By Sheri Regnier
Not a good plan to spend unless there’s cash in the bank – especially when the bill is paid with tax dollars.
After two years of scrutiny, B.C.’s municipal auditor released Rossland’s “Part Two” audit Thursday morning that focuses on the city’s fiscal management – or lack thereof, during costly infrastructure projects from 2010 through to 2012.
Auditor general for local government, Basia Ruta — who has since been fired after supervisors ‘lost all confidence’ — says the City of Rossland undertook major expenses without having project funding fully in place. Lack of a systematic approach and cohesive planning for capital projects, such as 2012’s major upgrades through Rossland’s main drag, dug the city into a $3 million-plus general operating deficit later that year. The following year, the city borrowed $4 million to replenish the $3 million shortfall before securing voter assent through the Alternative Approval Process (AAP).
Ruta noted that approval of long-term borrowing is not assured until the AAP is complete, and deems the approach “risky” to fund such a major expense.
(The City of Trail tried the AAP to obtain a $5 million pipe/pedestrian bridge loan last year. With 10 per cent of Trail electors signing a counter-petition, the action was quashed and the matter pushed to an August referendum)
Rossland Mayor Kathy Moore, who served as councillor for six years, acknowledged that the city’s infrastructure renewal plan wasn’t adhered to during capital decision-making, in particular, the Columbia-Washington St. project.
Moore’s summary letter, available for viewing with the auditor’s report at www.aglg.ca, outlines council’s reasoning to proceed with multi-million main street project even though less than $2 million was secured.
“It was a priority not only due to the age of the underground infrastructure,” she writes. “But also because we could take advantage of the fact the Ministry of Transportation had scheduled to repave their highway through our downtown.”
She maintains that digging up the freshly paved downtown at a later date, when the city could afford it, “made no sense.”
The audit highlighted the need for adequate resources in all municipalities to manage and invest in infrastructure, Moore added. “The irony is that not only do small municipalities often lack qualified manpower resources, they also lack financial resources.”
While Ruta noted Rossland took a step toward capital asset management during the audit period, she says the initiative was not maintained and 2014 capital projects deemed “urgent” hadn’t been addressed.
“The city’s files did not explain why this was the case,” she wrote, noting that “urgent” repairs ($290,000) to the Rossland Miners Hall were never done. “Again, the city’s files did not include documentation of the rationale for not proceeding with the recommended work.”
Overall, Ruta noted evidence of a limited systematic approach to decision-making on capital projects, narrowed the city’s ability to direct funds to areas of highest priority.
She stated, “In our view, the city’s relative lack of capital asset information made it difficult for council to make fully informed capital project decisions.”
Ruta confirmed that project selection for the five-year capital plan was performed by the chief administrative officer, sometimes in consultation with other city staff, but involved little documentation.
The apparent disconnect between staff and elected officials calls into question whether council had adequate information to make fully informed decision.
“It also puts the community at risk in terms of effective use of tax dollars and value for your money,” she added.
Ruta re-visited the 2010 case of the Rossland Arena roof repairs, when tenders came in much lower than anticipated. “City staff did not ask council to chose between spending less on this project,” the auditor explains. “Thereby reducing costs to taxpayers or freeing up funding for other projects.
“Instead, staff acted without council approval to spend funds on additional work they selected without the involvement of council.”
A shake up in city staff coincided with the release of the auditor’s summary.
Tracey Butler, the current chief administrative officer (CAO), is on her way out after recently stepping into the role due to prolonged leave of current CAO Cecile Arnott.
“She has been a hard-working and dedicated employee both well-liked and respected by her peers,” said Moore in a Thursday press release. “In the short term, council will be working with city staff to oversee city hall operations,” she explained. “Council is in the early stages of seeking out a temporary CAO to take leadership in the city’s management.”
The auditor’s final report follows a “Part One” made public in April 2014.
What was set out to be an unbiased look at projects carried out by the City of Rossland resulted in a hurtful report, according to then-mayor Greg Granstrom.
“We all need help but we don’t need to get poked in the eye when we ask for it,” he said following the first report. “I think this information could have been presented in a more constructive manner.
He was referring to the scathing report that concluded city staff did not adequately protect the interest of its taxpayers, backing up this claim mostly by noting the city did not get value for its money on the Rossland Arena roof repairs.
The information wasn’t new to Rossland, which at the time was in the midst of suing its former building inspector in hopes of recovering unaccountable funds from the project.
In fall 2011, the city discovered that then-employed Jason George Ward was not only the city’s chief building inspector but he was also involved with a business called ADA Co. Inc. which had been doing construction work for the city.
The city investigated and confirmed that about $182,000 had been paid to ADA, in relation to work done on the arena, when the alleged value of work was substantially less (estimated at about $50,000).
Rossland invited the auditor to assist in identifying system improvements as a result of what occurred with its former building inspector.
In return, the city received a detailed audit that not only highlighted alleged missteps and misfortunes with the arena project but also noted a difficulty determining whether the same was true for the Columbia-Washington infrastructure improvement project.
“The city and the auditor have to disagree on the accounting of the (Columbia/Washington) project,” Granstrom said in a May Trail Times interview. “The project was on time, on budget and we told the residents from the onset that it would cost them between I think it was $76 to $300 on their taxes per year on an average house.”
Upon completion, the $6-million project resulted in the average taxpayer paying $114 more on their municipal property taxes in 2014, a seven per cent hike for the city’s debt incurred.
“We have to multi-task and quite frankly we do it well,” said Granstrom in the previous interview. “Perhaps we don’t do it to the standard of an auditor general but I can tell you the standard is high that I see everyday and same goes for the accountability that we provide to our citizens.”
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The Auditor General’s report offered three recommendations to assist Rossland in its efforts to enhance its long-term management of the City’s capital assets
Recommendation 1
The City of Rossland should develop and implement a systematic approach to capital asset management
Recommendation 2
The City of Rossland should improve its capital asset information, risk assessment and planning by:
• Completing the process of assembling information on its capital assets and update it on a periodic basis in the future
• Undertaking a thorough risk assessment of its capital assets and address them with an appropriate action plan.
• Assessing its capital asset needs, including consideration of desired service levels.
Recommendation 3
The City of Rossland should enhance its planning and approval process for capital projects by:
• Adopting a consistent and structured decision-making process for all capital projects, including objective prioritization of proposed projects
• Assessing the impact of each proposed capital project on the City’s operating budget
Building a capital asset management revenue model.
• Developing a capital asset management investment plan to ensure that capital funding is fully in place prior to launching each capital project.
