Case study

For the two dozen new candidates seeking a council seat, and for those playing along at home, the case of the burnt-out bathrooms in Ameliasburgh Park presents a timely and informative window into the workings of council and Shire Hall. Consider it an early primer.

The facts are these: On May 16, 2017, public washrooms at Ameliasburgh Park were destroyed by fire. The replacement cost was pegged at $62,500. That amount was earmarked in the 2018 budget. The scope of the project, however, grew in the intervening months. New park storage capacity was added. A new septic tank was required. A fresh estimate in June revealed the cost to replace the Ameliasburgh Park washroom had risen to $78,087.

Tenders were released that month to rebuild the washroom. The low bid was $159,194. (The other bids were $198,400 and $198,600.)

The County’s insurance would have only paid $62,500, the book value of the building. But the County’s deductible (the amount under which it won’t make a claim) is $100,000. So there will be no claim.

Last week, council approved the spending of $159,194 plus a contingency amount of $15,900 for a total of $175,054. Plus HST. On a washroom.

ANALYSIS
Our case study presents a couple of topics for examination: Does the County’s procurement system (the way it buys things) work on smaller projects? Are we getting the best value for taxpayer dollars? Can we do this better?

The second avenue for exploration is this: What is the implication for the County’s 87 other buildings? Have we vastly underestimated the replacement value of these properties? And does it matter, since we have neither the resources or reserves to maintain them currently? What does it tell us about the County’s overall financial condition?

COMMENTARY
Four toilets, one urinal, some storage, a couple of changerooms, some mechanicals. A 440 square-foot concrete block building with an asphalt roof and a porch on two sides. $175,054. $397 per square foot. It seems like a lot of money.

I expect there are a great many small builders and contractors in our midst who might have built it for less. Granted, this is speculation, but it is supported by the fact that the County’s own month-old estimate assessed its replacement cost at less than half the amount you and I will ultimately pay for this washroom.

Many of these contractors either can’t or won’t wade through the municipality’s cumbersome procurement process—an entangled thicket of security and documenting requirements. Small builders and contractors simply can’t afford the time or they lack the patience and resources to do business this way.

Over time these outfits get weeded out, leaving only a select group of folks skilled at navigating the County’s tendering process. Only three contractors submitted bids to rebuild the Ameliasburgh washrooms. The winning bidder was Standard Paving Limited, from Trenton.

So, prospective councillors, you may wish to consider perhaps a better procurement process. The County spends a lot of money each year. Your money. This year, Shire Hall has been approved to spend $15.7 million on capital projects (roads, buildings, computers and such) and another $3.6 million in waterworks capital (pipes, pumps, meters, buildings and the like).

What if we could shave a quarter of this cost by buying better? That equals the best part of $5 million a year. Something worth aiming for?

There is still the matter, however, of the 87 other buildings we own. This points to a more troubling problem. At this point, we must zoom out from the County’s micro finances to consider the macro challenge. It’s a big one. You will want to be sitting down for this.

The County has assets valued on its books at about $678 million—including roads, bridges, waterworks plants and buildings. (This from a 2014 study prepared for the County by KPMG, a consultancy.) These things are deteriorating faster than Shire Hall can fix them. It has neither the taxing or borrowing capability, nor the reserves to fund its crumbling assets.

So council makes decisions, such as approving really expensive washrooms in Ameliasburgh, in a haphazard, self-deluded manner. Council knows, or should know, it doesn’t have the money to rebuild its assets— let alone paying twice the estimated replacement cost—yet it gives projects like this the green light regardless. Without regard to the big picture.

Council has no method, nor has it given serious consideration to how it intends to extract the municipality from this looming financial house of cards.

In the meantime, it operates in full-on denial. It blithely kicks the big problem down the road a bit further, so council can be seen to be solving a small problem this week. In doing so, it makes any long-term solution much harder to attain.

Review and discuss.

rick@wellingtontimes.ca