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City of Ottawa: The Amalgamation Nightmare

City of Ottawa: The Amalgamation Nightmare

This year marks the third anniversary of the newly-amalgamated City of Ottawa and the conclusion of its inaugural city council's first term. With the November elections fast approaching, the nation's capital and its leaders are finding their efforts to make the new city work under review. Many changes have taken place since 2000, when the province merged 12 municipalities into one. The degree to which one has noticed these changes depends mostly on where you live.

Whether we recognize it our not, our quality of life and finances will continue to be affected by the decisions of those in municipal government. Thankfully, we still have a say in those decisions…

So, with the election approaching, now is a good time for reflection. Have Queen's Park and the City of Ottawa lived up to the promises given at the time of amalgamation? Namely, a city that offers better services but costs taxpayers less money? Has merging the townships meant that we are now running a tighter, more efficient city that has served to improve the lives of everyone within its boundaries?

2003 is the year that the provincially-established Transition Board (TB) pointed to as an end to the genesis of the new city—a time far enough along from conception that the "success" of the project could be measured. No one thought that melding 12 independently-operating municipalities into one huge corporation would be a quick and easy task. In fact, people at every level of city government will tell you that it has been a great challenge and more difficult than expected. But the real question is — are these difficulties a natural result of amalgamation, or do they stem from the leadership of the mayor, city council or senior staff? Before we can answer these questions, it's important to understand the historical nuances of the city's amalgamation, and to remember the circumstances surrounding its inception.

Mixed Beginnings

The issue of amalgamation has been a hotly debated topic in the Ottawa-Carleton region for more than 30 years. In 1969, a two-tiered government was established, made up of the Regional Municipality of Ottawa-Carleton (RMOC) and 16 lower-tier municipalities. (It was later reduced to the 11 municipalities that combined with Ottawa-Carleton to make the new City of Ottawa — Cumberland, Gloucester, Goulbourn, Kanata, Nepean, Osgoode, Ottawa, Rideau, Rockcliffe Park, Vanier, and West Carleton.) Basically, the RMOC was responsible for spending 80% of municipal taxes in the region, but the lower tiers had autonomy in administering their unique townships. This system was not perfect, however. Lines of function and responsibility were continually questioned, and the two sets of elected officials were more often in competition with one another.

When the question of amalgamation was put to the public in a 1995 referendum, the majority voted against it. Nevertheless, five years later, the Mike Harris government superseded their decision. Some still complain it was a "forced amalgamation."

Said Tony Clement, Ontario's Minister of Municipal Affairs and Housing at the time of the new city's conception: "The government established the new City of Ottawa to reduce the number of politicians and improve local government, making it simpler, more efficient, and more accountable. The goal is fewer politicians and lower taxes."

The TB commissioned in 2000 was chaired by Claude Bennett, former Tory cabinet minister. "It is easier to sell something known as Ottawa than it is to try and sell Nepean or Gloucester, from an international point of view," says Bennett about the original rationale for the super-city. "So the process was a logical one. It took some time to sell, because not everybody was onside, but at the end of the day, I think that most believe it did have and does have potential to assist in the overall development of the massive area know as the City of Ottawa.

“The seven people on the transition board made a great team," Bennett continues. "We did what we were asked to do, and did it as citizens of this city with a long-term understanding of what the improvements could be. Was there unanimity on our committee all the time? No. But there was sufficient agreement to do what I think was a better than adequate job putting together [the 12 municipalities] and giving them some ground rules and procedures upon which the new city could function."

In retrospect, Bennett's only criticism is that the province didn't give them enough time to get the job done. "Anything less than a year and a half is a difficult challenge. We were given 11 months and a municipal election [and did the best we could].”

The TB's final report showed how the city could reduce its bureaucracy by 1,100 positions and eliminate duplicate service between two local levels of government. It showed how the city could save $75 million through merging the municipalities, and even identified $86.5 million in annual savings for the taxpayers of Ottawa after the third year.

