Does the City of North Canton Manage City Property & Personnel Effectively?

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
August 29, 2011

I have observed over some time now the business of city government and I am prompted to ask the question: Does the City of North Canton manage city property & personnel effectively?

A few days before Christmas of 2010, a family on Pittsburgh Avenue suffered an estimated $250,000 in damages as a result of a fire. What caught my attention was the fact that firefighters were unable to use two nearby city fire hydrants. According to a Repository story dated December 20, 2010, fire crews tried to connect to a hydrant on the corner of Portage and Pittsburgh. That hydrant failed and when crews hooked to a second hydrant further north on Pittsburgh, that hydrant worked but broke within a few minutes.

Now, we are just seven months later and we have city residents dealing with sewer backups. In a Beacon Journal story dated, August 25, 2011, Mayor Held states, “the city will work on possibly clogged sanitary sewer lines.”

Problems with infrastructure are happening all too frequently. Is North Canton being effectively managed? Factoring in the repeated storm water flooding in the city that we are all too well aware of and one would certainly wonder what is going on with management of the city’s infrastructure.

Not as critical as the infrastructure failures noted above, but important just the same, is what I perceive to be a misuse of city personnel. Anyone who has ever attended a State of the City speech has surely noticed the abundance of city personnel who turn out. Many of these events have taken place during the workday. Clearly, city personnel cannot be doing their jobs if they are attending these political events.

How many city employees were ushered over to the Suarez event, less than two weeks ago, on August 18, 2011, while on the clock? We all know this has gone on but is this an effective way to manage city personnel?

My motivation for asking whether North Canton is effectively managed came to me on Tuesday, August 16, 2011. It was on that day, at approximately 1:15 p.m. that I saw four city employees in a city vehicle, waiting at the traffic light at the intersection of Dressler Road & Belden Village St., ostensibly coming back from lunch.

When I noted to one of the passengers in the car several days later that I had observed him in Belden Village in a city car around lunch time a few days earlier, he told me that the driver of the city car was looking at city water lines. Why would four city employees need to be riding around Belden Village looking at water lines at lunch time? Do you think the three passengers enjoyed spending their lunch hour looking at city water lines?

I have learned that only the city’s Fire Chief has a vehicle available to him to use on a permanent basis. I have consulted the North Canton Personnel Handbook and it states, “City Vehicles are to be used for City business.” Is the city’s vehicle use policy enforced?

Is there a policy regarding the misuse of city employees? Apparently, there should be one.

The instances above do not make me feel that North Canton is managing city property & personnel effectively. Given the city’s ongoing precarious financial situation, one would think we could do better.


Thank you,
Chuck Osborne
City of North Canton

92% of North Canton City Ordinances Adopted As Emergency Legislation

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
July 11, 2011

In the year 2010, 92% of all municipal ordinances adopted by North Canton City Council were passed as emergency legislation. I suspect most North Canton residents would be dismayed to know that “municipal emergencies” are a common occurrence at City Hall.

The adoption of municipal ordinances as “emergencies” is not a new phenomenon by North Canton City Council. As a former councilmember, I questioned the need to repeatedly adopt legislation using “emergency” measures. This practice, I believe has increased and does not serve the citizens of the community.

For residents who are unfamiliar with the legislative process, the North Canton City Charter states that “…every ordinance shall be fully and distinctly read at three (3) different, regular council meetings unless Council votes to suspend this rule.” Without a suspension of this rule, the normal legislative process spans six weeks. After the third reading and passage by city council, the ordinance is then available for the signature of the Mayor. The ordinance becomes law 30 days after passage on council with or without the signature of the mayor.

The City’s Charter requires the affirmative vote of at least six (6) members of Council to suspend the rule requiring thee readings and allows adoption of the ordinance with just one reading.

The suspension of the rule requiring three readings is generally coupled with passage of an ordinance on an emergency which allows the ordinance to become effective immediately upon approval and signature of the Mayor.

Emergency passage of ordinances also requires the affirmative vote of at least six (6) members of Council and is considered an action that, “…is necessary for the immediate preservation of public peace, health or safety….”

North Canton City Council adopted a total of 105 municipal ordinances in 2010. Ninety-six of those ordinances were adopted as emergencies necessary for the immediate preservation of public peace, health or safety of North Canton citizens. Seventy-six percent of those ordinances (80 out of 105) were adopted with just one reading. Would citizens have been able to learn of and make comments on proposed legislation before passage with a single reading? I suspect not.

Enacting laws, at any level of government, as emergency legislation as routinely as North Canton City Council has done for years, diminishes the very definition of an emergency.

The greatest impact to the citizenry is the fact that ordinances passed as an emergency preclude a citizen referendum of that ordinance. A referendum is the practice of referring measures proposed or passed by a legislative body to the vote of the electorate for approval or rejection. It is there for a purpose. It is one of the many checks and balances that are built into our process of government. A referendum protects the public from overzealous legislators and is allowed in 24 states.

The adoption rate of 92% of all North Canton City ordinances, each as an “emergency” is beyond sloppy. It tells the citizens of North Canton that its leaders cannot be bothered with democracy and the law.

I hope North Canton’s elected officials will work harder to represent its citizens in the future and not trample their rights simply for expediency and convenience.

Thank you,
Chuck Osborne
City of North Canton

Corporate Charity Continues Unabated in North Canton

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
May 23, 2011

On tonight’s agenda for a 2nd reading is Ordinance No. 53-11. This is an ordinance authorizing the Mayor of the City of North Canton to enter into an Industrial and Commercial Occupancy Grant Agreement for project Omega.

What is Project Omega? Is this a CIA covert operation that is being undertaken by the City of North Canton that requires the utmost secrecy? Are City leaders embarrassed to identify the beneficiary of this legislation?

Why continue this cloak of secrecy? Is North Canton financing a raid in a foreign country that must be kept quiet for security reasons?

