The Hamilton Waterfront Trust posted a $200,000 loss on operations and an overall $600,000 deficit for the year 2017, despite receiving $100,000 as a management fee for overseeing sole-sourced construction work on the waterfront development. In addition Council has approved roughly $14 Million in sole-sourced construction contracts to HWT for which it will receive an undisclosed management fee.
Starting in 2018 the HWT will start receiving the first of 15 annual payments of $230,000 from the City to buy out the HWT lease on the former Discovery Centre. The transaction raises the question of whether the city is buying something it already owns from an organization that is no longer at arms-length, if indeed it ever was. A 45-year lease agreement was struck in 2010 between Parks Canada and the Hamilton Waterfront Trust, but reports at the time said the Trust was acting on behalf of the city. Recent governance changes made the HWT a creature of the city, with all of its directors appointed by council. Previously HWT had nominally, at least been a joint venture with the Hamilton Port Authority who appointed one member to the HWT Board.
The lease buyback is reminiscent of another transaction in 2011 when a cash-strapped HWT sold the Zamboni used to groom the ice on the Waterfront rink back to the city a year after the city had advanced money for the purchase of the machine in the first place.
The financials also show that the HWT has sunk about $230,000 in legal fees to defend itself against a multimillion dollar lawsuit launched by the former tenant Sarcoa Restaurant. The dispute has also resulted in $156,000 written off as bad debts.
At a recent all-candidates meeting Ward 2 councillor and HWT chair Jason Farr defended the agency against some criticism from the audience saying he was proud of the organization. Nonetheless, a new deed of trust between the city and the HWT has been drawn up that appears to subject the agency to tighter council control. Among other things the new arrangement:
- provides the City with the authority to dissolve the Trust on 12 months’ notice;
- imposes a monetary limitation of $250,000 on the HWT’s ability to conduct transactions without City approval;
- grants City Council the authority to resolve a deadlock among HWT Board Trustees;
- requires the HWT to provide an annual report to City outlining its Annual Audited Financial Statements, its 10 Year Capital Plan, its Strategic Plan and any changes to its organizational structure.
The changes, particularly the dissolution clause, effectively place HWT under council’s direct control.