Let’s be upfront from the outset, the Langley Events Center is a great community asset! Now let’s also be upfront and state the inconvenient facts and tell the UNTOLD truth about its financial reality! A lot has been said about out of control Municipal spending, put this at the top of the list!!
No Business Plan – Very questionable Management Plan – NO satisfactory Oversight.
In short, the taxpayers of the Township of Langley are owners of a Financial Disaster, brought to you by your current local Township of Langley Municipal Council. From cutting an unnecessary cheque for $8.83 million to a non-existent private partner back in 2011, to a mind blowing annual subsidy! Read on, unfortunately this story just gets worse….
A Taxpayer Funded Annual Subsidy that has grown to over $11,000,000 for fiscal 2013 and it looks like it is still growing!!! Yes that is not a mistake, it is the correct number of “0”s over $11,000,000 for one year in taxpayer subsidy! Yet, there is more!
As I have said so-often before, you just can’t make this stuff up. There are many internally in the Township (Council) who have never questioned staff as to the lack of a business plan from the outset (pre-construction) let alone the operational costs and it’s needs going forward. Pretending a problem doesn’t exist doesn’t cut it. Suggesting anyone questioning anything about the LEC is opposed to the LEC is of course a lie, patent nonsense and an all too often used diversionary tactic, as an excuse in the absence any logical answer or explanation for you the taxpayer.
This is a sad statement, but with anything close to good management we could have had the Langley Events Center at a much cheaper cost without the questionable payouts to non-existent partners and an increasingly outrageous annual subsidy that is going who knows where; these are not mutually exclusive! This kind of annual subsidy for a Public Facility just doesn’t exist anywhere else except in the present day world of the Township of Langley. It isn’t even close!!!
As I have blogged on numerous occasions, the first significant and very difficult issue I had to deal with when elected Mayor in 2008 was the untruth in the public domain that the Langley Events Center was a P3 agreement when in fact it wasn’t! Just for the record, this story was told through Press Release after Press Release (all documented) over two years supported by senior TOL staff, our MLA Rich Coleman and all members of Council.
If all of this wasn’t bad enough there was much more to come, unfortunately for the best part of two years I couldn’t say anything as it was tied up under in-camera rules. All of these facts were finally able to be detailed to the public through my Press Release dated Wednesday, December 15th, 2010 after all agreements were passed by Council and signed off. I received severe internal criticism for doing so, but I was being consistent in fighting for residents.
Inconvenient facts for sure, but all have to be laid at the feet of Council. All of this was highlighted in an earlier BLOG Post Dated March 3rd, 2013 http://www.langleywatchdog.com/2013/03/ .
It does not cause me any pleasure, but with my three years of experience in the Mayor’s office combined with what we have just learned, an external review is in order, or going forward is demanded. With the new information that follows with respect to the operations subsidy, it only reinforces this need! While the numbers we are quoting are all audited numbers, this revelation is no reflection on the auditor, they were only dealing with the numbers provided.
The Annual Operational Subsidy? – What hasn’t been discussed to-date and made public are the annual subsidies for the Langley Events Centre? Good and responsible governments are transparent which is absolutely essential in gaining public trust. In the case of the Township it doesn’t exist. Voters should be demanding it and accepting nothing less. The Mayor should be providing it and Councilors should be insisting on it. Unfortunately ALL members of our Council have been silent with respect to all questions on the detail of the start, the construction, the finish, the expansion and now the operations of the Langley Events Center.
Do we all remember the financial debacle of a contract entered into by our neighboring City of Abbotsford with the Abbotsford Heat Hockey Team playing out of the NEW Abbotsford Entertainment Center? It had to be bought out at a healthy cost to the taxpayers by the City of Abbotsford. So what am I talking about? Let’s put everything into perspective:
Total Abbotsford City subsidy to Abbotsford Heat Hockey Team for 5 years – $7.2 million.