As we all know, this is an occupancy grant agreement to Suarez Corporation Industries (SCI). Unless it is your desire to hide this fact from city residents, I ask that City Council documentation reflect who is the recipient of the grant and drop the cloak of anonymity? Transparency in government is best for all of us.

Why do City Leaders believe that the only way to bring jobs to North Canton is to provide tax abatements?

Economic development and jobs can and do come to North Canton without corporate charity.

In 2006, Dr. Suglio continued with his investment in our community in spite of the fact that he did not receive an abatement of taxes. Café Gelato and Suglio’s Dental Practice are thriving on Main Street.

Next door to Dr. Suglio on Main Street, Legacy Bank located a branch bank without ever asking for tax abatement. This was a sizeable investment in our community that came without the need for a tax giveaway.

In May, 2007, a proposed abatement of taxes for the Sherwin Williams Paint store never progressed beyond discussion after the public questioned the need for tax abatement for a public corporation, traded on the New York Stock Exchange, with sales of $7.8 billion dollars. Sherwin Williams built their store and invested in the community without any abatement.

North Canton has seen other businesses locate here and contribute to the community without asking for abatements. CVS Drugs and O’Reilly Auto Parts are under construction at the present time without public assistance. Walgreen’s has built two stores in North Canton without tax abatements.

New tenants have located to the Hoover District without receiving tax benefits for themselves. They include The Schroer Group with a large number of professional jobs, TruBridge Total Care, and Commercial Fluid Power and several other smaller businesses.

There are companies that want to come to North Canton and willingly contribute, financially, their fair share to support our community. These companies want North Canton to prosper because they understand that a thriving community benefits their business.

It is unfortunate that not all businesses want to share in the financial stability and growth of our community. Apparently, there are some businesses that feel that tax laws are too burdensome or unfair. These businesses ask that they be treated differently.

Over the last four years, the City of North Canton and the taxpayers of North Canton have enriched the Industrial Realty Group (IRG), the owners of the Hoover District, with the transfer of $3,440,000 of public money directly into their pockets to jumpstart the rebirth of jobs at the former Hoover site.

How much more public money must be diverted to enrich private interests at the Hoover District?

How much longer does the City of North Canton have to continue to provide corporate charity to IRG owner Stuart Lichter, a millionaire many times over?

Mr. Lichter and IRG have been paraded to the public as being the answer to North Canton’s prayers regarding the restoration of jobs at the Hoover District. It seems to me that given the state and local tax dollars that North Canton has put into the pockets of IRG, with no obligation for any payback, that the reverse is true. North Canton is the answer to Mr. Lichter and IRG’s prayers.

And now, Benjamin Suarez, owner of the Suarez Corporation Industries, wants public money put into his pockets as well. Why does the City of North Canton have to provide corporate charity to Mr. Suarez, also a millionaire many times over?

Taxes are the lifeblood of a community. Taxes fund all the services needed by a community to exist. If leaders continue to find ways to unravel the obligation to support the community, who remains to financially support North Canton City services?

In the case of the occupancy grant proposed for the Suarez Corporation, apparently this legislation has progressed to a second reading without any agreement or specific terms ever appearing in written form to City Council. From media reports it appears that the City of North Canton is prepared to return to the company fifty percent of City income taxes collected from individuals, working at or near minimum wage, for the Suarez Corporation Industries.

Does it seem fair and equitable to take income tax money collected from economically disadvantaged individuals and turn around and give that money to the multi-millionaire owner of the corporation where they work?

If employee salaries are taxed for needed income taxes to the community in which they work, they should be able to realize that their taxes have gone for the betterment of the community in which they work rather than the enrichment of their employer!

This proposed Occupancy Grant goes beyond corporate charity. I hope that North Canton City Council reconsiders any endorsement of this proposed Occupancy Grant agreement or any other agreement such as this.

If the Suarez Corporation has a viable plan to locate some of its operations to the City of North Canton, that plan should include supporting the City, fully, under the tax structure that applies equally to all North Canton businesses.


Thank you,
Chuck Osborne,
Resident, City of North Canton

Was $15,000 Review of Performance Audit Beneficial to North Canton?

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
April 25, 2011

It is no secret that the City of North Canton is struggling financially. Not only is that fact front and center in weekly discussions at city council meetings, it is apparent in the condition of the City’s infrastructure in this community we call home. Are City dollars being spent wisely?

Three years ago on February 11, 2008, North Canton City Council passed legislation to authorize the Auditor of State to undertake a Performance Audit to identify cost savings for City operations. On January 6, 2009, after nearly a one-year audit of city operations at a cost of approximately $62,000, the Auditor of State made 40 recommendations to the City in a 123 page report.

Not long after the release of the Performance Audit by the Auditor of State, City e-mails, dated May 14, 2009, indicate that then City Administrator Earl Wise was advised by Bruner-Cox that Mayor Held had asked their CPA firm “to assist The City of North Canton in regards to the January 6, 2009, Performance Audit….”

On July 13, 2009, Mayor Held signed a Letter of Agreement (LOA) with Bruner-Cox, LLP.

On October 14, 2009, former City Administrator Earle Wise signed a purchase order authorizing the expenditure of $15,000 for the review of the Performance Audit by Bruner-Cox. Three months later on January 9, 2010, a 32-page draft report labeled “Review of the North Canton City Performance Audit Project” was released.

Why has North Canton not received the final report that is contractually promised in the LOA? The last two bullet points in Attachment A of the LOA state that “[Bruner-Cox] will meet with North Canton City Council to review the draft of the report….[and] issue a final report to mayor and council.” This has never happened!

I spoke on this issue before City Council on July 12, 2010, in a presentation titled “$15,000 Audit of State Auditor’s Performance Audit Was an Utter Waste of Public Funds” (found in the minutes of the meeting
and online at http://opengovernment4nc.blogspot.com).

The Bruner-Cox review consisted of a replication of the recommendations made in the Auditor of State’s Performance Audit with the addition of very brief information from city department heads that was already generally known or could be found out in a brief telephone call.

