Bankrupt

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[quote=“MiG”]

Is that partly because of the forgiven loan for $20 million? [/quote]

Yes, that is related to the $20 million debt that was forgiven in 2008. That year the value of the City’s investment dropped from $46,901,103 to $31,402,399 because Citywest wrote off its cell network rather than replacing the equipment. That is what prompted the City to forgive $20 million.

The write down of the cell assets would have reduced Citywest’s equity position relative to its’ debt, which would have made it less attractive from a lender’s perspective. Commercial lenders always look at debt-equity when deciding whether to loan money and when setting interest rates. Citywest’s debt-equity would have been restored to a more favourable ratio when the City forgave $20 million in debt.

There was no public discussion at the time. The line was that ‘it’s money that we owe ourselves so it’s not a problem’. But the $20 million was not like play money. It was money that reflected profits that the old City Tel division of the City had reinvested in plant and equipment that were taken over by Citywest. The City’s balance sheet was also weakened somewhat, since the $20 million debt was no longer an asset.

Citywest and the City tend to play things both ways. Since the City owns Citywest it took a $20 million hit so that Citywest could continue to borrow money, to finance the cost of competing in Terrace-Kitimat, installing fibre optic cable and so on.

But since Citywest is a company it is treated as a ‘third party’, particularly when it comes to financial information. Citywest has become more secretive over the last year. Meanwhile, the council prefers not to talk about Citywest finances, notwithstanding that it is a major investment by the City.

22

[quote=“BTravenn”]

You are a good guy, Dex, and I often agree with you, but on this issue your numbers are totally out of whack. We’ll start at the beginning in 2006. The following information comes from the City’s audited financial statements, which are available on their web site.
snipped…[/quote]

Well that will teach me to always confirm documents I read and also go to the source. Google returned me Dan Rodin’s 2007-2011 Financial Plan document and right to the last page. Live and learn.

Upon reading the the 2011 Financial Statement, it would summarily appear that City West may not be entirely a toxic asset though. Assets - 51,645,000 Liabilities - 23,572,000. It seems to be staying afloat and still paying out to the city; 20 million notwithstanding

23

I have revised the profit/loss information in the fourth paragraph to reflect a change in Citywest’s reporting standards that Mr Rodin noted in his 2011 presentation. Originally Citywest reported a $2,590,442 profit in 2010, but that was adjusted to a $3,945,000 loss under the new standards. I have taken out the 2009 number, which would have been under the old reporting standards. Of course, all of this would be easier to make sense of if Citywest still made their financial statements available and the council, as the shareholder, was more forthcoming with information.

What is clear from the City’s financials is that 2009, when a $1,000,000 dividend was paid, was the last time that the City received a substantial financial return from the investment in Citywest. There is still some significant value in Citywest but the trends do not appear to be favourable.

[quote=“BTravenn”]

From 2006 to 2011 Citywest paid $4,300,000 in dividends and management fees to the City (see Note 1). During the same period the City collected $95,088,360 in taxes and grants in lieu (see Note 2).

In 2006 the City’s investment in Citywest was valued at $46,379,323. By 2011 that had declined to $28,036,763.

What is even more concerning is that Citywest does not appear to be consistently profitable. Commencing in 2009 new audit rules were introduced under which public sector organizations must declare the financial results of any wholly owned businesses, whether revenue was received from the business or not. Since then, Citywest’s profit/loss appears on the City’s annual financial statement.

The City’s financial statements show that in 2010 Citywest had a $3,945,000 loss (adjusted) and a $1,370,000 profit in 2011. During the period 2010-2011 Citywest experienced an accumulated loss of $2,575,000.

Unfortunately Citywest no longer publishes its annual financial statements online, so it is near impossible to know what is going on. And for reasons best known to the Mayor and councillors they prefer not to discuss Citywest’s finances in public, other than making vague statements that their own audited financial statements do not support.

Citywest is not a “cash cow” or a “handy asset” for the City. The evidence suggests that it is no longer a significant contributor to the City’s finances and that it is a business that is in decline.

Note 1: [2006] $1,000,000 + [2007] $1,060,000 + [2008] $1,060,000 + [2009] $1,060,000 + [2010] $60,000 + [2011] $60,000. There was a $1,000,000 loan repayment in 2011 but that was not income to the City. Except in 2006 Citywest has paid the City an annual $60,000 ‘management fee’. This information is most clearly presented in the auditor’s Notes to the statements. The 2006 Notes indicate that the City was expecting dividends of $2,000,000 a year.

