Questions arise over what councillors understand when voting on HWT matters
In the less than 10 seconds it took for the item to be read off at a July General issues committee meeting, Hamilton Council unanimously ok’d the oversight of $15 Million dollars’ worth of waterfront construction projects to the Hamilton Waterfront Trust. Under the terms of the agreement the HWT will collect a ten percent management fee that has been capped at $1.5 Million.
The work in question involves a number of projects required to make Pier 5-8 suitable for development. The city has solicited expressions of interest from developers and has received a number of proposals for the transformation of the area into a mixed residential commercial project.
The July 10th approval was the first time councillors had an opportunity to see the formula under which HWT would be compensated for its management services. The idea of HWT managing the Pier 8 site preparation dates back to 2014 when council approved, apparently without knowing specific compensation terms, a proposal to hire HWT to manage the installation of a pumping station on the site. At the time councillors were told “the identified recommendations have no immediate financial impact,” because the projects had already been approved in the capital budget. But that would mean that whoever drafted the capital budget must have tacked on a management fee for the HWT, in anticipation of eventual council approval.
The original sewer and pumping station project approved by council in 2014 was $2.7 Million. The motion approved read in part: “That staff be authorized and directed to draft a “Terms of Reference” for the implementation and construction of the proposed Pier 5-8 Sanitary Pumping Station, with an upset limit of $2,700,000, and that staff be authorized and approved to retain the Hamilton Waterfront Trust as the Project Manager for the identified project.” There is no reference to the fee that would be coming to HWT.
If the plan was to pay HWY a 10% management fee, for the pump station as now appears to be the compensation formula going forward; HWT would have been in line for $270,000. But the HWT financial statements for 2014 and 2015 show that the agency received $800,000 in fees related to the waterfront project, suggesting the scope of the work had greatly increased from the original $2.7 million. The Bay Observer was unable to find any reference in council records to a request for approval for the increased activity.
Over the years, staff have presented several discussion items to Council referencing HWT as project manager. The reports go into considerable detail in reminding councillors of their previous approvals of various deals with the HWT. In one presentation the staff report suggests HWT will be paid according to the “Project Management Agreement between the City and the HWT dated January 7, 2015.” However, that 2015 agreement was never presented to council. Nonetheless council voted approval. The 2015 project management agreement was provided to the Bay Observer only after the city legal department had agreed to its release. The language of the agreement appears to give city staff considerable latitude to assign new projects to the HWT from 2015 to 2019. It also appears to give staff the authority to negotiate compensation.
The reporting relationship between the HWT and the city has always been spotty. In the early days when the HWT was building trails and flush with cash, there was virtually no reporting, even though the HWT charter called for the release of annual financial reports to the City. It was during this blackout that the Trust first lost its charitable status for failure to file financial report to the Canada Revenue agency. There was also a lawsuit related to a construction accident that was not reported to the city until the City itself was named in a lawsuit, and even then City risk management and legal staff found themselves stonewalled when they asked HWT for information. Eventually the city paid off the suit and recovered the money in installments from HWT. It was also during this period that HWT negotiated a multi-million dollar deal with the Hamilton Conservation Authority to build the Lakeland community centre—a deal that was criticized by the Trusts’ auditors because HWT executive Director Werner Plessl and then HWT board chair Chad Collins were also on the Conservation Board, and Chris Firth Eagland was acting as a contractor for HWT while serving on the Conservation Authority Board. Conservation authority minutes show no conflicts of interest were declared while the deal was being approved.
The HWT relationship with the City will get an airing on October 4th when it is to appear before the General Issues Committee to explain its finances over the past three years. Ward Seven Councillor Donna Skelly told a reporter that she wants the HWT accounting staff and auditor to be present to answer questions.