Northam Industrial Park is managed by the Town as a separate entity and able to provide a dividend to the Town; this is like Holdco which is the holding company for the Electricity and Water Utilities. In 2017, the Town was paid $241,000 from its investment in Northam. In a report to be provided to Council at their Committee of the Whole meeting on September 4, there is no prediction of how much of the large profit will go to the Town. The profit before amortization for 2018 is expected to be $2,700,000 but most is expected to be paid to reserves (already $1,000,000) as “suggested in the soon to be completed asset management report”. A good part of the reason for the high profit is the absence of a mortgage since the last payment of $104,352 per month was made in March 2018.
Although the report for the first half of 2018 does not say where previous dividends were spent, a Cobourg News Blog report in August 2017 gave a breakdown from an earlier report:
Dividends
From 2003 to 2016, the Park paid the Town dividends totaling $5,062,150 – so what has the Town used this for?
- Long Term Debt on Infrastructure projects – $1.5M
- Physician Recruitment – $235K
- Hospital Donation – $300K
- Tannery costs (remediation, demolition) – $1.5M
- Capital Projects – $1.5M
The Park houses some notable businesses: Weetabix and Horizon Plastics (building 3) as well as the Town’s Works, Parks and Recreation Operations (building 7), Venture 13 (building 13) and a Lakefront Utilities Service Garage. There are also other businesses not listed here.
Links
- Northam Industrial Park almost paid off – 2 December 2017
- Northam Park has Proved to be a Good Investment – 1 August 2017
- Venture 13 Grand Opening – 18 May 2018
- Northam Industrial Park Financial Report – June 30, 2018 by Town of Cobourg Treasurer Ian Davey
Print Article:
With regard to LUSI have long held the opinion that in order to truly serve it’s owners – the Citizens of Cobourg, all accountholders should be issued one share of the 10 million outstanding shares. Aproximately 9,000 shares allocated to the accounts wouldn’t allow a change in anything major but would allow each account holder to attend the AGM. At the moment under the restrictive bylaws only the Town’s representative, with the Town’s 999,999 shares in hand can attend the AGM. Obviously not a very transparent system.
I challenge any of the nominated candidates to adopt this stand and take it forward to the new Council if elected.
Will do! A position I will take forward if I am elected.
Your idea Ben is definitely worth a discussion by the new Council. I have attended the meetings as a former member of Council for eight years.
As have I but the informal meetings were a rah rah session not a real AGM but just a “courtesy” because LUSI really didn’t have to do it.
I wonder why there were no hard questions posed by the Councillors. Then the anointed could have reported to the rest of us.
You just can’t help yourself, can you.
A useless Council manipulated by Staff!
When you succeed with your plan of replacing Council AND Staff, things will get better.
How is that going by the way?
Based on your comment one must conclude that you see no obligation for Council to keep the residents informed regarding the details of the operation of town owned assets. Why do you feel that residents, the owners, should be kept in the dark? Is ignorance bliss? Why?
See my post below.
The CTA acolytes have been whining and moaning about Holdco for the last three years.
Now if Ben’s idea flies, you will find out.
Wanna bet that even the answers given at an AGM-style meeting won’t satisfy you.
And btw. most folks in Cobourg don’t know what a Holdco is and just get on with their lives in our beautiful town.
Yes, ignorance is bliss for many and some of the posters here try hard to ignore the truth. That is sad since an informed electorate is essential for a democracy to function.
I believe that Holdco issues an annual report and I expect the annual report includes more information than the AGM (although I have never attended the AGM so I can’t actually compare).
Holdco issued a report on July 2017 on activity in 2016. The report included little financial information – it was aimed at consumers. Go here.
Gee Walter if what you have said on Ken Strauss’s plan to replace all staff is true it could be a great win fall for them if he uses the business acumen he picked up from his former employer Hydro 1 (that paragon of efficiency, fiscal management and customer service). Staff will all need wheelbarrows to carry all the money they will receive.
Please check your facts. I have never been employed in any capacity by Hydro 1 .
Sorry Ken, you are right, you were employed by Ontario Hydro which makes my comments even more appropriate.
“Replacing our politicians and town staff who ignore Cobourg citizens who pay their salaries would be a huge step in the right direction.”
https://www.northumberlandnews.com/opinion-story/8466588-are-cobourg-taxpayers-really-apathetic-/
There you go Gil!