But the final report of the transition board was presented to council in the form of guidance, not legislation. Therefore, the ultimate responsibility for accepting or revising its recommendations was left in the hands of the new municipal government. "If savings haven't been realized due to increased services and not following the transition board's recommendations, that's council's prerogative," Bennett says. "But if it's their right politically, they should take responsibility for costs left on the table."

From the outset, the handover of the new city from the TB was marked by tension between the mayor's office and the province. Newly-elected Mayor Bob Chiarelli was a provincial Liberal MPP until 1997. His chief of staff Brendan McGuinty is the brother of Ontario Liberal Party Leader Dalton McGuinty. Arguments over the unexpectedly high $189-million amalgamation bill (which included $110 million in severance packages for people whose positions became redundant) was the first controversy. Chiarelli demanded that Queen's Park pay 100% of these costs, and was openly angry when the province only offered to pay for half the amount. This was followed by a suggestion by the mayor that council revisit each of the TB's 400 recommendations.

According to Mike Jung, who is campaigning for council in Somerset Ward: "People are incensed that every issue has to be a fight between the mayor and the province. The word on the street is that amalgamation would have gone a lot better without this feuding. Many feel it does a great disservice to the community to have such partisan politics coming from the mayor's office.”

Amalgamation Might Be a Success If…

The transition board's final document recognized that the "success" of amalgamation — based on benefits such as new technologies and streamlined departmental structures — would take years to assess. Nevertheless, it provided four "performance indicators" to evaluate the transition process.

• Have we seen the financial savings promised by amalgamation?

• Is city staff working productively?

• Have city services improved?

• Are residents and businesses of the various communities pleased with city governance since amalgamation?

One of the chief rationales behind merging townships and eliminating two-tier government was to save taxpayers money. The province promised that by consolidating services and reducing the number of full-time employees across the city, the combined municipalities would see at least $75 million in savings annually and have no tax increase. Not only did city council promise to reali7e this goal, but the mayor tacked on his own pledge to cut the tax rate by 10%. The city and mayor's office are claiming to have accomplished these goals. However, reasonable challenges to this claim suggest the jury is still out.

With a budget, city staff and deficit that have grown since 2001, many are asking how it's possible that amalgamation has actually saved money. The city is now spending $153 million a year more to operate than before, employing almost 1,000 more people than the TB said was necessary to achieve savings, The City of Ottawa's Long Range Financial Plan predicts that at the rate things are going, the reserves will be depleted by 2006.

Knoxdale-Merivale Councilor Gord Hunter, who chairs the planning and development committee, says the city isn't saving money from amalgamation and he never thought it would. "For every area where there has been savings, there has been increased spending somewhere else. Take salary increases, for example. Savings by having fewer staff [in various departments] have been eaten up by paying more to the remaining staff in former municipalities."

Hunter points to other impacts on amalgamation savings: city growth and infrastructure needed as a result; the expansion of ambulance and police services; and the recent takeover of social_ services. "The province used amalgamation as an excuse to download services. There is only so much money to go around."

On the question of actual savings, the: burden of proof lies with the city, but it has yet to give a full accounting. This is because, according to the TB's former financial director David Muir, a number costs associated with amalgamation are still unknown. "Transition costs are yet to be: incurred, which also means that savings have not been realized. The city hasn't moved quite as quickly as we anticipated in selling off properties of the former municipalities. Other outstanding costs include labour negotiations and retirement settlements. The greatest savings were to be realized by reducing full-time staff. They haven't quite accomplished what we had planned in the timeframe we gave them, but have gone 90% of the way toward meeting that goal. However, over time we may not see savings from amalgamation because of spending decisions that were made."

In 2002, the city cut $73.3 million of the $79.9 million in costs targeted by the TB and said it had a plan for achieving the remaining "deferred" savings by 2004. But the course taken to identify such savings was not the one suggested by the TB.

Steve Kanellakos, the new acting city manager, says his staff had to be creative and shift around the figures to meet the target. "What handcuffed us with the transition board's mandate was to cut staff without cutting service levels," he says. "We found as many savings as possible, but sometimes they weren't where (or how) the transition board predicted they'd be found." This leaves open the question of whether amalgamation actually achieved savings, or whether these "savings" were achieved elsewhere through creative budget writing. [For example, a close look at the report shows that the largest discrepancies take place in Communications and Marketing ($1.2 million and 20 full-time employee reduction shortfall) and in Planning and Infrastructure Approval ($367,000 and 14 full-time employee reduction shortfall).]

