FOLLOW THE MONEY: Pelham is ripe for right-sizing


Our Mayor is a forward-thinker. In early May, on the Region’s dime, he flew out to a conference in Seattle entitled, “Congress for New Urbanism,” where many like-minded urban leaders shared ideas for growing their cities in “smart,” sustainable ways. They listened to a number of consultants and urban planners.

One module was entitled “Legacy Projects,” catnip to upwardly mobile politicians seeking to cement said legacies. Quoting directly from conference promotional copy: “Each Legacy Project culminates in a three-day workshop on site to explore opportunities, identify crucial roadblocks, engage local residents in visioning, and generate top-of-the-line design and placemaking strategies and deliverables.”

After consulting my brain trust to decipher this particular code, we focused on two phrases good salespeople use to hook small-town egos. “Generate top-of-the-line design” is the first. Translated, this means “hire us for a small fortune and we’ll design your dream.” And “placemaking strategies and deliverables” means, “we’ll study it to death as you pay us a small fortune, then we’ll deliver the results you want to see your dream through.” It’s easy to dream big on the public purse.

The conference was attended by mayors and administrators of many large North American cities, like Baltimore and Pelham. Just like our Mayor and Council “needed” the Community Centre we are now getting, they now need Pelham to become, well—to become a city, and the sooner the better.

I happened across a document presented recently to the Mayor and Council that provides a sort of early road map to our urban future. This document was from one of the nine “teams” that CAO Darren Ottaway has set up to look into a number of pressing Town issues. One of these teams is charged with addressing the abysmal state of “customer service” among Town staff. (We’re all called “customers” now.)

The team in question was releasing a preliminary draft proposal called “Growing a Stronger Pelham,” or some such title of deliverable visioning. The proposal is in anticipation of bylaw changes to allow for a modern small city. Why we need to become a small city was immediately obvious. Pelham is spending like a small city, so we had better grow the town into a small city so that this self-fulfilling prophecy becomes reality.

A number of proposals were put forward. When a municipality needs more income it can do a few things. It can gamble, like the Town is currently doing on real estate sales and development fees to pay for the new Community Centre. It can do nothing and worry about it later. It can build more to attract investment, or it can improve what it has by growing “smart.” Beyond gambling, the Town also seems to favour the last solution, which involves growing internally.

We know by now that Pelham can’t grow outside the town’s urban boundary because of Greenbelt restrictions. But the town can grow internally. How do we do that? Easy—change the bylaws and allow infills, houses built on any lot available. Allow for lots to be created for micro houses, like they build in Vancouver in alleyways and at the end of driveways. Squeeze in row houses with no yards and laneways in the back, like they built last century in Toronto. Build taller, closer, “smarter.” The Mayor and Council looked forward to the next phase of this report.

However, there is a better solution to our spending problem not mentioned. It’s called right-sizing.

One of the main reasons the Town has a financial deficit of $10.5 million is that we spend too much on governance. Our Mayor and Councillors are forward-thinkers, and forward-thinking takes cash. In anticipation of becoming a small city, we have already hired and are paying now for a small city administration. Pelham has 11 names on the 2016 Sunshine List. This means 11 administrators make over $100,000 in salary. These jobs not only pay well, they come with full benefits and an indexed defined pension. Remember defined pensions? This means you get your minimum pension amount no matter what, and it’s indexed to the inflation rate. In the private sector, employees get a defined contribution pension, if they get one at all. That means you pay into an expensive mutual fund, the employer matches the amount, and you hope for the best.

Let’s follow the money and see if Pelham is ripe for right-sizing.

