Kerry doesn't have a good opinion of the LEC. He appeared during the public hearing at Finance Committee last night to make a presentation titled "LEC Loans (past, present and future). By the end of his time, Kerry and the Chief Administration Officer didn't even agree to disagree, Mr Tollstam said he was wrong and Kerry said he (and the city) was wrong.
For those who are not aware of the LEC, renters like me who for now are not affected by it, the LEC can be best thought of a municipal Crown Corporation as it is a corporation owned entirely by the CNV, really us the taxpayers. The term does not really apply as most Crown Corps, like Canada Post is the Government (Federal or Provincial) is a service that the government operates because a normal business would not be able to operate that service.
The LEC is a corporation wholely owned by the CNV where it has thrust itself into the marketplace to complete against a Provincial Crown Corp and several real corporations. It is part of the "green" changes to old way of doing things which of course usually means the taxpayers have subsidize it. But the LEC tells us they set the rates below the price charged by BC Hydro and others. Councillor Heywood pointed out the assumptions made to determine what the average person pays is inflated. It really a mute point as the Council requires that any new structures over 10,000 sq ft have to use the LEC. So there is no competition or free marketplace.
Going back to the outstanding loan issue, this needs to be broken down. Kerry states that the LEC "has received public loans in excess of $10,664,000 from the City" and that "there currently no realistic plans in place to repay these funds."
First, lets get $2,000,000 off the table. The CNV loaned the LEC this amount to start the corporation. It is reported every year in the Statement of Financial Information as money owed. There is no indication of when it will be paid back. The CNV made this an interest free loan so the amount never increases. Neither party seems to be concerned if this money is ever paid back to the taxpayers. Seeing the LEC coming back to the trough this year for more loans indicates the likelihood of repayment.
Second, there is the question of staff. Kerry claims that the LEC has no employees and all work performed on behalf of LEC is currently being paid out of the City's payroll. The CAO said every bit of time spent by city staff was charged to LEC and was paid for. He didn't say whether there was a running bill or line of credit or all bills were paid when incurred.
So in this, they both may be right. One thing I can say safely is that the LEC is not a real corporation. If paying the CNV for staff duties, they avoid the HR costs of staff. In addition, if the LEC were a CNV department, they would be subject to democratic rules and public scrutiny. Kerry has made them face the issue in public and it was the LEC that contributed to the defeat of former Councillor Fearnley. The CAO has said that the issue will come before Council soon but will it be a secret meeting where it is voted on without public discussion?
One rule applies, "if matters have to be done in secret, it's because politicians and bureaucrats have something to hide.
If LEC can price their product lower than their competitors without subsidization, then they can exist in the marketplace and the City could sell the asset. Of course, part of their success in attracting clients is based on the City's ability to force taxpayers to become customers. If Kerry's suspicions are shown to be correct, then it is another green con job that taxpayers are paying the price for.
NOTE: This blog has delayed my article on the lack of Community Associations in the City.
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