Mayor Held, you stated last year that “[you] did support and authorize Bruner Cox to come in and provide oversight to the City… and that [you were] very confident, very comfortable with the work that Bruner-Cox did.”

I do not believe that North Canton City Council shares that position given that there was discussion under the Finance and Property Committee on July 6, 2010, to limit spending by your administration without an appropriation from council. Unfortunately, Council never moved forward with action on this.

Given that taxpayers have paid out $15,000 for this review, I ask that the Bruner-Cox Draft report be posted on the City’s Web site along with the State’s Performance Audit to allow residents to judge whether the City really benefited from a review of the Performance Audit for an added expense of $15,000 to the City.


Thank you,
Chuck Osborne,
Resident, City of North Canton

North Canton Finance Chairman Acts to Quash Illegal City Contract

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
April 11, 2011

The City of North Canton is currently at odds with the Ohio Department of Development (Ohio DOD) as to whether North Canton did or did not follow proper bidding procedures as required by the terms of a JRS grant awarding $5.0 million of State funds to the City for the Hoover Campus Redevelopment project.

Although North Canton explained to DOD in a letter dated September 7, 2010, that the City did follow proper procedures, DOD concluded in a January 7, 2011, letter to the City that North Canton did not follow proper competitive bidding procedures in the procurement of goods and services in the expenditure of $3.0 million.

The stakes are high for North Canton at the present time. Development officials have stated that if the City is unable to demonstrate that proper bid procedures were followed, they will demand repayment of the $3.0 million already paid to the City and terminate the Grant Agreement without disbursement of the remaining $2.0 million of grant funds.

One would think that the Held Administration would be mindful of the laws regarding the expenditure of public funds and of competitive bidding procedures, especially in light of the fact that the City is playing a high-stakes game with the Ohio Department of Development that could cost North Canton millions of dollars, but apparently that is not the case.

Finance Chairman Jon Snyder has revealed to me that he is holding his ground regarding the recent purchase of new cell phones for City employees and is telling the Held Administration to return the recently purchased cell phones as their purchase has not followed proper bidding procedures and been approved by the Board of Control.

Chairman Snyder became aware of the purchase when the Finance Department was billed by Verizon for the initial purchase of the phones and for service but had no funds with which to pay the bill. Chairman Snyder has told me that he has told Interim Finance Director Loretto to return the Verizon bill to the Administration and to tell City Administrator Grimes to return the phones to Verizon.

Chairman Snyder also advised me that when he asked for a copy of the cell phone contract, the Administration was unable to provide him a copy. After my written records request, a copy of the cell phone contract was provided to me and Chairman Snyder.

The one-year Verizon contract was estimated to cost $37,165.08. This is well above the current statutory limit of $25,000 set by ORC 735.05 requiring competitive bidding.

The previous contract with Sprint cost the City $31,386.20 in 2010. An e-mail from North Canton Finance department (March 17, 2011, from Chris Leamon) indicates that the City had 44 separate lines under the Sprint contract. The Verizon contract is for 66 separate lines.

Does the City really need a 50 percent increase in the number of cell phones in use throughout the City? I thought North Canton was in financial distress?

Section 4.05 of the City’s Charter controls the procurement of goods and services for North Canton. One provision states, “No contract involving expenditures [in excess of the statutory limit set by ORC 735.05] shall be entered into without prior approval of the Board of Control.” There was no such approval.

Section 4.05 also states, “No purchase or contract involving expenditure in excess of … [the statutory limit set by ORC 735.05] shall be made except with a qualified, responsible bidder submitting the lowest and best bid as determined by the Board of Control….” There was no competitive bidding for the contract.

ORC 735.05 is intertwined into the City’s Charter and it states that “When an expenditure…exceeds twenty-five thousand dollars, the expenditure shall first be authorized and directed by ordinance of the city legislative authority….” The Held Administration had not been authorized or directed by legislative ordinance to proceed with the purchase of new cell phones.

Mayor Held, the City is currently at odds with the Ohio DOD over the issue of failing to follow proper competitive bidding requirements. How can you make the same mistake again and not competitively bid the cell phone contract?

On May 24, 2010, Mayor Held signed into law Ordinance No. 45-10 requiring the Director of Law to provide written approval of all contracts as to form and content.

Mayor, did your administration comply with Ordinance 45-10 before the City entered into the cell phone contract with Verizon, an ordinance you yourself signed less than one year ago? City Administrator Grimes has provided no written record to me that shows North Canton’s Law Director approved the Verizon contract.

I might add that state statute, ORC 705.11 states that, “No contract with the municipal corporation shall take effect until the approval of the... city director of law is indorsed thereon….”

North Canton’s Charter, Section 3.01, states, “The Mayor shall sign, on behalf of the municipality, all contracts…”

Not until the City complied with my records request did Chairman Snyder and I learn that Interim City Administrator/City Engineer Jim Benekos signed the Verizon cell phone contract.

Mayor Held, why did you not sign the contract as is spelled out as a duty of the Mayor under the City’s Charter?

The lapses of leadership and the bold non-compliance with state and local laws by your administration are becoming quite worrisome. The financial costs to the citizens of North Canton for the failed leadership of your Administration continue to take a toll.

I ask this city council to hold Mayor Held accountable for these lapses. Please do not just talk amongst yourselves privately about these lapses of leadership. The repeated violations of the City’s Charter and state law are taking a financial toll on the City with each revelation of failure.

North Canton citizens need to be informed of the actions of government if democracy is to work. I ask that this council do its part and investigate the lapses that have occurred with the Verizon cell phone contract and report the findings to the public.

Thank you,
Chuck Osborne,
Resident, City of North Canton

Appointment by Mayor Held for North Canton’s Chief Zoning Inspector Adds to Leadership Concerns

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
March 14, 2011

In a March 10, 2011, Beacon Journal story, titled “Population declining,” Akron’s Planning Director, John Moore, states, “Deteriorating neighborhoods are a major reason that people leave.”

