Pelham says it will no longer cooperate with Region's review of Town finances
BY SARAH WHITAKER and DAVE BURKET The VOICE
The Town of Pelham has drawn a “line in the sand” over allegations of impropriety within the financing of the new Community Centre and an alleged development charges scheme.
Councillors approved, unanimously, a motion that states Council and staff "categorically deny all allegations"; that the Town will no long participate in the Region's review of Pelham's finances, as "it lies outside their sphere of jurisdiction"; and which demands the review "be ended immediately.”
"They have no business in our business," said Councillor Peter Papp, who seconded the motion, noting that Town Council, not Regional Council, is legally and legislatively responsible for what happens with the Town's finances.
Councillor Gary Accursi tabled the motion following a presentation by CAO Darren Ottaway in response to a July interview with the developer Rainer Hummel, published in the Voice, as well as Hummel’s late June presentation to the Region regarding his concerns over Pelham's financing of the Community Centre.
Ottaway, accompanied by Town solicitor Callum Shedden, went through each "key fact" one-by-one, asserting that all but one of the 28 claims made by Hummel was refuted. The one claim Ottaway did not refute was the absence of an entry regarding a transaction in the Development Charges Reserve account, noting the transaction referred to by Hummel was not in the Development Charges Reserve and therefore an entry for it doesn't exist.
The CAO noted that for some of the allegations to be true it would require a "significant conspiracy" between Town Council, Town staff, the Town solicitor and the firm he works for, the development company Fonthill Gardens, and the law firm of Sullivan Mahoney, which created agreements that were presented to Council.
Each of these firms, said Ottaway, has its own checks and balances in place and it would be “impossible” for such collusion to exist.
Ottaway also pointed out that Hummel claims the Town borrowed money for Community Centre construction but used the funds to buy back development charges credits already issued when the Town decided to cease its land-for-credits scheme. The claim ties together two separate transactions that took place at the same time but are not connected. They're tied together, said Ottaway, to create a story.
Calling the Hummel presentation to the Region an "extension of the [Regional Councillor David] Barrick motion," and, "politically motivated rhetoric,” Councillor Accursi asked how the issue falls within the Region's jurisdiction.
Shedden said both the motion made by Councillor Barrick and Regional Council allowing Hummel to make a presentation do not fall within Regional jurisdiction at all, adding he doesn't know why the Region has taken on the issue or why it's dragging on so long.
"It doesn't make sense to me from a Municipal Act point of view," said Shedden.
Members of the public were afforded an opportunity to ask questions during the Town’s “Evening with the Experts,” held at Fire Station #1 in late April, in answer to the allegations, commented Councillor John Durley, noting there should be no question that these transactions were carried out properly.
"People should look at the facts and not rumours floating about," said Durley.
The “Experts” meeting referenced by Durley was criticized by some in the audience at the time as incomplete and poorly managed, with only a narrow set of permissible topics allowed and answers that were evasive or incomplete. Then-Treasurer Cari Pupo, who fielded many of the questions as the CAO and some councillors looked on from the audience, was fired three weeks later.
Once Accursi made the motion, which included circulating Ottaway's presentation to Region and all municipal councils, posting it to the Town's website and publishing it in local newspapers, councillors discussed specific wording within the motion.
Papp suggested the motion be broadened to include all of Pelham's affairs, while Councillor Richard Rybiak suggested the motion stick solely to the financial review, cautioning there may be a time when Pelham needs the Region to be involved in Town business.
(That time came sooner than expected when a report later this same Council meeting on Regional transportation was heavily criticized for not including Pelham's transit system and the Region's oversight of working with Pelham on that issue.)
Council heeded Rybiak's warning and kept the motion specific to Pelham's financial review.
Reaction to Council’s decision, and reaction to an interview that Mayor Augustyn gave afterward to the St. Catharines Standard, was sharply critical.
The Standard story, headlined, “Pelhams demands end to scrutiny,” quotes the Mayor as asserting that the Region ought to “rubber stamp” municipal debenture (loan) requests such as Pelham’s, that’s “how it should be done.”
Asked for clarification, Augustyn told the Voice, "I stand by my quote in the PostMedia publications."
Augustyn asserted that since provincial legislation governs whether borrowing municipalities meet debenture guidelines, the Region's role is properly limited to cutting the cheque.
"The Region is essentially doing the work of the province in ensuring that the debenture falls within the 'Annual Repayment Limit.'"
But Augustyn's remarks struck some as suggesting that the Region ought to provide the Town with a blank cheque, no questions asked.
“It is outrageous that any level of government in this country would demand an end to scrutiny,” said Regional Councillor David Barrick, whose motion last spring before Regional Council started the investigation into Pelham’s finances.
“Mayor Augustyn seems to think he is ruling in Pelham as a monarch,” Barrick continued. “To state that councils—Town or Region—are there to simply 'rubber stamp' is delusional, and his threats to sue when asked a few questions are akin to a child throwing a temper tantrum when they don't get their way.”
Barrick said that as Budget Chair he has no plans to change how he approaches Pelham, adding, “I really hope Pelham's comments that they won't cooperate doesn't mean they are willing break Freedom of Information legislation.”
Regional Councillor Brian Baty, who this summer called on Pelham Town Council to consider commissioning an independent audit to allay public concerns, was similarly disinclined to heed the “end to scrutiny” call.
“It appears that the Mayor and Council are planning to end the examination of the Town’s finances as it relates to the East Fonthill property,” said Baty.
“This follows the several attempts by the Mayor to prevent the presentation at Regional Council by Mr. Hummel. If successful, then the logical question from taxpayers will be, ‘Where and when to we get honest answers to the questions asked?’ and, ‘Why is certain information as identified by Mr. Hummel not public information?’”
Baty asserted that neither the Town’s initial response to the Region’s questions, nor its public “experts” meeting in April satisfied residents’ concerns, which Baty described as more prevalent than Council is willing to acknowledge.
“My view is that concerns are widespread. Countless members of the public have shared their opinions that a third party, independent review is required to clear the air on these matters. I do not share the view that debenture issues should be ‘rubber stamped’ by Regional Council, as we must always be vigilant that the taxpayers’ interests are respected before assuming more debt, either at the Region or on behalf of local municipalities.”
Asked whether the Town would consider commissioning an independent audit, Mayor Augustyn would not respond directly, suggesting instead that Council's rejection of further Regional scrutiny "answers your question."
Rainer Hummel, who aired his concerns about the Town’s land-for-credits scheme back in 2016, says that Augustyn’s “rubber stamp” comment was the final straw.
“He wants a blank cheque with no credit limit, yet it needs to be co-signed by the other municipalities who are prudent with their spending,” said Hummel. “This guy is out of control.”
Shortly afterward, Hummel informed the Voice of his $50,000 offer to underwrite an audit of Pelham’s books.
