We deserve better from City Hall
Taxpayers deserve a City Hall that fosters a culture of accountability, responsibility
The road to hell is paved with the 20/20 hindsight of the best laid plans gone awry.
Or something like that. Which may explain how an innovative plan to help the City of Edmonton’s planning department weather the ups and downs of a boom economy ended up creating an unaccountable cash pot, one that city bureaucrats repeatedly starved and raided to cover off (and cover up) a wide range of inappropriate expenses.
A damning report by city auditor David Wiun, presented to city council’s audit committee this Wednesday, makes for some grim reading.
The current planning branch of the city makes money by issuing development permits. In good times, when builders are building, revenues soar. In fallow years, when the economy constricts, building permits taper off and not as much money flows in.
So in 2010, the city decided to set up a “current planning reserve” fund. The idea was to put surplus funds from good years into the reserve pot — and then draw funds out of the account in lean years, to make up deficits. The money isn’t property tax revenue. It comes from fees paid by developers — and it was supposed to be used to improve service, to make it faster to get development permits.
By 2012, there was $26 million in the reserve. The fund was exactly on target. The goal for 2017 was to have a nest egg of $46.2 million in the reserve fund.
Instead, there’s just $5 million in the pot. And there’s been no improvement in the speed at which developers get their paperwork handled.
The lack of cash in the kitty can be attributed, in part, to the economic slowdown of the last couple of years.
But that’s not the whole problem. During the boom years, city administrators diverted funds
that should have gone into the surplus saving account for all kinds of other expenses.
At the audit committee meeting this week, Coun. Bev Esslinger called the whole model a slush fund. That may be harsh. There’s nothing in Wiun’s report to suggest the money was used for speed boats or parties.
And council itself certainly isn’t blameless.
In one case, city council explicitly authorized and directed robbing the piggy bank, passing a motion to divert $2.5 million a year from developers to another government branch.
“Previous councils didn’t want to pay for things,” Mayor Don Iveson concedes. “They’d loot the stability reserve to try to shave a decimal point off the tax levy. A lot of games got played with budget optics, and we’ve put an end to that.”
Meantime, there were no clear lines of accountability or responsibility. With millions of boom dollars pouring in, there was no one providing oversight when things went off the rails.
And off the rails they went. The most egregious situation in Wiun’s report involves $8.5 million spent in 2015 on a failed information technology project, one that was kiboshed because the contractors didn’t deliver on time — and because there was a “perceived conflict of interest” in the awarding of the contracts.
All the contracts were cancelled. And then, the department spent another $5.3 million — and counting — to have the job done properly.
And with accountability so loose and slushy, the $8.5 million boondoggle, and the allegations of conflict of interest, were hushed up.
It wasn’t until late February, almost three years after the fact, that Leanne McCarthy, the deputy city manager, discovered the allegations and reported them to the auditor. A separate audit, and an investigation by corporate security, are now underway. The Edmonton Police Service is also involved.
No one has been fired or reprimanded. And McCarthy stresses the conflict of interest was only “perceived” — not proven.
Iveson calls the whole thing “unacceptable.”
“If there are allegations of conflict of interest or fraud or worse, they should have been investigated three years ago, not after the fact,” he said.
For years now, the city has been conveniently blaming its various management screw-ups on Simon Farbrother, the city manager who was let go in 2015. But that excuse is wearing thin. Iveson said the problem is a corporate culture that predated Farbrother, one that’s proven hard to change.
“We’ve had a culture of people not being held accountable,” he said. “It’s incredibly frustrating for me to see how slow progress has been. I didn’t realize how bad it was four years ago when I became mayor. But audit after audit has shown how deep the problem is.”
But Iveson isn’t the only one who’s frustrated with the managerial missteps, the ethical blind spots. And with each audit, Edmontonians grow more cynical about the people who are supposed to be running this city for the common good. Corruption? Incompetence? As citizens, we shouldn’t accept either from our public servants.