I wholeheartedly agree with Akron’s Planning Director and would expect that almost everyone in this room would agree as well with that basic premise. I only wish that Mayor David Held had the same understanding of the need to stay on top of the city’s zoning and code violations.

Even during the best of economic times, nuisances in neighborhoods detract from the peace and tranquility of city life. In hard economic times such as we are all living through now, well-kept neighborhoods can turn into blighted ones before anyone realizes what is happening.

Late in January of this year, North Canton’s Superintendent of Permits & Inspection resigned unexpectedly. Without delay, one would have expected an announcement that a key city department head had left the city and that North Canton was aggressively looking for a qualified replacement.

Per the city’s Web site, North Canton’s Superintendent of Permits & Inspection heads up a department that is responsible for plan review, permit issuance, and code inspections for commercial and residential construction and renovation. The department also conducts zoning, housing, and nuisance inspections and issues Zoning Certificates and Occupancy Certificates. The department tests and registers contractors and journeymen, issues water-connection permits, raze-building permits and sewer permits.

This is a great deal of responsibility, even for someone who is qualified to hold the position and a greater challenge in a department that is operating with reduced staffing.

Not until a March 4, 2011, news story in the Repository, titled “Changes in works for North Canton government,” was the public advised that a key city department head had left the city. For four weeks North Canton had no Superintendent heading up the Permits & Inspection department. In the same Repository story, Mayor Held relates that Economic Development Director Eric Bowles will serve as the city’s interim superintendent and might hold that position for six months.

Mr. Bowles has no certifications as an inspector in any building trades, as is required by the job description, so clearly he cannot be the Chief Building Inspector for the city.

Aside from that, one might ask if Mr. Bowles doesn’t already wear too many hats as it is.

Mr. Bowles has advised me that in addition to being North Canton’s Economic Development Director, with no staff support I might add, that he is also the Administrator for the North Canton Community Improvement Corporation (NCCIC), the Housing Officer for the Residential & Commercial Community Reinvestment Area, and the Project Manager for the Ohio Job Ready Sites (JRS) Grant for the North Canton Hoover Campus Redevelopment Project.

Mayor Held, Mr. Bowles cannot devote the hours that are needed to adequately serve in the capacity of Superintendent of Permits & Inspection and diligently enforce the city’s zoning and nuisance inspections. It is unfair of you to expect this of Mr. Bowles.

Furthermore, it is disingenuous of you to tell the residents of North Canton that the city is working to preserve the investment homeowners have in their properties and neighborhoods under this current interim appointment of Eric Bowles as Superintendent of Permits & Inspection.

I have been a long-time observer of North Canton City Government. For you, Mayor Held, I have observed your entire tenure here in North Canton. I question your decision-making and am keenly aware of the impact it has had on the city.

The first lease of the Arrowhead Golf Course comes to mind. The lease was negotiated by you as City Administrator, and ultimately resulted in a loss of $70,000for North Canton when the first operator of the golf course walked away owing the city a great deal of money.

The decision by you to have a local accounting firm re-audit the Performance Audit done by the Auditor of State cost North Canton $15,000. That audit was never completed after a draft was provided to the city. The draft simply duplicated the Performance Audit only months after the Auditor of State completed the work.

The delay by your administration for several years to renegotiate the water agreement with Aqua Ohio cost North Canton millions of dollars in water sold below water production costs. The dumping of street sweepings for years under your watch in violation of state law was another needless expense for North Canton taxpayers.

I am sure I could add to the above list but I believe my point is made.

Mayor Held, where is your leadership on issues before the city? You did not take a position on the proposal to house individuals with mental illness at the Harleigh House on North Main Street. You have not taken a stand on the possible threat hydraulic fracking has on the city’s water sources.

My concerns about failed leadership in your administration on various issues over the years reminds me of a fictional character, named Lieutenant Commander Philip Queeg, the Captain of the U.S.S. Caine in the movie, The Caine Mutiny.

In the fictional story, Captain Queeg is relieved of command by the First Officer of the Caine believing the Captain was unable to command effectively.

Further, I ask why you as Mayor did not relieve your City Administrator when you had told me several years ago that you were unhappy with his leadership of the city.

Just as you have shown repeatedly over the years that you have been unable to lead and effectively manage the City of North Canton, I believe I can say that the appointment of an overburdened Economic Development Director to be the Superintendent of Permits & Inspection Department will only reinforce the perception of your lack of leadership.

Deteriorating neighborhoods will only reinforce that perception by the city and the world at-large.

Please appoint a Superintendent of Permits & Inspection who has the time and expertise to handle the position and who can effectively and diligently work to maintain North Canton neighborhoods from decline.

Thank you,
Chuck Osborne,
Resident, City of North Canton

North Canton Streets Go Unpaved While Extraordinary Bonuses & Benefits Are Paid to City Workers

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
January 31, 2011

For the last several years, council has made no secret of the precarious financial situation that the city has been facing for a number of years now.

One might ask if Mayor Held over the last five years as Mayor has made the tough decisions that are needed to put North Canton on a sound financial course for the future. Has City Council made the tough decisions it told residents were needed when town meetings were held at the Civic Center several years ago. President of City Council Revoldt talked of a state takeover during the town hall meeting if North Canton did not stop the City’s downward fiscal spiral.

Anyone who was at the meeting of the Council of the Whole last Monday, January 24, 2011, might question if city leaders really have a grip on the city’s financial condition. It seems to me that financial decisions are only being made at the eleventh hour when there are no other options available.

A good example of a crisis now facing the City is the revelation that North Canton’s promises to City employees to pay an unlimited amount of accumulated sick time as well as accumulated vacation pay and Medicare payments to City employees upon retirement has grown to an obligation of $1,849,075. This debt obligation, partially offset by a fund, called the Compensated Absences Fund, containing $608,436 leaves an unfunded liability of over $1.2 million for the City. This liability will continue to grow unless action is taken to control them.

