Comment
Ask questions
It’s the job. The purpose of a member of council is to ask questions. And keep asking questions until you get satisfactory answers. It’s the primary function of any governing body. But who needs to ask questions when you have faith?
For some, it is ‘insulting’ to ask questions, to challenge assumptions, and to ensure the organization it governs does what it says it will do. It is disrespectful. Rude. Instead they implore each other to ‘trust’ their organization.
It’s a misunderstanding of the job they signed up for. Asking questions is the job.
Council got into the loan-making business in a big way last week. (See story on Page 2). It will lend up to $5 million to the Prince Edward County Affordable Housing Corporation (Housing Corp). The term is for five years carrying interest at 2.5 per cent. In Shire Hall’s words, it will use idle cash that would otherwise serve no specific purpose to fund this loan.
The Housing Corp is out of money. It has spent all its seed funding and whatever council has kicked in over the past six years. Its efforts to attract additional federal and provincial funding have dried up. It already owes the County half a million dollars.
There were a lot of ‘unforeseen’ and ‘sad’ and ‘disappointing’ adjectives tossed about to describe how the Housing Corp has ended up with two empty lots and no means to move forward. But there wasn’t much curiosity on the part of council to know how or why. And whether such bad luck portends anything about the Housing Corp’s future.
Instead, council persuaded itself the only choice before it was either to reach into taxpayers’ wallets to lend the Housing Corp. millions of dollars to keep it alive or to admit the Housing Corp was stuck.
This newspaper and this column have consistently argued in favour of a municipal role in cultivating and nurturing affordable homebuilding in Prince Edward County. Nevertheless, this set of facts must prompt a long list of fresh questions.
Has Shire Hall loaned millions of dollars before? Does it have the experience to administer this loan? Manage drawdowns? Ensure the money is being used the way it is intended?
What is idle cash? Shouldn’t idle cash be used to reduce debt in a municipality with more debt than its current assets? Or returned to taxpayers? Why does Shire Hall have idle cash?
How did the Housing Corp find itself in such a dire situation? It has not built a single unit six years after it was formed. Currently, there is no meaningful prospect of doing so.
How will the loan be repaid? If funding agencies aren’t willing to fund the Housing Corp now—what assurance do we have that they will do so after council has sunk a further $5 million into this venture? Or will the Housing Corp. beseech council to reach into taxpayers’ pockets once again to fund the estimated $25 million construction cost of the two projects?
So many questions. A Milford resident asked a bunch. So did your correspondent. None were answered directly. Some were transmuted through council members. The answers were, in the kindest description, incomplete.
It is not at all clear that anyone in Shire Hall has administered a loan of this scale. It is not all clear why Shire Hall has $5 million of idle cash sitting around that it can loan for five years. Or whether this loan will ever be paid back. It is not at all clear that once opened, the temptation to use taxpayer funds this way will prove irresistible to fund future ambitions.
The Housing Corp must answer questions as well. It has struggled to get the old Wellington rink down and the lot cleared. Cost overruns. Unforeseen challenges. Does the board or management have the requisite experience, skills, and capacity to develop, build, manage, and operate a 40- and 12-unit apartment building? Does it have the means to get this project across the finish line?
Given the lack of progress so far, these are fair and reasonable questions. For the folks overseeing the public purse, asking hard questions isn’t insulting—it’s your job. Perhaps there are explanations. Perhaps the challenges were truly one-time in nature, and the worst is behind. But to know this, council must ask questions. And keep asking questions until it gets answers that make sense.
If they believe their role is to rely upon ‘faith’ and ‘trust’ in the organization, do we really need council? What, after all, is its purpose?
The County’s Treasurer may be charging interest at 2.5% to PECAHC, which they’ve recently absorbed into the County structure (apparently, instead of the arms-length corporation that was set up in 2018). Sounds awesome, right? After all, the County apparently has “idle cash”, according to the report used to justify Council’s decision.
Per the County’s most recent available Audited Financial Statements, the County had a cash pile of over $45.9 million. But where did that cash come from?
In the same Statements, you can see that the County owed Ontario Infrastructure and Lands Corporation (Infrastructure Ontario) over $13.1 million at OILC’s “prime rate” (not disclosed). The Bank of Canada prime rate was 7% as of the date of the Statements.
Note: OILC is the Province of Ontario — yes, that’s right — we are uploading “revenue” to the Province in the form of the interest that is charged on those loans. In a Municipality, “revenue” comes from higher taxes.
This is shown as “Temporary Borrowing” in the Statements. Temporary? The previous year, this figure was over $11.4 million. Seems like this is a new way to raise cash. Just borrow it, and let taxpayers pay the interest.
1) Are County taxpayers OK with the Treasurer borrowing money at 7% and lending it out at 2.5%, and paying for the interest by way of higher taxes?
2) Are County taxpayers OK with the fact that this “loan” is simply an internal transfer of funds from one segment of the CAO’s office to another one — and any “interest income” is also simply an internal transfer?
3) Are County taxpayers OK with uploading a million or so per year of interest payments on Temporary Borrowing, to the Province?
4) Are County taxpayers OK with Finance claiming a “cash pile” that has been built with borrowed money as well as higher taxes?
In case anyone wants to see for themselves, the latest available Audited Financial Statements are at https://www.thecounty.ca/wp-content/uploads/2023/10/2022-12-31-Prince-Edward-County-Cons-and-Trust-wFS.pdf.
If County taxpayers remain silent on this, then they have essentially given Staff the green light to continue this practice, and the ballooning spending will continue.
All this while there has been zero progress towards affordable housing in 6 years, and nearly $600K spent by PECAHC.
Council says they trust Staff. Is that good enough? You, the taxpayer, gets to decide.
And if no one asks any questions, then taxpayers can just keep on paying, and avoid complaining when the next round of tax increases is even higher.