Note 2: [2006] $13,944,114 + [2007] $16,003,826 + [2008] $15,695,430 + [2009] $17,030,317 + [2010] $15,902,000 + [2011] $16,512,673.[/quote]

[quote=“Dex”]
Upon reading the the 2011 Financial Statement, it would summarily appear that City West may not be entirely a toxic asset though. Assets - 51,645,000 Liabilities - 23,572,000. It seems to be staying afloat and still paying out to the city; 20 million notwithstanding[/quote]

No, Citywest is not an entirely toxic asset and it has been staying afloat, but for a $28,036,763 investment $60,000 a year in management fees for the last two years is not much of a return.

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[quote=“BTravenn”]Here’s a link to the TK interview where His Honour projected that in 13 months Prince Rupert could be bankrupt. No solutions or actions are proposed.
bcove.me/zp7d3ytl

North Coast Review offers some thoughts about what our Mayor may be hoping to achieve as a messenger of impending doom.
northcoastreview.blogspot.ca/201 … n-now.html
…
And here is a link to a Black Press story yesterday about the possibility of City Hall being shut down an additional day a week to address a projected half million dollar budget shortfall.
thenorthernview.com/news/201255941.html
[/quote]

Last week the Mayor provided a dire warning that the City could be bankrupt in 13 months and there was also discussion of the possibility of closing City Hall one more day a week as a cost-cutting measure to help address a budget deficit and crisis.

At this week’s council meeting the Mayor appears to have been heading in new directions with his predictions for the future. There is a full review and op-ed on North Coast Review with useful links for further details: < northcoastreview.blogspot.ca/201 … ities.html >.

It is good to see that the Mayor is talking about tackling at least some of our civic worries by seeking Provincial support for an environmental clean-up at Watson Island.

At the end of the meeting, though, the Mayor suggested that the council give some thought to civic investment in a Marine Laboratory to help revive the shellfish industry. That seems to be viewed as a critical step on the road to economic recovery, with future development of the Port and four more recently announced LNG proposals mere sidebars to the deliberations, it seems: < northcoastreview.blogspot.ca/201 … rince.html >.

At a time when we may be only months away from falling over the fiscal cliff, the Mayor’s thought process(es) about investment in commercial activities can be a bit hard to follow, also considering that the City’s biggest private sector investment, Citywest, does not seem to be doing too well, contributing only $60K a year to City coffers after a $3.9 million loss in 2010 according to the City’s books.

The same article also notes that Councillor Thorkelson cautioned about the lack of cold storage facilities due to industry closures. That is certainly an appropriate issue for a fish union representative to raise, but why was she was speaking in her City council capacity at the time? Along with investing in a Marine Lab should the City be investing in a cold storage plant as well?

I’m starting to wonder if the Mayor and perhaps some of his colleagues are really closet Marxists, concerned as they seem to be about socializing the means of production, no doubt to improve the lot of the proletariat after many years of job loss and decline (other than at the Port, which paradoxically the council does not seem to have the warmest of relationships with).

I used to be quite a reader of the works of Karl Marx myself, years ago when I became disenchanted with the NDP as a party of backsliders and hypocrites. It seems fair to say, though, that history has taught us that public ownership of the economy does not always work that well, and that investment capital is best raised through private means rather than taxation of the same proletarians that public ownership is supposed to benefit.

Important though the fishing industry has been up here, perhaps the council might focus on issues that are actually within their responsibilities and authorities under the Community Charter, like fixing potholes and other civic infrastructure that is not bearing up that well under the pressure of our much diminished population and also ensuring that the place does not become so run down that it becomes known not so much for its’ scenic beauties as for being an eyesore at the end of Hwy 16 that no one wants to relocate to or visit.

As for the LNG proposals, perhaps there are some issues there for the council to consider if they can tear themselves away from fisheries topics. Will these LNG plants that are being proposed be within our boundaries such that if they go ahead the City will be awash in much welcome industrial tax revenue? Or will the plants be in other jurisdictions (Lelu Island is in Port Ed for instance) such that tax revenues flow elsewhere while Rupert is stuck with greater pressure on its’ services and infrastructure and the costs that go with that?

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So I c that the tax payer is footing the bill for this mess!!

26

It would be appreciated f those referring to city workers would be a little more detailed. If you are talking about reducing lets talk about management, rather than union workers…management are the ones getting the big bucks…maybe it is time to trim the top end rather than the little guys…also lets keep in mind that we are all tax payers, so any increases or shortfalls affect everyone, including city workers, Just saying…

27

How to find half a million dollars? How much could be saved if we did not fill the city manager job and downgraded the financial officer to “accountant”? Now is our chance with both positions up soon.

Given that the City is broke, think like a household: no more travel for officials, cut management first, councillors and mayor take ten percent cuts. Stop giving new industries tax cuts, like was said in this thread earlier. Stay away from cuts to youth, that includes the Civic Centre and Aquatic Center.

Budget Meeting tonight May 8th,2013 at Civic Centre tonight at 7pm

28

how many managers run the civic center and pool? couldn’t one person run both the civic center and pool? that would save us money