Benefits such as these in the private sector were contained or completely eliminated long ago.

How many more financial body blows can the City of North Canton take before the City reaches the point of financial collapse?

This year, four city employees have indicated that they will take retirement. North Canton will have to cut checks to these four employees upon their retirement for accrued sick time, vacation, and Medicare totaling $215,040. These are benefits that retirees will receive over and above their pension.

Ward 3 Councilman, Jeff Davies, went on the record last week stating, “The City is facing a crisis.” I agree with you, Mr. Davies!

Since creation of the Compensated Absences Fund in 2006, Council has funded that account to the tune of nearly $200,000 per year. Added to the $100,000+ annual cost of the longevity bonuses paid out to city employees just before Christmas each year brings the cost of providing these benefits to well over $300,000 each year.

During the presentation of the City’s 2011 budget by Finance Chairman and Fourth Ward 4 Councilman Jon Snyder, Mr. Snyder noted that NO street improvements were in the 2011 budget.

Typically, North Canton budgets approximately $250,000 for street resurfacing, annually. This is not a total rebuild of streets but a replacement of the asphalt surface only on neighborhood streets.

Sadly, it is apparent that longevity bonuses at Christmas for city workers and windfall payments of accumulated sick leave, and vacation pay doled out upon retirement are going to be paid before city streets are resurfaced. That appears to be the case as City Council has budgeted NO funds this year for street resurfacing.

Given that North Canton can only pay down the unfunded liability of $1.2 million at the rate of $200,000 per year, could one assume that funds needed for street resurfacing will not be available for the next six years?

Several on City Council have stated that current bonuses and benefits for city workers were put in place by administrations of years past. I can only ask you, Mr. Revoldt, and others who have made those statements, if each of you is acknowledging your past participation in those decisions when you make those remarks?

Will your participation in the decisions of today be more farsighted than your decisions of the past? Taxpayers can only hope.

It was stated last week by Finance Chairman Snyder that payments for sick time and vacation pay that city workers have accumulated “must be brought in line with the City’s ability to pay.” With that said, I must ask Mayor Held if he thinks his selection for City Administrator will be able to lead the city with Mr. Snyder’s marching orders as city policy?

I say this because as a retiring city employee, Police Chief Grimes is by far receiving the largest payment of accumulated sick time and vacation time, under the city’s present benefits program with nearly $79,000 to be paid at retirement.

The greatest portion of the unfunded liabilities is benefits promised to unionized city workers. Mayor Held, when Police Chief Grimes retires and becomes City Administrator in March, will he have marching orders from you to work to curtail benefits paid to future retiring city workers covered by union contracts?

Given how Chief Grimes has benefited from the current City policy on payment of accumulated sick leave and vacation pay on retirement, how effective will Administrator Grimes be in persuading unionized city workers in renegotiating those benefits?

Passage of Ordinance No. 13-11 as written will curtail payments for accumulated sick time and vacation pay only for the City’s exempt employees. Council must make the hard choice. There is no room to fudge on this.

Decisions such as this should have been made years ago when tax collections with the loss of the Hoover Company reduced city revenues by a million dollars annually.

I would urge everyone on this council and in the administration to remember whom they represent and who elected them to office. Benefits such as the ones that are paid out now are unsustainable. This council knows that and has stated that fact publicly.

Please get a grip on the cost of government or I assure you it will get a grip on you.

Tax money paid for these unsustainable worker benefits must be squeezed out to allow for road improvements.

Taxpayers must come first. The future of North Canton depends on it.

Thank you,
Chuck Osborne
Resident, City of North Canton

North Canton Increases Debt While City Leaders Stockpile Cash

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
October 25, 2010

On tonight’s agenda are five pieces of legislation dealing with the issuance and sale of bonds on behalf of the City of North Canton. Three of the five proposed bond issues will increase North Canton indebtedness by $2.4 million. The remaining two proposed bond issues seek to convert existing debt, totaling $1.6 million, from short-term notes to long-term bonds.

The proposal to convert the $700,000 short-term note of indebtedness on the former Arrowhead Golf Course property to a long-term bond is the purpose of my remarks tonight. It is titled on tonight’s agenda as Ordinance No. 78-10.

The City of North Canton paid a total of $4.2 million for the Arrowhead property in 2003. Two million dollars was taken from the city’s reserves and $2.2 million was rolled into a short-term note. North Canton made annual payments of $300,000 on this note but found itself unable to make those payments without subsidies from the City’s General Fund. This practice forced the city to divert funds that could have been used for city services to make the annual note payments.

Per recommendations of the 2008 Performance Audit by the State (R2.11), the City reduced its annual payments on the Arrowhead note to $100,000 per year. The present balance on the note is $700,000 which is the amount of the proposed bond on the agenda tonight.

If passed tonight, the annual bond payments will further reduce the annual payments on the Arrowhead indebtedness. Recommendation 2.11of the Performance Audit cautions that, “by prolonging the debt, the City will incur additional interest and issuance cost, and the note will not be paid off until 2015 or 2016.” In discussions, some council members have also made this point regarding the increased interest expense if the debt is extended further into the future.

Doesn’t this sound like someone who is overextended on his credit cards and can’t make his credit card payment so he only makes the minimum payment each month?

Paralleling, what I believe to be, the ill-fated decision to purchase the Arrowhead Golf course property was a decision in 2005 to remove $1.5 million from the City’s General Fund and begin making $100,000 per year payments to the North Canton Community Improvement Corporation (CIC).

Of the original $1.5 million removed from the General Fund, $757,000 remains in an escrow account controlled by the City.

To date, $743,000, or about one half of the original $1.5 million has been given to two businesses with no requirement to repay those funds back to the North Canton CIC. City leaders promised in 2005 when the $1.5 million was removed from the City’s General Fund that the CIC would operate as a revolving loan fund.

Sadly, that has not been the case.