Total Abbotsford City buy out of 5 remaining years for the Ab. Hockey Team – $5.5 million
City subsidy to the Abbotsford Heat for the last year of their contract – $1.76 million
Abbotsford Ent. Center Facility Operations subsidy for the 2011 / 2012 year – $1.70 million
(not related to Hockey Team subsidy – more on this comparison below)
That contract and buy out, combined with the Operational subsidy while outrageous, is nothing compared to what you, the taxpayers are paying for the Langley Events Center in the Township of Langley.
The Langley Events Center – for the Record – First we must understand the complicated management structure of the Langley Events Center, an arrangement, if nothing else, that should cause one to pose a few if not many questions. The first that comes to mind “Is the best interest of the taxpayer being served by this rather convoluted management and operational structure”? So here it goes –
Langley Facilities Society – Established March 12th, 2009 under the Society Act of British Columbia. The purpose of the Society is to manage annual funding provided by the Township of Langley and other parties for the operation and maintenance of the Langley Events Centre.
Society Members:
Mark Bakken Langley B.C. Voting Member / TOL CAO
Township of Langley Langley B.C. Voting Member
Dellarae Sawchuk Langley B.C. Voting Member / Purch Mgr TOL
David Leavers Langley B.C. Voting Member / Director Parks
Society Directors:
Mark Bakken Langley B.C. CAO Township of Langley
Christine Ann Corfe Langley B.C. Director Corp. Admin. TOL
David Leavers Langley B.C. Direct. Parks and Rec. TOL
Dellarae Sawchuk Langley B.C. Purchasing Mgr. TOL
Hilary Tsikayi Surrey B.C. Director of Finance TOL
Ten Feet Sports and Entertainment – The Langley Events Centre commenced operations in 2009. On May 1st, 2010 operations of the Langley Events Centre were assumed by Ten Feet Sports and Entertainment Ltd., a wholly owned subsidiary of the Langley Facilities Society.
Owners / Directors
Margaret Mason 0 shares Partner – Bull Housser & Tupper
Langley Facilities Society 100 shares
Jason Winslade 0 shares TOL GM, Direct. Presid. and Secret.
IMPORTANT – It is important to note that there is an agreement in place between the Society and the Township dated April 14th, 2009. Both parties agree to a “Right of Reverter” related to beneficial title in addition to a “Keep Well” agreement. The Township commits to provide all the funding required by the Society to meet its financial obligations in the operation of the Langley Events Center. “A blank cheque for unlimited funds? Read on – You decide!” NOTE – Ten Feet Sports and Entertainment by contract is responsible for operations NOT CAPITAL PROJECTS! Are the $10.898 million in Capital Fund Taxpayer Subsidies an effort to bypass public scrutiny? What were they for?
TOL Financials – The Township of Langley’s Consolidated Financial Statement for 2013 lists the following – (note – they state that their Annual Financial report includes the financials of the Langley Facilities Society and Ten Feet Sports and Entertainment)
Recreation Culture and Parks
Revenue $11,948,000
Expense $28,784,000
Deficiency ($16,836,000)
What part does the LEC play in this 2013 deficiency?
Langley Facilities Society Financials (LEC) – According to the Langley Facilities Society, the Society relies upon annual grants (I prefer to use the words “Taxpayer subsidies” YOUR TAX DOLLARS!) because that is what it is from the Township to fund its operations. The following numbers are taken from the Societies audited Consolidated Annual Report.
Item Subsidy
2009 TOL Operating Grant (Subsidy) $2,137,000
2009 TOL Capital Grant (Subsidy) —————
2009 Total TOL Subsidy $2,137,000
2010 TOL Operating Grant (Subsidy) $3,329,000
2010 TOL Capital Grant (Subsidy) —————-
2010 Total TOL Subsidy $3,329,000
2011 TOL Operating Grant (Subsidy) $6,281,000
2011 TOL Capital Grant (Subsidy) —————-
2011 Total TOL Subsidy $6,281,000
2012 TOL Operating Grant (Subsidy) $5,332,000
2012 TOL Capital Grant (Subsidy) $3,933,000
2012 Total TOL Subsidy $9,265,000
2013 TOL Operating Grant (Subsidy) $4,044,000
2013 TOL Capital Grant (Subsidy) $6,965,000
2013 Total TOL Subsidy $11,009,000
Total Subsidy for 4 years and 9 months $32,021,000
2014 – What will it be – $12,000,000?
