No reason for further delay in investment decision

While a $60-million investment decision should take some time, Peterborough city council has reached the point of unnecessary delay.

Eight months ago, council heard six proposals from investment firms and community agencies bidding to manage proceeds from sale of the city’s electricity distribution network.

The total amount in play is $57.9 million, with up to $6 million more coming once final details that affect the price the buyer, Hydro One, will pay are worked out.

Assuming that final price is about $60 million, every month the money sits in a standard interest rate account represents $150,000 in lost revenue.

Or at least that will be the case if council eventually follows the advice of a committee it set up last June to recommend how the money should be invested.

That advice was about as expected: give half to a non-profit investment banking firm that specializes in handling money for municipalities and half to the city-owned utility company to invest in renewable energy projects.

The bankers, ONE Investment, say they can produce a three per cent net return. Peterborough Utilities Inc. is promising six per cent. That’s an average 4.5 per cent annually.

The city’s “high interest” savings account would be paying no more than 1.5 per cent since the money arrived last August.

The difference in those returns works out to the lost $150,000 monthly.

Perhaps there is a good reason why the committee of staff and council members took eight months to report back, but the time frame seems excessive. There is no good reason to build in any more delays. Council appears to be going down that path, however.

The committee’s recommendation is solid. ONE Investment will provide a conservative mix of fixedincome assets. PUI has been providing annual dividends in the six per cent range for years from hydro and solar projects.

The four other contenders have cases ranging from reasonably strong to fairly weak. The common theme among their shortfalls is that they would use the money to supply programs or services similar to what ONE Investment and PUI are offering, but not as well.

Instead of accepting that advice, councillors decided to hear from the other four bidders one more time.

The re-do was driven by a late campaign by the Community Foundation of Greater Peterborough, one of the bidders. A majority of council then decided that if they were going to hear from one they would hear from all.

Each of those four gave detailed presentations last June. Nothing substantial would be expected to change.

The Community Foundation is asking for a minimum of 20 per cent of the cash — likely $12 million. It would review applications from local groups for community improvement projects and pay out $600,000 annually in grants while growing the principle each year.

The city already has a similar in-house process for community grants. If it wants to hire the foundation to run that process, and perhaps add some money from revenue generated by ONE Investment and PUI, that will be a decision for another day.

The other timing issue is that the city wants more details from both ONE Investment and PUI.

Council needs to get those reports at the same time it hears from the other bidders, if not sooner, then finalize an investment decision that should already have been made.