Northam Industrial Park – Status Q1, 2022

In March 2003, when the Mayor was Peter Delanty, the Town of Cobourg purchased Northam Industrial park with a loan (mortgage).  In March 2018, the full amount of $13,330,027 of this loan was repaid.  Over the period to date, the revenue earned has contributed to the Town’s operating and Capital Budgets – details below.  Each quarter, treasurer Ian Davey provides a report on the finances and the Q1 2022 report was provided at the CoW meeting on July 11.  Included in that report was some financial information not usually provided: the total contribution from the Park to the Town’s finances.  Some people have said that the Town should be run like a business and it’s clear that this is already true for the Northam Industrial Park.

Historical Data

  • The loan was repaid entirely from the revenue generated by the park without the use of tax dollars.
  • In the nineteen years of ownership $16,421,905 has been invested back into the infrastructure of the park
  • $8,772,305 has been used to support Town of Cobourg operating and capital projects.
  • These amounts are in addition to the repayment in full of the original mortgage in the amount of $13,330,027.

Balance Sheet as of March 31 2022 (Assets and Liabilities)
See Resources below

  • The asset section is split between current assets of $6,573,046 and fixed or capital assets of $17,015,727. The bank balance includes an operating balance of $3,829,335 and a capital reserve fund of $2,500,000.
  • The liabilities as of March 31, 2022 were $323,314 compared to $642,219 as at December 31, 2021.
  • The book value of the equity in the park is $23,265,459 as of March 31, 2022. This value is based on historical accounting results during the period of ownership by the municipality and is not a reflection on the current fair market value for this property. [It’s probably worth a lot more]

Income Statement

  • Revenue in 2021 and 2022 annual budget: $4.4M
  • Expenses for 2021: $1.52M
  • Expenses Budget for 2022: $1.68M
  • Net Income for 2021 (after Amortization):  $2.1M
  • Net Income for 2022 (after Amortization):  $2.0M
  • Comment: Operating revenues for the first three months of 2022 are slightly ahead of expected budget at 25.36% of the total budgeted revenue for the year. Vacancies within the park continue to remain at low levels with no changes expected throughout the remainder of 2022. Operating and administrative expenses are also tracking within budget for the first three months of the year.

Impact on Cobourg’s 2022 budgets

The 2022 Town of Cobourg Operating and Capital budgets included the amounts of $1,385,300 and $166,764 respectively to be funded from Northam Industrial Park operations. The financial report indicates that this remains a realistic commitment. [$1.55M compared to $2.0M net income].

Resources

Print Article: 

 

23 Comments
Inline Feedbacks
View all comments
Sandpiper
16 July 2022 10:03 am

So will our property Taxes go down or will wages go up ??

Ahewson
Reply to  Sandpiper
16 July 2022 6:59 pm

I was wondering how the likes of yourself would find something to gripe about.

You could say, while they haven’t gone down, perhaps they haven’t gone up as much as they could/would have.

Informed
15 July 2022 7:35 pm

One of the best decisions the Town has ever made!

George Taylor
Reply to  Informed
16 July 2022 9:12 am

Best Investment The Town of Cobourg Ever made! $13.330.27 (Paid Off)
Many More Tax Dollars, than the Feds. ever Gave Cobourg?
NOW, the property across from the Post Office below HooLee Gardens, THAT is ANOTHER STORY?

Keith Oliver
Reply to  George Taylor
16 July 2022 9:49 am

George Taylor

Innuendo should have no place in these blogs. Please explain what you mean by your statement refering to the property north of the Post Office, written in bold letters and found in the last paragraph of your post.

Wally Keeler
Reply to  Keith Oliver
16 July 2022 10:50 am

“Innuendo should have no place in these blogs”

You didn’t give that any value when you suggested on this blog that I am a wino.

George Taylor
Reply to  Keith Oliver
16 July 2022 1:09 pm

Definition of innuendo
1
a
an oblique allusion HINTINSINUATION
especially a veiled or equivocal reflection on character or reputation
if you had PAID any ATTENTION too what i SAID!, I SAID that the Town buying the OLD DEPOT, for 13 Million was the BEST investment they EVER MADE.
now that being said, i guess being a Country Boy, it is NONE OF MY BUSINESS?
Geo.