Walter, why do you feel that ALL town staff ignore Cobourg’s citizens? That is the only way that the referenced oped can be interpreted as a plan to replace ALL staff.
How is the replacement bit coming, Mr Strauss?
Sorry, you are not leading by example, but not really surprised.
In 48 days the voters will have decided Cobourg’s immediate future. How is your campaign for more of the same progressing?
If you had written ‘replacing THOSE politicians who’ it would be a lot clearer, Mr Strauss.
But maybe your command of the English language is good enough for CTA purposes.
I hoped that it was clear but English is not everyone’s first language.
Read it a long time ago Walter. Typical CTA document, issuing enough information to mislead people and leaving out the facts.
Gil, ad hominem comments absent specifics is mindless drivel that is a waste of time. Please provide your view of the facts so that none will be misled.
Gil B, it has been a week and you still haven’t told us which “facts” were omitted. When can we expect to get the facts so that none are misled?
I like it!
Yessss!
Great idea, Ben and Miriam!
Finally put this thing to bed.
Although I suspect that some folks just hate the notion that municipalities can run enterprises so efficiently that they make a profit. Like Northam, Holdco and the Marina.
They have spent their working lives with the fervent credo that only private enterprise can make profits
– without gouging their customers. Like the oil companies or Volkswagen.
Chuckles.
If publicly owned businesses make profits, the books must be cooked by secretive, bloated bureaucrats and their politician puppets.
So let’s shine some light on this subject and move on.
Wait a minute Walter. Did you just agree with Ken Strauss?
Congratulations to Mayor Peter Delanty who spearheaded the purchase of Northam in 2003.
His mantra ‘Cobourg is open for business’ come to full fruition.
A valuable asset for Cobourg with dividends for years to come.
If you ask me, there is too much smoke and mirrors in this town…it’s like the old boys club…profits\dividends\reserves\slush fund…call it what it is…extra money for the insiders to hand out…been going on for years.
Time for new mayor Henderson to come clean and open the books for all the stakeholders in this town
“Mud, mud, glorious mud!”
There is a small difference:
Northam’s dividend results from the profits on renting buildings to local industrial users.
Holdco’s dividend results from profits on providing electricity. This means that the Holdco “dividend” is just a tax by a different name. We pay for the dividend in our electricity bills and our politicians use it as a slush fund (as Walter recently correctly observed).
Not really. If the electric utility was privately owned we would pay as much, or more, for our hydro and any profits would go to the owners of the utility. We would not call these profits “taxes”.
We are lucky to have a town owneded utility, which means that price increases will be kept moderate, and any profits are plowed back into the town. Actually it is not “luck” but forethought of the town and its advisory boards.
When profits have been returned to the Town the money should then be subject to the normal procedures that the town undertakes to spend money . These procedures apply to all money that the town has. Treating the money as a ”slush fund”, and not following regular procedures to approve spending, is probably illegal. If the CTA wishes to prevent the town from making any further slush fund approvals they should get a reliable legal opinion on this.
No need for legal opinion at all.
An open transparent disclosure by the town of the financial workings /records etc and the process of usage would solve any mysteries or suspicions,but appears not to be a consideration.
Why is that information not available to its residents hence the description “slush fund”.being accorded ?
I understand that term isn’t just recent.
No “conspiracy theories” just knowledge of how the town operates in this particular area desired without also pointing at the CTA everytime as default for the reason for questioning.
Ordinary taxpayers not belonging to the CTA also voice their concerns on this blog which may differ either way.so the automatic “we against them” mentality accomplishes nothing.
We are all taxpayers I assume so why shouldn’t it be public knowledge ?
Lakefront Utilities doesn’t pay a dividend to Holdoc. Further, dividends have no effect on electric rates.
No dividend? Perhaps you should tell the Mayor. In the Holdco annual report for 2015 (page 2) he says:
The “dividend” comes from the allowed profit for Lakefront and certainly does impact electricity rates.
“Lakefront Utilities confirms that the annual dividend to the Town of Cobourg excludes LUI’s net regulated income”
“LUI also made arrangements with the Town of Cobourg to suspend dividend payments to its shareholder”
By the way, those quotes were from Lakefront’s response to CTA questions dated August 26, 2016 during the rate hearing.
Would you please explain the source of the annual dividend plus interest of about $850,000 if not from Holdco’s customers? Who are these customers?