The North Canton CIC currently has a balance of approximately $190,000 and can ask for the balance of the $1.5 million at any time. As I noted earlier, $757,000, currently sits in an escrow account controlled by the City.
City leaders are waiting for the next opportunity to hand out the remaining nearly one million dollars with no obligations for repayment while the city struggles to pay its expenses.

Should North Canton pay its bills with money it has on hand or should the city borrow and increase its indebtedness?

At this time, North Canton has cash funds available to wipe out, entirely, the $700,000 note owed on the Arrowhead property. There is no need to issue and sell long-term bonds.

If this council and the Held Administration are truly serious about the fiscal plight of the City of North Canton, it would use those escrow funds and extinguish that indebtedness.

North Canton’s fiscal future continues to hang by a thread and North Canton increases debt while city leaders stockpile cash.

There is no logic in continuing to hand $100,000 per year to the CIC through the year 2017 while the city faces fiscal crisis. As it is, this council is borrowing $1.3 million to replace the very roof over our heads here at City Hall and at the Civic Center along with another $1.1 million for other infrastructure improvements in the city.

This $2.4 million in new debt is in addition to the more than $16.0 million of debt the city already has on its books. Whether the debt is enterprise debt or general obligation debt makes no difference.

Debt is debt and it all must be paid back.

The purchase of Arrowhead Golf Course property for $4.2 million in 2003 along with the removal of $1.5 million dollars from the City General Fund in 2005 constituted nearly one third of the $18.0 million dollars the city had in reserves in 2003. With spending decisions such as these, it does not take long to blow through $18.0 million. And that is what has happened before our very eyes.

Economic conditions are not good and economic prospects are not bright, locally or nationally. If this council and the administration are remotely interested in fiscal stewardship for the City of North Canton, it is time
it demonstrated its beliefs in actions instead of letting business and politics continue as usual.


Thank you,
Chuck Osborne
Resident, City of North Canton

New Position of Assistant Law Director for Mayor’s Court Has No Functional Role Whatsoever

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
October 11, 2010


Two weeks ago this council passed Ordinance 73-10 establishing the position of Assistant Director of Law/Mayor’s Court Prosecutor. The legislation was passed on its second reading on an emergency.

I appealed to this council in remarks prior to each of the two readings to reconsider this course of action and urged this council to restructure the position of Law Director to a full-time position and get control of legal fees and services for the City which presently come at a very high cost. A sixteen-hour work week for the City Law Director in this day and age is inadequate.

Two weeks ago I noted that North Canton has expended $414,870.41 for outside legal services over the last five years. Adding in the $245,000 paid to the City’s law director for each of the last five years at $49,000 per year for a sixteen-hour work week results in the expenditure of nearly $660,000 ($659,870.41) for legal services in the last five years. This is an average of $132,000 per year.

North Canton is paying $62.50 per hour for the services of an attorney to fill the role of Law Director while the Stark County Prosecutor’s office pays $39.14 per hour to its most senior attorney. Nearly two dozen other attorneys at the prosecutor’s office earn less than $30.00 per hour.

My point tonight after further research on this issue is the fact that the newly passed legislation creates a position of Assistant Law Director to serve specifically as a prosecutor in mayor’s court when in fact there is no role for a prosecutor in mayor’s court.

Councilmembers should avail themselves of the time to sit in on a North Canton Mayor’s Court and see how the process works.

Mayor’s Court is an administrative action. People are cited to appear for violation of local ordinances and traffic laws. The city official charged with enforcement of local ordinances issues the citation. In the case of traffic offenses, it is the local police. In the case of zoning violations it is whoever is responsible for enforcement of local zoning laws, which in North Canton is the Superintendent of Permits.

Mayor’s Court does not unfold as a capital case as seen on TV. There are no prosecuting attorneys. There are no defense attorneys.

The individual simply appears before a magistrate and pleads guilty, no contest, or not guilty. If the individual pleads either guilty or no contest, the magistrate levies a fine and the individual pays the fine and court costs. If the individual is found guilty after pleading not guilty, the ruling can be appealed and heard in Canton Municipal court and proceeds as a trial de novo per ORC 1905.25, meaning a new trial in a new tribunal.

Further research has uncovered a contract between the City of Canton Law Department and the City of North Canton for the purpose of providing legal representation in Canton Municipal Court for $17,000 per year.
This annual contract expense with the Canton Prosecutor’s office raises North Canton’s legal costs per year to $149,000 per year.

The latest contract covers 2010 and 2011 and was approved by council in Ordinance No. 99-09 on November 23, 2009.

Among the list of services itemized in the contract with the Canton Law Department is Item a. – Acceptance for prosecution of transfers from Mayor’s Court.

Thus there is no role for a prosecutor in North Canton Mayor’s Court nor is there a role in Canton Municipal Court. What exactly is North Canton’s new Assistant Director of Law going to do?

Ordinance 73-10 narrowly defines the duties and compensation of the Assistant Director of Law as pertaining to Out of Court and In Court Work as a prosecutor in Mayor’s Court.

What work is there to do? Can this legislative act of North Canton City Council serve any purpose?

I would say nothing has been accomplished with the passage of Ordinance No. 73-10.

I also would say that North Canton should have been working harder long ago to maintain neighborhoods in the City and citing violations of its zoning laws.

You do not need a prosecutor in North Canton Mayor’s Court. Furthermore, the services of the City of Canton Prosecutor’s Office also preclude the need for a prosecutor for enforcement of local ordinances.

Lastly, I am compelled to ask why the City has been billed $1,548.90 by the law firm of Morrow & Meyer, LLC for prosecution of the Prater zoning violation when there are provisions in place to deal with enforcement of the zoning violation in both Mayor’s Court and then in the Canton Municipal Court.

The zoning violation could very easily have been handled administratively in North Canton Mayor’s Court and if forced in to Canton Municipal Court, handled per the contract in place with the City of Canton Prosecutor’s office.

As events have unfolded, the City of North Canton chose not to utilize the services of the Canton Prosecutor’s Office and paid a second time for legal services of a private law firm for which it need not have paid.

