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bilko@rgcmail.com Vol.21 No.35
Wednesday, November 29, 2017
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The road to $59 million
Column Six Stuck in the future It’s a brave new world, for some
Former councillor says debt is hidden; Town says financial statements are accurate. Both could be right.
BY COLIN BREZICKI
Special to the VOICE
If you don’t know where you’re going, any road can take you there.
BY SAMUEL PICCOLO
I
The VOICE
Since former Councillor Marvin Junkin’s resignation, the Town of Pelham has repeatedly asserted that its 2016 audited financial statements are not misstated, an assertion that implies a denial of Junkin’s claim that the Town has $17 million in undisclosed debt. But Bill Karner, a Pelham CPA and Chartered Accountant with some 25 years experience, argues that it’s possible that the 2016 audited financial statements are not misstated, while at the same time the Town is indeed—or shortly will be— $59 million dollars or more in debt. As you’d expect, there are a number of numbers in this story, but we’ve done our best to present Karner’s assessment in terms we can all understand. Here we go. Using the Town’s publicly available 2016 and prior year audited financial statements, 2017 and prior capital and operating budgets (and related schedules), Karner demonstrated last week how he independently arrived at his conclusion, which matches the figure that Junkin alleges was presented to Council by the accounting firm KPMG during a closed-door meeting on September 5. Karner divides his debt calculation in to five sections. (For simplicity, the following dollar amounts are rounded to the nearest whole number).
Long-term debt and bank indebtedness
The single biggest portion of the $59 million figure is in black and white, in the Town’s 2016 audited financial statements, which present $21.3 million in long-term debt and $1.8 million of bank indebtedness, for a total of $23.1 million at year end.
Cash shortfall
The next largest portion stems from what appears to be a substantial cash shortfall. According to its financial statements, the Town should have had $9.3 million in cash on hand at end of 2016. But Karner says that this cash is likely almost entirely from a loan—the first portion of a debenture received near the end of the year. The loan advance of slightly over $9 million See $59 MILLION Page 10
CAO Darren Ottaway watches as Councillor Peter Papp speaks. Story, page 13
VOICE PHOTO
Junkin doesn’t budge
Maintains audit was an “audit” not a “report” BY DAVE BURKET
The VOICE
He’s a little wobbly on a new knee, but former Ward 1 Councilor Marv Junkin is sticking by his story. It’s an account he also planned to tell the Niagara Regional Police on Monday as the Voice went to press, and the Ombudsman of Ontario, in an interview scheduled for this Friday. On November 5, Junkin
resigned his seat to protest the way Council reacted to news presented during a closed-door meeting two months earlier, in early September. At the meeting, Junkin says that the results of a financial audit delivered by KPMG revealed Pelham’s debt to be $17 million dollars more than previously disclosed. Rather than make these findings public, Junkin asserts that Council decided
to obtain an immediate $8 million dollar bank loan, then work to improve the appearance of the Town’s finances, including by delaying the release of it 2017 financial statements until late spring 2018. After falsely stating that Junkin had not taken his concerns to Council before resigning, Mayor David Augustyn has adjusted See AUDIT Page 8
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WA S T H I N K I NG OF Alice down the rabbit hole recently as I drove around another unfinished Niagara shopping mall, searching for my dentist’s new location. After 30 years in a downtown St. Catharines office, he had removed to this concrete wasteland that I remember once being an orchard. Weaving my way through a maze of untenanted offices and stores, I counted half a dozen fast-food outlets already up and running. If I get lost, at least I won’t starve to death, I think, as I cut across an empty parking lot that could safely land a 737. Though right now eating anything was a challenge, and why I needed my dentist. The two teeth on my partial bridge had snapped off on a raw carrot, and left me looking like Davey Keon when he held the Stanley Cup the last time the Maple Leafs won it. A little agitated now with my appointment time nearing, I parked outside a barebones office that had people inside and went in for asSee COLUMN SIX Page 16