Gardens overrun 'a serious breach of corporate policy,' Knox Video

Wednesday, December 11, 2013   by: Jamie Lyle

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Expressions of shock and disbelief were evident at City Hall on Tuesday morning, with an impromptu press conference called by the Mayor and CAO the day before, revealing major financial losses for the City.

The City's Mayor, CAO and Councillors who attended the press conference offered little explanation or answers regarding a situation that seemed to surprise everyone in the room.

Mayor McDonald identified in a speech to the press that over the last 10 days, it was discovered by The City's Chief Administrative Officer, renovations of Memorial Gardens are substantially and, many would easily argue, excessively over budget.

But it was only just last night, during Monday's regular City Council meeting, that council was advised of the new $16.2 million total.

“I was stunned and shocked,” says Mayor Al McDonald, who seemed emotional.

“You know, when you're told on a regular basis that everything is fine and that we're within budget, that there's no issues, and it's not a case where council thought that there was a problem, we were told that everything was fine,” McDonald says.

“So, you can imagine when somebody walks into your office and to council and says “you're over budget at $3.6 million,” there were a lot of lost looks in that room,” he says.

The taxpayer will now be paying $16.2 million for a project that was originally supposed to cost $12 million, guaranteed less than a year ago.

This means that the rejuvenation of Memorial Gardens, which is still not complete, is almost 4 million dollars over budget, with serious questions arising as to who is responsible for the overrun.

It was stated during the conference that the Mayor and Council, at numerous meetings, were advised falsely that the project was within budget, however, it turns out, City Hall was issuing far more in work orders and payments than the elected officials admit to knowing about.

“I would like to be crystal clear, Mayor and Council did not approve any spending over $12 million,” says McDonald.

This brings the question of how City Staff were able to process cost overruns and payments without informing the Council and Mayor and withdraw funds from the city coffers under their nose to the tune close to $4 million on a project that was the centrepiece of construction within the city for the 2013 year.

The press conference, which had lengthy statements from City Hall Officials and are available for viewing on, in some ways, raises more questions than answers, stirring debate over the operations at City Hall and within the Municipality.

The City, under scrutiny for an already burdensome tax increase, has seen fierce debate about a number of costly issues to the taxpayer, with this current bombshell adding a huge liability and undoubtedly, large increase to the tax rate that ironically, was to be set at last night's council meeting.

Council announced they're joint business venture with the North Bay Battalion in November of 2012 and now have spent over $16 million dollars of the taxpayer's money on a facility to house the team in an entertainment facility.

The current developments have garnished a large amount of concern amongst local residents, who point to the fact that rampant corruption and government projects have overrun the ability of the democratic process to control, suffocating tax levels.

With hundreds of valid comments coming forth on online forums and conversations around the city, the issue surrounding this council are many, especially when it comes to honesty and accountability, with the tax payer funds that they seem to not monitor or control.

Essentially, the bank account holding the taxpayer's line of credit was opened and spent by city officials without informing council or following due diligence in filing their cost plans, essentially freely spending debt in the taxpayer's name on this project.

With $4 million on this project, some 32,000 litres of fuel lost or unaccounted at the City Yard and other costly overruns, it is hard to know what is being expended out on the city taxpayer honestly, with no accounting process occurring, essentially, undermining the power or purpose of council at its base level.

With much of the blame being pointed at Managing Director of Community Services Peter Chirico, whom it is said, was unable to speak with council while undergoing surgery on Monday evening, as to how the monies got okayed and spent without council's legal consent.

Council, some believe, seem to be playing dumb to a secret they should have known about and have yet to comment on whether or not they are proceeding with legal concerns, with accounts being accessed and spent without their permission.

“This situation is one of spending beyond an approved budget and there is no suggestion that there is any fraudulent or illegal activity associated to this overspending,” says Chief Administrative Officer Jerry Knox.

“What we have is a serious breach, knowingly or not, of corporate policy involving the spending and commitment of City and tax payer's funds without proper authorization,” he went on.

Knox pointed to the fact that there would be serious consequences without elaborating on exactly what that meant, but it seems that who is in control of the city's bank accounts and how they get spent is not clear, but clearly, not in the control of the Council or the Mayor.

With Knox, the Mayor or councillors unable to pin point the how or why it happened, many are wondering what the procedures are to allocate funds for spending at City Hall and how many dollars may be vanishing.

The questioning of the city's ability to tender out contracts also has to be put into the spotlight, with every project seeming to overrun projections when it would be far fairer to legally hold the company to complete the project under their agreed terms.

Councillor and Director of Community Services, Dave Mendicino, clearly stated that the money was not approved for spending yet it seems contracts and commitments were made without the authority to proceed on the extended funding of the project with little known as to what extended the costs to the building, not even so much as a hint that materials or wages or labour were more costly than expected.

“The Mayor did his due diligence, the CAO did his due diligence, I did my due diligence by continually asking about the project,” says Councillor Mendicino.