City auditor Tracy McTaggart, who compiled the transition report, reiterates that the 52-page document (containing the word "savings" at least once in almost every paragraph) "is not an overall analysis of amalgamation savings." She says she does not know of such a report that is forthcoming.

Without a comprehensive report from the city, it is impossible to know if amalgamation has saved money.

However, Walter Robinson, national director of the Canadian Taxpayers Federation, says he does not think that amalgamation has saved taxpayers anything. "Any savings have been plowed back into new program offerings, spent on a proliferation of committees, or chewed up by losing consistently at the Ontario Municipal Board. Or, they have thrown it into a variety of social engineering campaigns—from pesticides to the smoking ban, to focusing on whether or not to ban the circus or leash people's cats. When you're talking about building a competitive metropolitan environment, those aren't part of the priorities. They fall off the top of the 'to do' list."

And, to be sure, any savings that have accrued have not been passed on to taxpayers. Skyrocketing property assessments have meant that Ottawa has the fifth highest municipal property tax of any major Canadian city. In fact, even with the 10% tax rate reduction, because of assessments, businesses and many residents are having to pay more now than they did three years ago. This, coupled with the fact that the mayor has had to dip into reserves to balance the budget, has experts worried that more financial woes are coming.

Gail Logan, president of the Greater Ottawa Chamber of Commerce, is concerned that Ottawans will likely see a tax increase next year. "The 6.5% property tax rebate that was returned to residents in the form of a grant this year will be built into next year's tax base and assessments will continue to increase, probably by 5%," Logan says. "When you add in the OMERS (Ontario Municipal Employees Retirement System) pension payments scheduled to resume next year, an increase seems inevitable. Yet, when the mayor was presented with these figures at a recent meeting, he responded by saying that would happen over his dead body. We're holding him to that."

Commenting on the province's satisfaction with the city's financial performance, David Young, Ontario's Minister of Municipal Affairs and Housing, said: "We're hopeful that the City of Ottawa will cut taxes in the future, but are very pleased that it has managed to freeze taxes and want to give credit where credit is due."

Yet, Ottawans seem less eager to offer their praise. Given the fact that actual taxes are now higher, even though the tax rate has dropped, and the city has not been able to show that amalgamation has saved them money, Ottawans may have a difficult time believing that the city and province lived up to their promises.

For city staff, transition has meant working within a new chain of command to learn new ways of going about old business. Yet, knowing how staff have faired through this challenging and often confusing process gives insight on how the city is functioning as a whole.

As veteran human resource executive Susan Wright of Oland Specialty Beer Company says, staff satisfaction is key to any company's performance. "An engaged workforce that's innovative helps build confidence among shareholders. Effective employees have confidence in management, company pride, personal drive and a clear understanding of the company's vision and strategy. (Oland conducts annual employee surveys and follow-up strategies as an essential part of its operations).

But those running the Corporation of the City of Ottawa have not conducted such surveys. And, one high-ranking city official admits that "if a formal survey were conducted, we probably wouldn't get a positive answer on staff satisfaction." While city staff have been given strict orders not to speak to the media, evidence suggests that the senior manager is right — transition has been less than pleasant for employees.

The most obvious indication of this is record-high levels of sick leave taken since 2000. According to Wright: "The higher the absenteeism, the lower the organizational health."

Then, there is the obvious example of extended labour negotiations. Many employment contracts ended in 2000, yet are still undergoing fierce negotiations. Such unusually long proceedings would leave anyone frustrated and insecure about the future.

Direct dealings with staff present other clues. Visiting the local client service centre, or calling the city's help line and meeting with uncertain replies or misdirected calls, demonstrate that staff are still trying to get their bearings.