Keith Oliver
Reply to  George Taylor
16 July 2022 9:39 pm

George Taylor

Please reread my post which followed yours. I simply asked you to clarify your innuendo about the future of the site across from the Post Office. I’ve seen the detailed plan for this multi storey residential building and the way it compensates for otherwise lost public parking. I believe it will be an asset to the Downtown.

Last edited 4 months ago by Keith Oliver
Tucker
Reply to  George Taylor
16 July 2022 1:32 pm

Looks like 13. thousand, should be 13 million. Proof read before you send.

George Taylor
Reply to  Tucker
16 July 2022 1:51 pm

SORRY! 13 million.

Keith Oliver
Reply to  Informed
16 July 2022 10:10 am

Infomed

For the sceptics who continually criticize how the finances of our Town are managed, one can add the creation of the regilated holding company Lakefront Utilities Inc and it’s non-regulted service company Lakefront Utiliy Services Inc (LUSI).

Wally Keeler
Reply to  Keith Oliver
16 July 2022 10:45 am

“regilated” and “non-regulted” Sounds like Biden vocabulary.

Keith Oliver
Reply to  Wally Keeler
16 July 2022 9:52 pm

Wally

The letters “u” and “I” are next to eachother on the keyboard and with a dry macula in oth eyes I do make these kinds of typos. As always I appreciate your help in clearing up these mistakes.

Last edited 4 months ago by Keith Oliver
Ken Strauss
Reply to  Keith Oliver
16 July 2022 10:06 pm

Have you considered proof reading prior to posting?

Bryan
Reply to  Keith Oliver
16 July 2022 11:26 am

Keith Oliver,

Holdco, LUI & LUSI….Really?

First off, the holding company is “Holdco” and it is unregulated as it has no operations and any revenue is passive. Holdco owns two subsidiaries, LUI and LUSI. Holdco is 99.99% owned by Cobourg with Cramahe as a minority shareholder. The Holdco group was created in 2000 in response to the Ontario government’s direction to deregulate the municipal utility commissions (specifically the electrical utilities).

Lakefront Utilities Inc (LUI) is not a holding company and most of its revenue is regulated. It provides electrical distribution services to Cobourg and some nearby municipalities.

Lakefront Utilities Services Inc (LUSI) is an unregulated subsidiary of Holdco. It provides management and staffing to Holdco and LUI. It also operates Waterworks (Cobourg’s water supply) under contract to the Town. LUSI previously ran Cramahe’s municipal water system, but lost that contract.

Over the years the Holdco Group has participated in some notable business “failures”:
-Street Lights: Sylvania patent suit. Settlement amount undisclosed
-Water heater rental: No published financials. Business “sold”
-Lakefront Generation: $65K in startup funds. No published financials reporting of ongoing operations and performance. LG was “merged” into LUSI. No reporting of the final losses.
-LUI had to repay a large industrial customer about $1.4M including interest related to over-billing errors.
-Waterworks (the Town) had to repay a local small business $10K on behalf of water usage overbilling by LUSI

Continued in part 2

Last edited 4 months ago by Bryan
Bryan
Reply to  Bryan
16 July 2022 11:44 am

Part 2 Holdco, LUI, LUSI

In 2016, LUI applied to the OEB (Ontario Energy Board) to increase its rates. At the hearing, several intervenors including the CTA were successful in getting LUI’s requested rate increase reduced by about 28%
In 2021 LUI applied for a rate increase. Several intervenors including the CTA and the Northumberland Hills Hospital attended the hearing.

LUI’s “asks” included:
-a paper billing fee of $2 per month
-a $15 fee for each additional invoice copy requested by a customer
-a standby charge for customers (such as NHH and School boards) that used alternative (solar, co-gen) sources to supply most of their electrical power.
-the recovery of about $1.2M plus interest in unbilled electricity charges resulting from a LUI error. The plan was to bill customers for this “underbilling”, plus interest over a two year period.