Salaries / Wages
2010 $ 691,000
2011 $1,220,000
2012 $1,072,000
2013 $1,526,000
2013 + 42% over 2012
LEC Revenue
2013 $2,370,000 (Exclusive of TOL Grants)
IMPORTANT NOTE – All numbers quoted come direct from the annual financial statements of the Langley Facilities Society and are audited by KPMG Burnaby.
Not only are the annual grants (taxpayer subsidies) completely out of line, the rate of growth of those grants (taxpayer subsidies) paid by the TOL since 2009 is completely irresponsible. The total taxpayer subsidy paid to the end of 2013 is over $32,000,000. That total is for only 4 years 9 months – March 12th 2009 to Dec. 31st 2013! What do we have to look forward to for 2014 – $12,000,000?
Ten Feet Sports and Entertainment Financials (LEC) – The detail of expenditure and revenue Information is not available as yet? How many employees? What is their compensation? What expenses are covered? What revenue is generated…. And much more!
The Facility Operating and Licensing Agreement between the “Langley Facilities Society” and “Ten Feet Sports and Entertainment” states the following – under section 5. Funding of Operations.
(a) At the beginning of each quarter (first quarter commencing January 1st, 2011) Langley Facilities Society shall pay to Ten Feet a sum sufficient to operate the LEC without running a deficit, or such other amounts agreed to by the parties, after accounting for all other revenues that Ten Feet may have received from operating the LEC pursuant to provisions hereof.
(b) Ten Feet shall use its best efforts to minimize any deficits, provided however that ten Feet shall not be responsible to repay Langley Facilities Society for any funds advanced to cover such deficits.
Without these subsidies the Society would be unable to meet its obligations during the normal course of operations.
On December 31st, 2010 the Langley Events Center was carried on the books of the Langley Facilities Society at a cost of $73,756,000.
There were additions during 2011, 2012 and 2013 totaling $15,512,000 for a total cost (cost of construction) of $88,138,000.
The LEC has been given as security for a B of M loan of $15,940,000. Interest on this loan was $446,000 in 2011 and a principal repayment was made of $1,000,000. It is clear that an increasing subsidy of what we have seen will be required as payments are simply not available out of operations of the LEC.
Question – Why was this loan (it’s purpose?) processed through the Bank of Montreal as opposed to the Municipal Finance Authority which as I understand it is required under provincial legislation?
Appraisal – Although the LEC cost $88,138,000 to build, its value is a completely different story. If it were appraised by a commercial appraiser, a major factor affecting its value would be the income generated from the property. That amount of income is minimal. It is clear the appraisal of this facility would not be close to the cost to build.
Comparison: How bad are these deficits (taxpayer subsidies) compared to a similar facility?
How does this annual subsidy of $11,000,000 in the last year compare to any similar facility?
(See above, but just in case someone was asking, here is something to think about?)
The NEW larger (and more expensive to build) Abbotsford Entertainment Center operations for the year 2011/2012 were subsidized by their taxpayers to the tune of $1,700,000.
The Township / LEC spent $7,565,000 MORE in taxpayer subsidy than Abbotsford for the same year by comparison (5½ times more)
The Township / LEC spent $9,309,000 MORE in taxpayer subsidy than Abbotsford by comparison (6½ times more) for 2013!
(Note – the Abbotsford subsidy above was stated by Mayor Bruce Banman at an Abbotsford Chamber of Commerce luncheon presentation in November of 2012 as reported in the local media.)
Summary – This information will be explosive to ALL taxpayers of the Township of Langley as it should be!!! Leading into a major Municipal Election (and it is by all measure) it is imperative that the sitting Council members are measured on their job performance while in office. If they are not held to account, you will have in essence said we are fine with this annual subsidy. It is unfortunately that simple. This is not about liking or not liking the Langley Events Center, but it is about whether your tax dollars are being managed with sound and prudent management which is clearly not the case.