Former Kanata mayor Merle Nicholds, who is now a consultant for businesses in transition, says she is concerned about city employees. "The speed at which the province set the timetable for transition has been hard on staff. You have a large organization made up of different cultures coming together very quickly, but people providing services must have a chance to become acclimated to the new culture and organization. No one is taking the people factor into account. From the leadership down, there's not a clear sense of purpose or direction. Staff going through such change needs lots of support and to know that the organization is well managed and well thought-out. They need the security that comes from good planning and strong management. I don't think anyone has put that in the plan.”

Recognizing that city government is only as healthy as its staff, it seems strange that more effort has not been made by the mayor and city council to measure and ensure the satisfaction of city employees.

At the heart of amalgamation is the restructuring and "streamlining" of services formerly divided among the region and various townships. Ottawans have been led to believe that the process of harmonizing these varying performance standards would occur unnoticed. They were also promised that amalgamation would bring about better services in the future. Has the city been able to deliver on these promises?

Although many staff paychecks still bear the name of the old municipality, we are seeing some veritable improvements as a result of the amalgamation process.

For example, the city's protective and emergency services (911, ambulance, fire and police) are in the final stages of being regrouped into one common jurisdiction with coordinated communications and operating protocols. According to Sergeant Stephen Flanagan (who has served with the Ottawa Police Force for 30 years), the process of merging the police department began with rural resentment and disputes between urban chiefs, but is now accomplishing what it set out to do. "We no longer have the problem of neighborhoods overlapping or simultaneous investigations. Amalgamation has taken hold and growing pains are pretty much a thing of the past.”

Regional fire chief Al Matthews acknowledges that the transition process has been shaky at times because "people generally don't like change?' However, combining and standardizing fire services has meant new equipment and better response times—especially in the rural areas. "Under artificial boundaries of old townships, you had firefighters travelling great distances to get to the corner of their district—which was just next door to the neighboring district's station. Now, the closest station responds."

Yet not all core services have been delivered "without a hiccup" over the past 30 months.

Herb Lagois, owner of Lagois Drafting & Construction in North Gower, says that he noticed instant changes following amalgamation. "It takes four to eight weeks to get building permits now. Before, we could get them in as little as three days."

According to Lagois, novice inspectors fresh from college are overloaded and unqualified to make decisions. "Their inexperience requires engineering reports, which are costly to homeowners and require more time." Indeed, the problems associated with harmonizing building codes and bylaws across the growing city are numerous and well documented.

"Amalgamation has made it a lot harder for businesses," agrees A.J. Plant, manager of Gloucester's Chamber of Commerce. "It takes longer to get things done [through City Hall], and a lot of things you could do before, you can't do now."

A host of other problems have been listed: trash piling up on city streets and in parks, extra delays in snow plowing and street maintenance, overgrown soccer fields or having to deal with three different departments to obtain use of the fields.

"Merging 12 former municipalities into a single entity is historically unprecedented," says Centretown Business Improvement Agency director Gerry Lepage. "No question that certain aspects of service delivery are going to fall between the cracks. If people expected an improvement, they haven't seen one. Amalgamation is proving to be more of a challenge than anticipated and the dynamic of tension will exist for some time yet."

But what troubles Lepage and others who keep close watch on municipal politics is the lack of leadership. "There is no distinct direction to determine exactly what services the city should be delivering.”

A good example are the differing perspectives on council on where to find the $120 million in savings needed to meet this year's budget shortfall. While councillors Gord Hunter, Shawn Little and Janet Stavinga are willing to take aggressive measures, Alex Cullen, Alex Munter and Elisabeth Arnold are requesting even more money for various programs. It seems that when it comes to programs, particularly in the people services department, there is not only a lack of overall vision as to which projects the city should tackle, there's a lack of awareness about those currently funded. According to a city audit report, $9.5 million in unaccounted-for grants was spent in 2002—$4 million of which exceeded the budget. "Currently in the City of Ottawa, there is no overall policy framework governing the establishment and management of grants and funding programs to external organizations," the report states.

Caroline Andrews, dean of Ottawa University's Faculty of Social Sciences, says that the potential benefits of amalgamation were contingent on council addressing overarching questions of policy and governance. "Councillors are facing a dilemma between fulfilling their policy-making role and dealing with the day-to-day issues facing their ward. People view re-election chances as dependent on meeting individual needs. This means big picture questions are left unanswered."