Each of these “asks” was successfully challenged by the intervenors. All were withdrawn by LUI except for the underbilling. The intervenors proposed that LUI agree to recover the underbilling from customers, without interest, over a 5 year period. This was accepted by LUI and the OEB

Last edited 4 months ago by Bryan
Keith Oliver
Reply to  Bryan
16 July 2022 10:12 pm

Bryan

The point of my post was that the Town instead of a for-profit business remains in control of vital services. We’ve seen the result of private ownrship of vital services in the relationship between the substandard condition of long distance transmission lines by Pacific Gas and Electric and the California wild fires in 2019 (in which PGE pleaded guilty to 84 cases of involuntary man-slaughter).

Impossible to compare the results of private vrs public ownership of Cobourg’s services but I would rather have HOLDCO responsible to the community than a private enterprise responsible to share holders and/or other investors.

Last edited 4 months ago by Keith Oliver
Bryan
Reply to  Keith Oliver
16 July 2022 11:50 pm

Keith,
It is your opinion then, based on no apparent facts, that Port Hope’s sale of their electrical utility (as well as Whitby, Ajax and Pickering) to Elexicon Energy (formerly Veridian) was a bad decision.

Also, you wrote “…I would rather have HOLDCO responsible to the community than a private enterprise responsible to share holders and/or other investors.,,,”
Why? How is that “better”?
Also, Holdco is just a holding company and not the service provider.

Last edited 4 months ago by Bryan
Ken Strauss
Reply to  Keith Oliver
16 July 2022 12:26 pm

Keith, your post is somewhat unclear. If you are saying that LUI/LUSI/Holdco are Cobourg’s financial and management disasters that SHOULD be criticized, I agree!

To Bryan’s list of their misdeeds I would add the replacement of all water meters in Cobourg. Why replace thousands of meters with many years of remaining life? Oh, I understand, they had to be replaced to give a sweetheart deal to a favoured vendor with no consideration of alternatives, no tender and everything justified with a seriously flawed economic analysis.

Keith Oliver
Reply to  Ken Strauss
16 July 2022 10:30 pm

Ken

What “sweetheart deal”? Were metes not replaced over a period of time so that they could be read by satilite instead of manually?

Bryan
Reply to  Keith Oliver
17 July 2022 12:02 am

Keith,
The deal was that about 4,000 water meters were purchased for $2.3M on the basis that they were old and provided inaccurate (low) measurement of the water used resulting in lost revenue. Prior to the purchase, LUSI did not provide any analysis bases on the meters replaced to date that supported the claim that replacing the water meters would result in more revenue. Similarly, no analysis of usage/billing data from the “new” meters has been provided that demonstrates that the “old” meters significantly under measured water usage.

As to meter reading, the new smart meters are supposed to transmit usage data to a receiver network installed throughout Cobourg. Once again, there has been no analysis to show that this was cost effective

Satellite (not satilite), where did this idea come from?

Ken Strauss
Reply to  Bryan
17 July 2022 9:39 am

In addition to Bryan’s comments on water meters:

  1. There are several companies that offer remote water meter reading systems. Rather than use a tender to ensure that Cobourg got the best product/price only one company was considered.
  2. The analysis of the metering errors was seriously flawed.
  3. The financial analysis ignored the significant ongoing software, hardware and operating costs for the new remote reading system.
  4. The financial analysis ignored the possibility of repairing or replacing only the defective meters rather than replacing thousands of meters which were working perfectly.
  5. The financial analysis had numerous errors of arithmetic that significantly affected the results.
  6. The batteries in the fancy new meters have a limited life but the costs of periodic battery replacement were ignored.

I spent many hours documenting these issues and more and then presented a summary in a delegation to Cobourg Council. Clr. Darling (the one responsible) dismissed all concerns and convinced the others to approve the needless expenditure favoured by staff “subject matter experts”. Does anyone wonder why Cobourg’s taxes are high?

Bryan
Reply to  Bryan
17 July 2022 9:41 am

“…on the basis that they were old and provided inaccurate (low) measurement…” should be “… on the basis that the old meters provided inaccurate (low) measurement…”

Sorry for the failed proof read