Important Questions to ask yourself or any other resident of the Township of Langley?
Where were the elected members of our Municipal Council throughout the budget review?
Did they go through a thorough Budget Review?
How much did they know about this subsidy and when did they know it?
During the budget process (if there was one) were the Financial Statements of the Langley Facilities Society discussed? If so were they challenged?
Did Council members know about this taxpayer funded subsidy?
If Township Mayor and Council did not know about this subsidy they are grossly negligent in their elected responsibility and if they did know and it was left unchallenged this alone calls for a majority change of council by voters on Nov. 15th!
Does this information not leave residents / taxpayers speechless?
Further reasons to be concerned as a taxpayer aside from the obvious gross waste of your tax dollars? What about other Township priorities that have been put on hold?
Where is our promised NEW Aldergrove Indoor Pool and Recreation Center? Over $32,000,000 (up to 2013) in Langley Events Center deficits (taxpayer subsidies) with no end in sight and the taxpayers in the eastern side of the Township are left with a new promise from one election to the next all dependent on selling off taxpayer owned property assets?
The Township of Langley had no problem cutting a cheque to a non-existent private partner for the Langley Events Center for $8,830,000, they had no problem in secretly approving a deal to expand the Langley Events Center (not announced until 6 weeks after construction started) for $7,500,000 plus covering deficits from the operation of the Langley Events Center which by the end of 2013 (a little over 4 ½ years) had reached more than $32,000,000.
FACT! A total of $32,000,000 has been spent in less than 5 years on one facilities operations, plus $88,138,000 in capital for a total of $120,138,000 – none of it approved by voters!!!
What about other priorities? Council has been putting Aldergrove and East Langley residents on ignore regarding the Aldergrove Pool and Recreation Center, we can’t fix and widen 208th street through Willoughby, we can’t fund a community based planning function for Brookswood (we borrow from developers) and we can’t fund 4 man crews for our Fire Department as mandated by Worksafe B.C. to just name a few. There is much more than this which is being ignored as we know!
Message to voters – Don’t believe any renewed promises about a new facility in Aldergrove that members of this current council will trot out prior to the November election. They have repeatedly proven they cannot be trusted! If a sitting Councilor of the majority state they are fiscally responsible during the election campaign, sorry they don’t know what the words mean or how to spell the word!
Another way to look at it if we need one – Just how much does this deficit (taxpayer funded subsidy) represent of your total Township of Langley Budget or it’s potential affect on taxes if that amount was needed to be made up?
5.941%! Just think of that number, 5.941% or very close to 6% of the total 2013 budget went to a taxpayer funded subsidy of one Municipal Facility!
In the Township of Langley $850,000 represents about 1% in your Municipal Budget therefore an $11,000,000 shortfall represents a 12.94% property tax increase to make up the difference.
Question – Would YOU vote for that?
This takes the well-known Financial incompetence of the Township of Langley (see McLeod Park expansion) and members of our council to a whole NEW level! It is nothing less than a shocking development. The Langley Event Center is a fabulous facility of which our community has a great deal to be proud of BUT! That does not mean it is a great big black hole into which we pour your hard earned tax dollars unabated without investigating the cause and fixing it!
Question – Where has this money gone?
How are these costs possible or plausible?
As I said earlier, Aldergrove residents can have a new Recreation Facility, and other priorities can be looked after BUT ONLY IF the current long standing financial incompetence that has gripped this municipality for many years is eliminated. In the November election, Get Out and Vote, we owe it to ourselves, friends, neighbors and relatives who live in the Township. Spread the word!!!!
IMPORTANT NOTE: The figures listed above come from the Dec. 31st 2013 audited Consolidated Financial Statements published in June of 2014 for both the Township of Langley and that of the Langley Facilities Society.
RG
I am working on a few posts at present that I believe should be of significant concern and interest to residents of the Township of Langley.
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