I believe this is a violation of public trust and is most certainly fiscally irresponsible.

I ask at this time that the law firm of Morrow & Meyer, LLC refund back to the taxpayers of North Canton the $1,548.90 it has received regarding the prosecution of the Prater zoning violation case as the Canton City Prosecutor’s Office was under contract to provide such legal services in Canton Municipal Court and would have done so without added cost to the taxpayers of North Canton.

I urge this council to also ask that those funds be returned. The city has been double-billed for legal services and taxpayers are due a refund.


Thank you,
Chuck Osborne
Resident, City of North Canton

North Canton Legal Costs Skyrocket as Fiscal Crisis Grows

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
September 27, 2010

Two weeks ago, I made comparisons between the compensation rate paid to the North Canton Law Director and the rates paid by other governmental agencies in Stark County and asked why North Canton cannot do as well as those other Stark County governments.

North Canton is paying $62.50 per hour for the services of an attorney to fill the role of Law Director while the Stark County Prosecutor’s office pays $39.14 per hour to its most senior attorney. Nearly two dozen other attorneys at the prosecutor’s office earn less than $30.00 per hour.

The City of Canton, likewise, has three full-time Assistant Prosecutors on staff that are paid an hourly rate of $20.10 per hour.

Why can’t the citizens of North Canton be afforded legal services from its law director at equitable hourly rates?

Furthermore, North Canton needs a law director who is available to work more than the currently required sixteen hour work week and I believe the following clearly supports my argument.

One, the request in Ordinance No. 73-10, in its second reading tonight, to create the position of Assistant Director of Law shows that the current law director cannot do the job in a sixteen-hour work week.

Two, the current law director has already billed the taxpayers of North Canton for $4,128.84 for hours over and above his sixteen-hour week. Those charges for legal services are over and above the law director’s annual salary of $49,000. Again, an indication that the current law director cannot do the job in a sixteen hour work week.

Third, over the last five years, North Canton has paid out $414,870.41 for legal professional services. Adding in the $245,000 paid to the law director for each of the last five years at $49,000 per year results in City legal costs of nearly $660,000 ($659,870.41).

Over the last five years, North Canton has averaged spending nearly $132,000 per year ($131,974.08) for legal services. In the last eighteen months alone, North Canton has spent more than $275,000 ($275,141.85) for legal services.

North Canton needs a full-time law director at a fair salary, not an assistant law director as Ordinance No. 73-10 proposes.

The law director’s salary was more than doubled seven years ago and justified then by the elimination of the position of assistant director of law. Now the position is being resurrected.

In brief discussions in support of Ordinance No. 73-10 to create the position of assistant law director, Superintendent Tom Hampton stated that the city has about a dozen violators of zoning laws that habitually ignore letters from the city and that there are four or five cases ready to cite to mayor’s court.

Why has this effort been delayed?

Two weeks ago, I stated, “….one might wonder why the city failed to initiate such enforcement of its zonings laws beginning early in 2005 when Earle Wise took over as city administrator. Mr. Wise is an attorney and worked for many years as a Stark County Prosecutor before coming to North Canton.

Given that Mr. Wise is still on the city’s payroll at a salary of $70,000 per year, why can’t Attorney Wise assist Law Director Nilges in the prosecution of the zoning violators in North Canton Mayor’s Court?”

I am still awaiting a valid response to that question?

Prosecution of zoning violators in North Canton Mayor’s Court is likely to come at additional financial costs to the city if Ordinance No. 73-10 is enacted.

I say this for the following reasons: One, it is unlikely that fines will cover the assistant law director’s anticipated two hours on each case. Two, if a case is appealed to Canton Municipal Court, the fine is even less likely to cover the assistant law director’s time. And for everyone’s information, Ohio Revised Code 1905.25 states that, “An appeal from the mayor’s court to the municipal court or county court shall proceed as a trial de novo.” This means that the case starts fresh as if there had been no previous hearing before a judge requiring more time of the assistant law director. Three, if the zoning violator fails to pay the court ordered fine, do you jail the individual at added expense?

There are other expenses related to prosecution of these zoning violations that have not been explained. Ohio Revised Code 1905.26 allows for the payment of witness fees from the treasury of the municipal corporation. Is the city prepared for expenses such as these if they arise?

Does the city have clerical help who know how to send out court summons and subpoenas? Is this expense being factored into the total cost of prosecutions? People need to know all of the costs and not just be given a snapshot of the costs to prosecute violators in mayor’s court.

The bottom line is this. North Canton must maximize the resources available to it now and minimize the costs of prosecuting zoning violators. The city can do this by utilizing former city administrator Earle Wise who is already on the city’s payroll. The city also must restructure the position of city law director for a full-time position at a fiscally responsible salary for the citizens of North Canton.

North Canton must get control of the cost of government and this is a good place to start. If this council would proceed in that manner and get of control of its legal costs, to use the council president’s words from two weeks ago, that would be good stewardship and a good use of the public resources.


Thank you,
Chuck Osborne
Resident, City of North Canton

North Canton Law Director Paid Well For Part-time Service to City

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
September 13, 2010

In last week’s Council of the Whole meeting, city officials remarked that zoning laws and building codes in the city have not been enforced for many years and that they now want to get serious with violators through prosecution of violators in North Canton Mayor’s Court.

In 2003, as a member of this council and Chairman of Ordinance, Rules, and Claims Committee, I begged fellow council members to put some teeth into enforcement of the city’s zoning laws without success. If you recall, I was running for the office of mayor that year and it was more expedient at that time to let politics prevail than do what was needed for the citizens of North Canton. Many of you who failed to act at that time still sit on this council. It is good to see that after seven years, you finally are on board to facilitate enforcement of zoning laws for the city.

My discussion on this legislation before you lies with who is responsible for implementation of that goal. On tonight’s agenda Ordinance No. 73-10 proposes to establish a rate of compensation and the position of Assistant Director of Law for prosecution of code violators in mayor’s court.

