related posts:

City of St. Thomas named in $7.8 million lawsuit over decision to wind down Ascent Renewables

Entegrus merger presentation the equivalent of football’s two-minute, hurry-up offense

STANDING ALONE

It’s not often you find Steve Peters standing in isolation.
Such was the case, however, this past Monday (March 18) when Coun. Peters was the lone voice of opposition as members of council authorized city administration to prepare a bylaw to enter into a heritage easement agreement with Patriot Properties.
Although Patriot Properties is proposing a three-tower residential development at 96 Moore Street, the land is still owned by London developer Gino Reale.
peters-steve-09-cmykHaving approved the overall contents and actions of the agreement, a formal application will be made to the Local Planning Appeal Tribunal to remove the requirement of the existing 2008 Ontario Municipal Board order that any development or redevelopment of 96 Moore Street includes a faithful replication of the north façade of the former Alma College building.
As approved, the easement agreement includes existing heritage attributes which will be rehabilitated, new commemorative elements which will be introduced to the site, performance guarantees, and overall project scheduling/timelines.
Peters questioned whether the public will have input into those commemorative features and whether their final design is carved in stone.
In response, city manager Wendell Graves stressed the development plans for the property have evolved over time, however, the agreement now before council is the final plan.
Redevelopment of the Alma property was approved by the previous council last September, a concern for Stevens who noted four members of the current body have had little input into the Patriot Properties’ proposal.
So, what now?
Graves previously stressed, “pending approval from the Local Planning Appeal Tribunal, prior to the development actually proceeding, council will be required to manage the planning matters for the site which include the removal of the holding zones, final approval of the site plan and the city will be required to enter into a Community Improvement Program grant agreement for the project.”
The fate of several dozen trees – some planted by Alma students – and the final landscaping will be part of the site plan approval.

Related post:

Alma heritage easement agreement preserves the few remaining remnants

SPEND WISELY

Many small and rural municipalities in Ontario – including St. Thomas – this week received an unexpected financial windfall from the provincial government.
However, administrators in those municipalities are likely wondering what strings are attached.
Well, there aren’t any, according to Steve Clark, Minister of Municipal Affairs and Housing, who announced the one-time investment on March 20.

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Steve Clark

Clark went on to advise, “These allocations will assist in improving service delivery by finding smarter, more efficient ways to spend money that help those who need it most while respecting taxpayer dollars.
“This is part of the government’s plan to support some of Ontario’s small and rural municipalities that may have limited capacity to plan, modernize and improve the way they provide services to their communities.”
Not a lot of clarity there, but as the old adage suggests, ‘Never look a gift horse in the mouth.’
St. Thomas is in line for $369,992, while neighbouring municipalities Central Elgin will receive $604,351 and Southwold $414,626.
The County of Elgin gets $725,000.
In total, 406 Ontario municipalities will receive provincial dollars based on the number of households in a municipality and whether it is urban or rural.
In announcing the funding, Clark noted “Taxpayers need their local government to deliver modern, efficient services that show respect for their hard-earned dollars.
“This funding will help small and rural municipalities improve how they deliver services and reduce the ongoing costs of providing those services.”
Responding to an online query from former Central Elgin Mayor David Marr, Elgin-Middlesex-London MPP Jeff Yurek stressed, “This investment is unconditional. We are providing this money to support municipalities.”
In a media release from Yurek’s office, he indicated the funding supports Ontario’s commitment to reduce the cost of government.
Yurek added, “Our government believes that municipalities are best positioned to determine where and how this money is best spent in order to prepare for the future.”
City Manager Wendell Graves indicated it is too early in the process to determine how the funding will be applied.
Speaking to Graves Friday (March 22) he indicated, “We will be taking a report to council before the end of April that discusses the funds.”
So, any insight into what areas of governance the money can be directed to?
“We’ve seen a little of language around helping to establish strategic direction for the future in municipalities,” advised Graves. “It is fairly vague. But we will certainly be sensitive to making sure it is used as strategically as possible.”
We asked Graves if a portion of the funds could be directed to the mental health initiative being undertaken by city police.
“We’ll look at a lot of things,” said Graves, “One of the things we will be cautious of is this is not really operating dollars, because it is not going to be happening again (it’s a one-time investment).
“Whatever we do, we have to make sure it is crystal clear don’t expect the pot again.”

STAND DOWN

A climate emergency motion tabled by Coun. Lori Baldwin-Sands was buffeted by severe turbulence Monday.
Most members of council, including Mayor Joe Preston, were having difficulty with the implications resulting from the inclusion of ’emergency’ in what Baldwin-Sands referred to as a symbolic motion.
Coun. Joan Rymal touched off the resistance when she admitted, “I really have an issue with the connotation of the word.”
“I don’t want to cheapen the impact of the word emergency,” added Preston. “We are taking huge steps forward, but I don’t think we have to declare an emergency.”
He went on to note the environment, constitutionally, is a federal matter.
Several councilors pointed out the city needs more than a symbolic motion.
“We need a corporate vision on what we can do,” suggested Coun. Peters.
Coun. Gary Clarke agreed, and added, “City staff needs to move to electric vehicles and look at more public transit and urban farming.”
“We need to promote and add to the things we have already done,” noted Coun. Jeff Kohler.
The city manager waded into the fray, as he noted both the new police headquarters and the social services hub under construction at 230 Talbot Street have attained LEED (Leadership in Energy and Environmental Design) silver level certification.
Which, Graves advises, “adds significantly to the costs.”
What is really needed, he continued, is to update the city’s strategic plan.
“This can include environmental issues.”
It was Coun. Clarke who introduced a motion to defer any action on Baldwin-Sands’ climate emergency.
“Let’s take our time with this,” said Clarke. “We need something more than symbolic.”
When it came time to cast a vote, Baldwin-Sands dejectedly raised a hand to join her peers and shelve her own motion for the time being.
Just a thought Lori, if having the city declare a climate emergency is so important and urgent, why did you vote in favour of deferral until who knows when?

Related post:

Alma heritage easement agreement preserves the few remaining remnants

FINANCIAL LIFELINE KEEPS IT GOING

Referring to her as a “vital resource,” St. Thomas Police Chief Chris Herridge has been thrown another financial lifeline as he battles to keep Canadian Mental Health Association response worker Alex Paterson as one of his tools for front-line officers.
City council has approved an $18,000 expenditure that will allow her to remain with the service until the end of June.
She has been on board since Oct. of 2017 when a one-year trial program began. Several extensions ensued, with the latest set to expire at the end of the month.
This latest extension allows Herridge to continue exploring funding opportunities with the province and the South West Local Health Integration Network.
“She has proven to be a worthwhile addition,” praised Coun. Linda Stevenson.
“It is money well spent for every taxpayer in St. Thomas,” added Coun. Jim Herbert.
And Mayor Preston reminded, “This is healthcare funding, not police funding. We need to keep this going.”
We’ll update this story in the coming days with input from Chief Herridge.

Related post:

Alma heritage easement agreement preserves the few remaining remnants

THE READERS WRITE

Foos Basics window muralReader Deb Hardy doesn’t give a hoot about the lack of recognition of this city’s railway heritage at the newly opened Food Basics, as we touched upon last week. You can read the item here.
She posted this week, “Personally I don’t take issue with Food Basics’ lack of railway memorial. I’m not sure how that is pertinent or different from Giant Tiger’s lack of memorial when it was located there. They are investing in our city and employing residents. Yes, they are doing it to make money themselves but what business isn’t?”
All very valid considerations, Deb.

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