The Bay Observer has published several stories describing the operation of the Hamilton Waterfront Trust, and the special status it enjoys with Hamilton City Council. Since its inception the HWT has operated largely outside any public scrutiny while receiving sole-sourced contacts from the City valued in excess of $10Million. City staff admit that the practice has been to write cheques to the HWT on the strength of invoices provided by the HWT with no attempt by the city to verify actual costs. Sometimes the city has up-fronted cash to HWT. In addition city staff initiated paying management fees to the HWT without a council vote. In past Bay Observer stories it has been revealed that:

• HWT inflated the value of the Beach Trail project allowing it to draw down more money from a provincial funding formula than it was actually entitled to claim.

• Received a rare adverse opinion from its auditors, who identified questionable financial controls and possible conflicts of interest. Since its inception HWT has used three different auditors.

• Has posted accumulated operating losses of $1.4 Million

• Engaged in nepotism and cronyism in providing jobs.

Recently city staff presented a report to the city General Issues Committee recommending another sole-source contact to the HWT—this one to oversee the engineering around installation of a pumping station on Pier 8 as a first step in making the property serviceable for what will eventually be a massive industrial and commercial development worth potentially half a billion dollars. The report was not clear on how much would be paid to the HWT. By way of background just three months ago Council passed a new purchasing policy that set out strict guidelines for sole-sourcing. That prompted the following exchange of emails, starting with our request for an explanation of what appeared to be a deviation from city procurement policy:

From Bay Observer

To: All members of Hamilton City Council

Dear Councillor;

I am hoping somebody can assist me in understanding the city’s procurement processes:

The bylaw which was recently enacted says this with regard to sole source procurement:

Subject to Policy # 2 – Approval Authority, the General Manager of the Client Department

will approve the Non-competitive Procurement Form, justifying the need to use this Policy

# 11 prior to City staff entering into any discussions with any vendor regarding the

purchase of the Goods and/or Services. This process may be adopted when any of the

following conditions apply:

(a) when Goods and/or Services are judged to be in short supply due to market conditions

(short supply);

(b) when a single source for the supply of a particular Good and/or Service is being

recommended because it is more cost effective or beneficial for the City (single source);

(c) where a City Contract has expired or will very shortly expire and unforeseeable

circumstances have caused a delay in issuing a new RFP or RFT so that a Contract

extension is required (contract extension).

 

(2) Council must approve any requests for negotiations with a single source as set out in

subsection (1)(b) of this Policy # 11, where the value of the proposed procurement is

$250,000 or greater.

My question is how does this policy square with the sole source consulting contract that is being recommended in PED14002 for the Hamilton Waterfront Trust (passed without discussion last week) or more importantly the $3 Million council voted for the waterfront skating rink and the $1 Million approximately for additions to the Williams Coffee Fresh building. Reading the legislation I see none of the conditions in subsections a,b,or c. applying:

My Questions are:

1. Was council permission sought prior to entering into negotiations with the Waterfront Trust?

2. The exceptions that permit sole-sourcing appear to be quite narrow:

goods and services that are requested are in short supply–clearly that does not apply here

sole source option is more cost effective: how would you know without getting a competitive bid, and since the city has never done any kind of cost-benefit audit on any of the projects it has sole sourced to the HWT in past, there is no verifiable track record?

unforeseeable circumstances–Pier 8 works have been on the books for a decade.

Given the above what is the justification for this transaction?

Thanks for your assistance;

Regards

 

John Best

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The only councillor to respond directly was Councillor Tom Jackson, who replaced long –time HWT chair Chad Collins after the 2010 election. Jackson, who serves on the HWT board along with Councillor Jason Farr, is a staunch supporter of the HWT. He has suggested in past that the current system of waterfront trails and amenities would not have been possible if the city had undertaken the works.

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From: Jackson, Tom

Cc: all councillors, City Manager Chris Murray, Head of Finance Mike Zegarac, City Waterfront Coordinator Chris Phillips and City Clerk