Call Lakefront and ask them. I have called them in the past and they have been easy to deal with. But I’m not the CTA 🙂
Cobourg Person
It would be interesting to know your real name as you appear to be quite knowledgable/involved by your statements re the goings on/details of how it all works …….if it’s accurate..
You prefer to be anonymous however,so just another anonymous opinion.
If they provide “…a payout ratio of 50 percent [of] net income” in a year, then they are charging their customers far too much, in my opinion.
while I’m fairly uninformed with respect to LUI affairs, let’s note that, 1, someone has posted that the amount of ‘income’ is regulated and 2, there is no longer a dividend payout. We might ask what’s the disposition now, of what were once dividends, and, is there any expectation of reducing the amount of borrowed funds that require such hefty interest payments? Also, has the payout ratio, now for interest payments only, been revised? I would think that these considerations need to be addressed when responding to your concern, Rusty.
So that we all understand the situation:
Lakefront has been making annual interest payments of $507,500 since 2000. This demand note bears interest at 7.25% and the interest payments are the majority of the Holdco dividend of which Mr. Brocanier is so proud. In the last 18 years there has been no progress in repaying the loan nor obtaining a lower interest rate although even car loans are at a much lower rate. Do not be mislead by Cobourg Person; this loan interest is added to the electricity bills that we all pay in Cobourg. I assume that the zero progress in reducing the interest rate is a result of Cobourg politicians not wanting to lose their slush fund as Walter terms it.
I made no comments about the interest payment. II commented that a dividend is not paid by Lakefront as per documents submitted to the CTA.
So we all understand: Interrst is paid to the Town of Cobourg on a $7,000,000 loan at 7.25%. However, the amount included in rates is limited to the Ontario Energy Board deemed interest rate of 3.72%.
Rather than assume that no progress has been made, call Lakefront and ask!
You are correct that 3.72% is the allowed rate for affiliate debt. However, that does not change the amount paid ($507,500 per year) by Lakefront to Cobourg for Walter’s slush fund. The electricity rates could be lower if the allowed rate were what the CTA argued for. For example, other utilities are only charging their customers 2.8% (a full percentage point lower) for their affiliate debt. If they are making such great progress after almost 20 years of no progress, why doesn’t Lakefront tell their customers of their progress?
If other utilities were charging less, then the CTA wouldn’t have lost the written hearing. All utilities charge their customers the deemed interest rate on affiliate debt. Lakefront is no exception.
Please don’t attempt to obfuscate something that is very simple. Other utilities are paying less because their affiliate debt was converted to loans from legitimate lenders (banks for example) at market rates. Unfortunately, Lakefront has avoided doing so for almost 20 years. The CTA didn’t lose the written hearing; Lakefront’s customers were the losers..
If interest charged is at a rate of 7.25 and the portion of that included in billings is 3.72, the difference of 3.53% interest is likely either accruing or coming out of something else. Would that then be termed as a dividend to get around regulations? Wherever it comes from, it has to be generated by billings of one sort or another and that means the customer pays it in higher utility bills. No amount of spin or footwork can alter that reality.
Hahahaha!
“Slush fund” was a joke. like Acme Travel Lift etc.
Get a sense of humour. man!
I think everybody got it Walter, but like I said, it just wasn’t that funny.
The topic is Northam Industrial Park!
No red herrings please.
Why do you request that everyone stick to Northam and then later today you post regarding Holdco?
Possibly if the financial records/ information were available to the
public it would remove any doubts about its workings,but that doesn’t appear to be a possibility.up till now.
With a new mayor and council could that become a possibility of transparency as always promised but not provided.?
Possibiy question to new candidates and acclaimed mayor ?
You CTA folks have been whacking this Holdco business for the last three years.
Ask Barry Gutteridge, the Chair, your questions and then tell us all.
It would be far better for Holdco to have public meetings so that everyone could ask their own questions. Public meetings with public questions is a far better approach than one person asking in private and reporting back. Why must the affairs of a business owned by the people of Cobourg be kept secret?
Wondering what the purpose is for the “reserve fund” referred to above. Will it be used for future capital expenditures related to the Cobourg Works and Lakefront Utility facilities. Per the town’s 2017 audited financial statements the depreciated value of the property is $17.8 million with no debt at this point. A little gem for the town.