“It was under the care and control of the Managing Director of Community Services,” he adds.

With Mayor and Councillors and other officials now involved in the situation, auditors from KPMG will be looking into what has been going on, ironically, with the City's own staff being audited.

A report on the auditor's findings is expected to be filed before Christmas.

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dealer 12/11/2013 9:48:53 AM Report

Let me get this straight.....Knox is CAO and knew NOTHING about the overspending? I find that hard to believe....if he didnt know anything about it he was not doing his job!

This is not a guy i want working for me....the minute there is trouble he is the FIRST to be pointing fingers!!
whaaazz up 12/11/2013 12:46:18 PM Report

Well. Guess I don't have to eat my words
as I said from the start " It won't come in on time and it won't be on Budget.
I did not however think for a moment that
after being told " We have 12 million to
spend and not a PENNY MORE" that it would
come in with over 4 Big ones .
Chirico has to pay the price,he was in charge of the project but those pointing
fingers must fess up that this was not a
one man show and accept responsibility
for no oversight on the project. Will that
happen??? I doubt it !!!!
truthonsale 12/11/2013 1:24:38 PM Report

why do people expect to be lied to and stolen from by governments, if massive amounts of money were missing from accounts at any work place the police would have to investigate, but its okay to the public if its a politician? Is that not a syndrome where the victim think they deserve to be violated ?
Meghan 12/11/2013 1:31:21 PM Report

How could this have happened in a city this size with fairly small departments? What a blatant misuse of tax payer funds! We're not talking about chump change either. This is millions of dollars spent that we weren't aware that we were spending, all in a very short time period! All this for a venue that we can't even start to think about making money on for at least 20 years. How could only one person at city hall know about this? This scares me to death thinking how easy it is to do. There is far more to this story than it appears. Is only one signature needed to spend that amount of money? Because if so, I want that policy to be changed immediately! Why are we giving these city workers hefty paychecks so that they can take our money and not be accountable for it? I am outraged by this! I work hard for my money and scrim and save and for what?
dealer 12/11/2013 2:37:14 PM Report

Cant argue with any of the above points.....the real question is....are we going to get any real answers?

Surely there must be more checks and balances in a project of this size? Surely it was not 1 person who knew what was going on?

Imho, there was little anyone could have done once this ball got rolling.....i mean u cant very well stop 3/4 of the way through and say we cant finish or, the battalion will have to wait....they were committed, we were committed and there was a FIRM date to get the job done...there was, NO going back....having said that i have not read an arena project of any kind come in under budget...ever?

I realize that does not make this any easier to accept....
Meghan 12/11/2013 3:13:06 PM Report

That is no excuse. This council is running itself as though its a Roman Empire, who also built a huge arena that they could use a few times a week for entertainment purposes to distract everyone from all the poverty and starving. There is no way that no one other than Mr. Chirico didn't know about this. Checks have to be signed and site visits have to be conducted. There is no one person that could have done all of this. We as tax payers cannot simply accept these actions as just another business day down at city hall. We are a population of 50 something thousand carrying a huge debt load that just got much bigger! This is not how its supposed to be and we can't simply slide this under the rug because Christmas is coming up. I would understand all of this a more if it was a multi million dollar company coming in to give jobs and boost the economy. But the arena has done nothing for us except drag us into a hole that my grandchildren will be paying for. My trust in this council and in the city is gone and everyone looks like hypocrites!
dealer 12/11/2013 3:28:27 PM Report

i am not defending what has happened....just saying what is, not what should be......i agree with your assessment meghan...

i would point out however that the Gardens, in the past, has been a dormant building from late April/early May until late money coming in, no jobs, no nothing.

This will be the 1st summer where there will be activity at the Gardens....that means....there will be jobs there during the summer....that means...there will be people spending money there during the summer...that means, in some cases, people staying in hotels, eating at restaurants other words spending money in our in point, do u think that new pizza place on fisher would have opened up with no battalion/upgraded arena...imho, that NEW business is just the start of the benefits we will see as a city from the upgraded arena.

again....all this does not change the lack of accountability from city hall...
Oldtimer 12/11/2013 9:26:57 PM Report

Just like the Provincial then Federal Governments.
Audits for everyone.
The community suffers usually.
whaaazz up 12/12/2013 12:59:43 PM Report

Wasn't there a bylaw change recently
that gave more people the right to
make purchases without approval??
I believe there was a cap on the amount
but it could build up very quickly.
If i remember correctly a member of the
Tax group made a presentation to Council
strongly objecting to this change and as
usual was "TACKLED" by some members of
council for suggesting they don't trust
the staff.
WELL HELLO !!!!!!!!!!!!!!!!

whaaazz up 12/12/2013 1:01:07 PM Report

One more thing if I may.

dealer 12/12/2013 1:54:14 PM Report

if thats true whaaaaaz....that is 1 dangerous bylaw change!
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