Subject: Re: Sole Source Procurement HWT

Dear JOHN….Thanks for expressing your curiosity on the above and I appreciate you giving me the “weekend off”!! Okay, here we go. You may have missed it, but back in January of this year, Chris Phillips presented an outstanding update and presentation to GIC on Jan.27/14, on several “Servicing fronts and Waterfront Initiatives”, including the status of the HPA agreement for transfer of Piers 5 to 8 back to the City; also, the future revenue opportunities (10s if not 100s’ of millions of dollars) for future appropriate projects on these lands for the City when investment of many varieties will occur in the future; and our (the City’s) successful utilization of the HWT on a variety of past and current projects…a current one being the “design” of the new “pumping station” worth $500,000., that had been previously approved by Council last year for that “design” work to be carried out by the HWT. Chris’ report had a 2-part recommendation in January that was amended with a (c) part, (that if memory serves me right and if not I’ll apologize, that Councillor McHattie moved and I seconded, and, please check with City Clerk’s for the exact wording John)….that the City continue to utilize the past arrangement with the HWT…. “By authorizing the extension of the current management agreement with the purpose of expediting the specific West Harbour and Waterfront Strategic Initiatives as approved in the 2014 Capital budget”…..(For example, like the “pumping station”), moving forward and these various projects be brought back for GIC consideration. That amendment was approved unanimously. Then, the Deputy Mayor (Councillor McHattie, who had stepped out of the Chair to move the amendment), asked for someone to move the main motion as amended. Again, if memory serves me well, Mayor Bratina moved the main motion as amended, seconded by Councillor Powers, and it was unanimously carried (the Clerk’s minutes should confirm this). It was subsequently approved without recorded dissent at the following City Council meeting on Jan. 29/14 too!! In essence, the City is utilizing the expertise of the HWT and, with the decision this past week at GIC, going to Council next week on the “building” of the “pumping station”, since the HWT did the “design” work, to me (and for GIC members who were in attendance this past week), it made sense the HWT “project manage” the building of it as well now, estimated at approx.$2.7m.. That’s what is before Council Wednesday, recommended unanimously by GIC, adopting Report Item#8.11, that was recommended by staff to begin with last week. So, again, City staff took direction from Council, after that unanimous ratification at the end of January. As well John, at the end of the day, on any policy matter and in spite of any existing City policy, Council is supreme and can override its policy if it deems it necessary or appropriate or beneficial. However, in this situation, Council gave its authorization for staff to proceed with an extension of the current Management Agreement with the HWT as recorded in January. Hope this helps and bye for now John, Councillor Jackson….

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The Bay Observer had been advised that there was no formal management agreement between the City and HWT so we replied as follows:

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From: John Best – Bay Observer [mailto:john@bayobserver.ca]

Sent: March-24-14 5:10 PM

To: All council and senior staff

Thanks Councillor ; Your note quoted the staff report as follows: “By authorizing the extension of the current management agreement with the purpose of expediting the specific West Harbour and Waterfront Strategic Initiatives as approved in the 2014 Capital budget”…

Is there a current management agreement with the HWT, and is it available? I know there is a current practice in place of paying HWT a percentage on projects the city asks it to do. But I was advised that the arrangement was never presented to council, that it was apparently worked out between HWT and city staff. I think in the previous complete year available it resulted in about $182,000 going to HWT. With regard to the sole-sourcing aspect, I take your point that council has the power to override its own policies, but in the case of last week’s vote did councillors realize they were overriding the city purchasing policy?

Rgds

John Best

Publisher Bay Observer

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From: Jackson, Tom

Sent: Monday, March 24, 2014 5:29 PM

To: John Best – Bay Observer ; Council and Sr. Staff

Subject: RE: Sole Source Procurement HWT

DEAR JOHN….Will never speak for my Council Colleagues, but I have found them individually and collectively, to be “on the ball and sharp as a tack” on any topics of deliberation!! But, I refer you back to the motion as amended on January 27/14, unanimously approved, then ratified at Council on January 29/14, without dissent, that authorized staff to carry out the continued arrangement with future projects with the HWT. You may wish to consult with the mover and seconder, of both the amendment (McHattie/Jackson) and the main motion as amended (Bratina/Powers) on January 27/14, or of course the other 12 Council Colleagues, if they realized what they were doing with the main motion as amended. The “pumping station” project, which is really needed to provide for more development along Piers 5 to 8, is exactly City staff being transparent and following through on Council direction, bringing that project back to GIC, which they did last week, again gaining approval without dissent, for those members that were present. That’s about all I can add further John. Bye for now, Councillor Jackson…..

Tom Jackson

Councillor, Ward 6

Tel: 905-546-2707 905-546-2707

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The weapon of choice at Hamilton City Council against anyone who questions the HWT is the standing recorded vote, where councilors stand and their vote is counted. It can be highly symbolic if a councillor finds himself or herself on the wrong end of a 15-1 vote. It was employed against former Mayor Fred Eisenberger and more recently applied to Mayor Bob Bratina. In his correspondence with the Bay Observer councillor Jackson more than once drew attention to the fact that council was unanimous in its support for the HWT.