Niagara-on-the-Lake is about the same size as Pelham. They are also restricted by land use rules. NOTL is a growing, thriving tourist town with stores, restaurants, theatres, and no end of attractions. They have six names on the Sunshine List including a CAO who earns $124,000. In total they spend $680,000 on their senior administrators. NOTL has had a growth rate of 4.6% since 2011. Port Colborne is a growing town again after years of job losses in industry. This industry left them with a legacy of paying for a full-time fire department, so they have 16 names on the list. Remove the firefighters and they have five names on the list, including a Fire Chief. Their CAO earns $144,000. Combined, their administration costs $618,000. Thorold is twice the size of Pelham, growing at 5%, and has 13 firefighters. Their CAO makes $161,000. Combined, their four administrators cost $545,000. Welland is three times the size of Pelham and has a large fire service; their CAO earns $165,000. Welland is growing at 3.3%. Grimsby, with 10,000 more residents than Pelham, has six names on the Sunshine List that make a combined $694,000. Their Town Manager earns $113,000. Grimsby is growing at 8%, the fastest rate in the Region. These towns and small cities are keen to grow and increase revenue just like Pelham and they seem to be doing a good job of it. And they are doing it with leaner, more cost-efficient senior administrators.

What about Pelham? Since you asked, fasten your seatbelt.

Pelham, as mentioned, has 11 senior administrators. In 2014 we had four. These administrators cover every future contingency. We have a Director of Culture and Recreation, $115,600. A Director of Public Works, $127,100. A Director of Human Resources, $134,000. A Manager of I.T., $101,400. A Fire Chief, $145,400—the highest paid Fire Chief of the towns mentioned, by the way. A Director of Corporate Services, $144,000. A Building Inspector, $114,000. A Clerk, $117,000. A Library CEO, $101,000. A Director of Planning, $134,000. And of course a CAO, who comes in at $176,000.

Mr. Ottaway is especially well paid. He is the fourth highest-paid CAO of the 13 separate governments in the Niagara Region. He is just behind the CAO of the Region itself, St. Catharines, and Niagara Falls. His pay, along with the others in Pelham Town Hall, has been rising at the highest rate in the Region. From 2014 to 2016 it has gone up 30%. Pelham’s spending on senior administrators has leapt from $457,000 in 2014 to today’s city-like cost of $1.4 million. Throw in the $1.1 million we spend on consultants, and we spend some $2.5 million of a $14 million budget on salaries and consultant fees alone. Pelham has 17,100 residents and is growing at a rate of 3%. (The numbers above are for 2016. The Town has budgeted an increase of $365,000, or 8%, for salary and benefits increases for 2017.)

Other towns and cities in the Region have civil service jobs basically equal to the ones here in Pelham, but they don’t pay as much, at least not enough for their names to appear on the sunshine list.

When private companies have a revenue problem they right- size. Jobs are eliminated and pay is reduced. Either that or they go out of business. It’s not pleasant, but the alternative is that everyone loses their job.

I suggest that our Mayor and Council create a tenth problem-solving “team” and add a couple of us “customers” to it. If this new team was to right-size Town administrators, we could save quite a lot of money. I suggest that the Town return to the levels of 2014 and keep four administrators at the following rates, which are comparable to the towns and cities around us. The CAO’s pay would be set at $120,000. The Fire Chief at $125,000. The Finance Director at $110,000 and a combined position involving H.R. and other duties at $110,000, for a total of $465,000.

Government administrators like to claim that if you want good people then you have to compete with private sector wages. Fine. If our current administrators don’t like the new pay scale then they are free to get what they’re worth in the private sector, defined contribution plan and all.

Eliminate consultants and make sure that the administrators hired are qualified to deal with these tasks. Eliminate the other positions or downgrade the pay scales to levels comparable to other towns. The $2 million in savings could help pay for the Community Centre, just in case the gamble doesn’t pay off. If it does, then put the savings into one of a dozen other infrastructure projects that need attention—repair Poth Street, properly maintain our town pool, which used by thousands of people. Maybe add a splash pad for the little ones. Taxes could be reduced, reserves could be replenished.

Right-sizing is the answer. Waiting for the town to grow into a city to pay for a city administration in waiting is not “smart” growth.

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