City Learns Zip From LRT Inquiry, Lansdowne 1.0: BENN

09/23/2023

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Financial literacy. Business acumen. Why is there such a deficit of these basic skills at city hall?

Around the council chamber? The shortage of financial literacy and business skills is a consequence of the democratic process.

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You can only vote for someone who is standing for election. And among those who stand for election, political connections trump skills and experience. Having said that, there are courses “out there” that will assist a councillor in understanding what they are reading. A course that would explain to them, among other things, that the debt the city incurs as part of its capital spending must be paid back, with funds from the operating budget. Just like the mortgage on their house gets paid out of current and future earnings.

In the senior management ranks, the lack of financial literacy and business acumen is truly sad. The problem is exacerbated by the willingness of the few who have a useful level of financial literacy or business acumen to willfully participate in political theatre.

Case in point, the recent financial figures referenced by Mayor Mark Sutcliffe. A document that sets out the catastrophic results of the public transit system if a number of carefully selected key variables are used.

In one section, staff state that they were caught off guard by the poor ridership numbers coming out of the pandemic. That they could not possibly be held accountable for not getting their estimates of key operating elements such as the number of riders, compensation, fuel and interest rates right. Perhaps. But why weren’t they paying attention to the analysts who report regularly on global, national and local economic drivers? Anyway, water under the bridge.

In the same report, staff lays out a scenario that is 25 years into the future. A scenario that the mayor used, with a visual degree of emotion, to paint a picture so bleak as to induce thoughts, in some members of the public about the relative merits of relocating to another planet. The same management team that couldn’t properly forecast the next 25 months due to circumstances beyond their understanding, but they can project out 25 years with a high degree of confidence. As I said, willful participation in an act of political theatre.

Did the senior ranks at city hall learn nothing from the provincial light-rail inquiry report? About their obligation to provide council with the objective information they require to fulfill their statutory duty of oversight? To not actively participate in efforts to deceive?

Next case: Lansdowne 2.0.

Staff is ready to present to council the bylaws required to change the zoning at Lansdowne to permit the development plans as laid out by Ottawa Sports and Entertainment Group. They are ready to pass into law their best bargaining chip. Prudent business people understand they need to see the entire deal before they commit to irrevocable decisions. How much is a residential developer going to pay for the air rights? Get that number in the agreement before signing. How much will OSEG pay for the 59,000 square feet of incremental retail space? At this point, it appears to be somewhere between zero and nil.

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A person with a reasonable level of business acumen knows that they need to understand what is important to the other side of the transaction. In the case of Lansdowne 2.0, control of the real estate. Control as in they get to decide what to build and when they will build it.

Put the two pieces together, and a prudent councillor would ensure that what will be built, under what circumstances, and with what financial commitment is set out in a set of binding agreements prior to taking irrevocable steps. In this case, prior to passing the zoning bylaws. Otherwise, OSEG is going to eat the city’s lunch, AGAIN.

Has senior management at city hall learned nothing from the financial fiasco that is Lansdowne 1.0? Or the way over-budget new central library? Or the LRT?

The answer to this and other questions is no. It appears that senior management at the city are either unwilling or incapable of learning lessons. Neither would meet the standards of a competent board of directors, or city council for that matter. And that is the sad state of that this city finds itself in. Self-inflicted wounds. Wounds that will take decades to heal, if ever.

Ron Benn, a finance executive, has been a member of the Centrepointe Community Association for the better part of three decades.