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From: John Best – Bay Observer [mailto:john@bayobserver.ca]

Sent: Wednesday, March 26, 2014 10:15 AM

To: Jackson, Council, Sr. Staff

Subject: Re: Sole Source Procurement HWT

Thanks for your response Councillor. I didn’t see an answer to my question about whether there is an existing written agreement between the city and HWT that is now being extended by virtue of the motion council will deal with today, or whether it is an informal arrangement. I take your point about council being unanimous on several occasions in support of HWT, which is somewhat perplexing from a public accountability standpoint given the following:

• HWT has accumulated operating losses of $1.4 million since its inception

• Between 2002-2013 city has sole-sourced HWT more than $10.6 Million for various construction projects with no verification of actual expenses or any apparent oversight whatever.

• In addition the HWT has gone through the $6 million they started out with.

If the argument is that sole-sourcing projects to HWT is more cost-effective than following the city purchasing policy, it is difficult to find the evidence, given that none of the above was put out to competitive tender.

John Best

Publisher Bay Observer

905-522-6000905-522-6000 x 104

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From: Jackson, Tom

Sent: Wednesday, March 26, 2014 10:36 AM

To: ‘john@bayobserver.ca’

Subject: Re: Sole Source Procurement HWT

Dear JOHN….Thanks for your further reply. I respect your opinion, however, I’ll simply leave it for me, from my standpoint alone, that you and I have a differing view of the value the HWT has done for this Community. I do appreciate you acknowledging my point on “unanimity”!! Bye for now, Councillor Jackson…..

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On March 26th, the sole-source HWT contract went to council for final approval . Following an intervention from Councillor Brad Clark, the motion to let the contact to HWT was amended to call for the drafting of a management agreement between HWT and the city– something that had been absent for the past 10 years of activity and only after  the expenditure of more than $10 Million in public funds. As the matter came to a vote Councillor Jackson was heard to call for a standing recorded vote by his council colleagues. Councillors leapt to their feet. Following the vote Jackson sent the following email to the Bay Observer:

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From: Jackson, Tom

Sent: Wednesday, March 26, 2014 10:56 PM

To: john@bayobserver.ca ; Council, Senior Staff

Dear JOHN….Just an update thru our City Council meeting tonight, that is still ongoing….Councillor Clark was courteous enough to approach me before tonight’s meeting in my office with GM Zegarac of Finance to discuss an amendment Part (C) to the original GIC motion from last week, that you previously queried. It ultimately was approved unanimously tonight that reads…”That staff be authorized and directed to negotiate all necessary agreements in a form satisfactory to the City Solicitor, including management agreements in relation to all work that the HWT is retained to support, including implementation and Terms of Reference and construction of the proposed Pier 5 to 8 Sanitary Pumping Station.” Then, the main motion as amended, was carried unanimously in a standing recorded vote by 14 members of Council present at that moment, with no dissenters. Councillor Powers, who has been a big supporter of the HWT’s work over the years, was absent due to representing us tonight at an AMO meeting. Mayor Bratina had to step out of the Chamber for awhile and missed the vote, but, was gracious enough to pull me aside when he came back into the Chamber to tell me I did a good job on the HWT matter. I thanked the Mayor respectfully. Hope this further helps and bye for now, Councillor Jackson….P.S….Werner Plessl was advised of this amended change proposed tonight for a “management agreement” and was more than pleased and offering his cooperation….Tom….

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Our reply: Thank you councillor. This exchange has provided some useful insights into our city’s operations.

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Questioned after the vote Coun. Clark was asked if the management agreement will simply enshrine the past business practices between the City and HWT including sole-sourcing. He replied that he thought council would take a more critical look at any such deal. If so it will be a major departure from what up until now has been a level of unanimity by this council when the HWT is at issue; that is more reminiscent of a scene from  the North Korean Parliament than a democratic local council meeting.

John Best had enjoyed a lengthy media management career, in television and radio and now print. As Vice President, News at CHCH in Hamilton, John oversaw a significant expansion of the news operation. He founded Independent Satellite News, Canada’s only television news service providing national content to Canadian independent TV stations. John is a frequent political commentator on radio and television, a documentary producer and author of a book and numerous articles on historical and political subjects. John is a past recipient of the New York Festival’s award for writing in the International TV category.

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