The average city produces between 6,000 and 8,000 products and services—everything from brochures to recreation programs, and reviewing these services not only helps measure performance but also helps to identify savings, often 5% to 10% of the budget. Not until June, with six months left in its mandate, did city council request a core service review. This report is expected by the end of November—after the elections.

"Amalgamation still has to live up to its promises in terms of bringing services to satisfactory levels within residential and business communities," concludes Andre Piché, director of national affairs at the Canadian Federation of Independent Businesses.

How have the 785,000 people from the different municipalities been impacted by the transition to One-City Government?

At first, Marilyn Charron of Orleans was in favour of amalgamation because she thought there was too much money being spent on the various levels of government. "However, they said my taxes were going to go down with amalgamation and they haven't.”

Transit fares and recreation fees have gone up. Parking fees have doubled. Charges for new water accounts and new homeowner registration were introduced.

Gary Bourk has been a business and commercial property owner in Westboro for 50 years. "We shake our heads at the red tape. Taxes have gone through the roof, while money is being spent on questionable projects like the 0-Train."

Rural residents have felt ignored since amalgamation.

Osgoode councillor Doug Thompson worked to establish the Agriculture and Rural Affairs Committee in an attempt to bridge this gap. "There is a mentality around urban staff to say we know what's best for you."

A good example would be the debate surrounding the prohibition of open fires. A proposed bylaw would have required rural residents, like city dwellers, to cut and bundle wood from country acreage and set it at the roadside. The bylaw was overturned. Now rural residents have to apply for a permit that may take two or three days to obtain. The "craziness" of this scenario demonstrates the tendency of decision-makers to apply urban methods with little understanding of rural needs.

The Manotick Messenger, the weekly newspaper for Rideau and Osgoode, has consistently highlighted such political effects. In October 2002, editor Doug Clark wrote a laundry list of "steps toward stilling the rural voice" taken by the city: "decreased police presence; increased hunting restrictions; unreasonable restrictions on herbicides, pesticides and other farming practices; the abandonment of historically significant names and regions; introduction of snow plow licenses; and an indicator of just how far Ottawa will go... licenses and leashes on cats!"

This point is illustrated further by the recent enforcement of a sign bylaw prohibiting advertising on city property without a license. For many businesses in rural areas, this has always been the primary means of advertising.

But rural businesses aren't the only ones complaining about the disconnect at city hall.

Christine Leadman, executive director of the Westboro Business Improvement Agency, says that communication from city to businesses is poor. "Since amalgamation, [the city] has been trying to push more bylaws and reports through without involving business leaders. (New handicap parking codes) are being introduced very quickly. These codes will impact businesses, apartments and so on. You can't impose such codes without better communication."

Conclusions

The city has not yet tallied the transition and a given a full accounting of the savings promised. The consensus is that if there have been savings, they've been eaten up in other areas and taxpayers have not reaped any dividends. Also, there is a growing concern that spending decisions made by the mayor and council could mean a significant tax increase as early as next year.

The city has not conducted an employee survey. However, all sides agree that the transition process has been difficult for staff and morale of city employees is low.

Until now, the city has not produced a core services review or overall measurement of programs. Gaps in service delivery were seen. What has not been seen is a clear set of priorities for programs and services.

The city has not taken the steps necessary to measure community satisfaction with the transition process. On the whole, it's clear that Ottawans have noticed increased financial costs since 2001 and are unsure about how their money is being managed. Rural and business communities have noted a deep sense of "disconnect" from City Hall.

Taken as a whole, these "test answers" reveal a great deal about the way the mayor and city council handled the challenges presented by amalgamation. While amalgamation brought with it certain problems, such as glitches in service delivery, other more far-reaching problems, such as disgruntled staff, unsound bylaws and discontent among key constituents are a result of poor management and oversight. Ultimately, the mayor and city council are responsible for these problems.

City leaders made many promises on the eve of amalgamation but as seen here, little has been done to pro voters that these promises were kept.

By: Tarah Stock