I believe this proposal for an Assistant Director of Law should first prompt an evaluation of what is expected of the City’s current Director of Law and the salary he is paid.

In 2003, under Ordinance 123-03, the salary for the Director of Law was increased from $16,100 to $49,000 per year. A Repository September 30, 2003, report titled, “Canton attorney appointed interim city law director,” noted that medical benefits of $7,000 were also paid prior to the salary increase.

In spite of the added cost of medical benefits, the increase in salary under that ordinance more than doubled the cost of the law director. On October 13, 2003, I voted against Ordinance No 123-03.

The current salary structure for law director does not now allow for medical benefits, but state law does mandate PERS. This adds nearly $9,000 a year to salary costs for the law director.

Ordinance No. 34-10 passed earlier this year spells out the duties and responsibilities for the position of Director of Law. The law director receives 3 weeks of paid vacation and is expected to work 16 hours per week.

A 16-hour week, at $49,000 per year results in an hourly rate of nearly $62.50 per hour ($49,000 / 784 hours worked per year). One way to better understand the present salary costs for the Law Director is to compute the equivalent annual salary if he were full time.

Using an hourly rate of $62.50 per hour and a full-time work schedule of 2,080 hours, the North Canton Director of Law receives an equivalent annual salary of $130,000. The cost of PERS adds an additional $23,725.

Why is North Canton paying exorbitant hourly rates when other governmental agencies here in Stark County are able to pay more reasonable hourly rates? The hourly rate for the most senior attorney working for the Stark County Prosecutor’s office is $39.14 per hour.

Why is North Canton’s Law Director receiving an hourly rate for legal services that is 60 per cent higher than the hourly rate received by the most senior attorney in the Stark County Prosecutor’s office?

Nearly 86 percent of the attorneys on staff at the Prosecutor’s office receive an hourly rate of $30.00 per hour or less.

Is North Canton getting the most bang for its buck for legal services?

The City of Canton, likewise, has three full-time Assistant Prosecutors on staff that receive an annual salary of $41,796 each for full-time legal services. That equates to just over $20.10 per hour.

North Canton needs a Director of Law that is full-time. The past and present arrangement of hiring an attorney whose focus is on maintaining and supporting a full-time private practice with all the attendant demands and expenses shortchanges the city that hires him/her part-time.

This is borne out in the myriad of added legal costs that North Canton has paid over and above the law director’s salary. Thousands of dollars in legal costs have been paid to the last three North Canton Law Directors for fees over and above their stated salary year after year. Legal fees in the tens of thousands of dollars and most recently legal fees in six figures have been paid to outside law firms while North Canton pays top dollar salary to a law director who is only expected to work 16 hours per week.

On a weekly basis, while in attendance at city council meetings, I am continually reminded of the fiscal crisis the city is facing yet I do not see corrective action to minimize costs and expenses.

Working as a full-time Law Director for the City of North Canton would be an attractive proposition.

A full-time attorney for the City would not need to look for clients, would not need to pay rent for office space, would not need to pay utility expenses, would not need to make payroll for support staff. These are all the expenses that make up the billing rate charged by an attorney in a private practice. This is what makes up the $156.00 per hour billing rate the law director now charges the City for hours in excess of the 16 hours he is required to work for the City.

I do hope the City moves ahead to prosecute violators of its zoning laws. I also hope City Council will revisit the compensation and job requirements of the position of Director of Law and not move ahead with passage tonight of Ordinance No. 73-10. Enforcement of city zoning laws is one of the most basic and simple of a city law director’s duties. That should be handled by the North Canton City Law Director.

Lastly, one might wonder why the city failed to initiate such enforcement of its zonings laws beginning early in 2005 when Earle Wise took over as city administrator. Mr. Wise is an attorney and worked for many years as a Stark County Prosecutor before coming to North Canton.

Given that Mr. Wise is still on the city’s payroll at a salary of $70,000 per year, why can’t Attorney Wise assist Law Director Nilges in the prosecution of the zoning violators in North Canton Mayor’s Court?

Remember, the city is facing budget deficits. Spend the public’s limited tax dollars wisely. Spend those dollars as if they were your last dollars, because those dollars may soon be our last dollars.


Thank you,
Chuck Osborne
Resident, City of North Canton

North Canton Veterans Memorial Fails to Pass Muster

Prepared Comments Made to
North Canton City Council

August 23, 2010

The North Canton Hoover World War II Veterans Monument relocation plans have run amok, clear and simple. One only has to observe what is unfolding before our eyes to see that this project has turned into a debacle that only memorializes the destruction of a small park and the faulty planning of everyone who has had a hand in forcing the the placement of the memorial in that park.

At last Monday night's Council of the Whole meeting, three members of the Veterans Memorial committee, Jim Dansizen, Ken Dansizen, and Jim Repace came before council to ask for council's blessing for Phase II of the project. Board member Jim Repace dropped a bombshell on a fiscally strapped North Canton City Council and requested $65,000 of scare taxpayer funds to be put toward completion of the project. A citizen request to address council regarding remarks made by the Veterans Memorial committee members that night was denied.

Resolution No. 72-10 to be voted on tonight calls for North Canton City Council to authorize the Hoover World War II Veterans Monument committeeto work in conjunction with the Administration of the City of North Canton to begin Phase II of the Veterans Memorial in Bitzer Park.

The resolution is to be passed on an emergency. Emergency action by this legislative body is deemed necessary for the preservation of the health, safety, and peace of the City of North Canton.

Unfortunately, I do not see any preservation taking place in Bitzer Park. I am not alone with that opinion. Online comments from last week's Repository story on August 17, 2010, titled, "N. Canton veterans memorial to be done by Nov." are unanimous regarding the poor placement of the Veterans Memorial in Bitzer Park.

One commenter, jpbarr, states: "...I have not found one person yet that understands why the memorial structure was placed where it is situated & and at that angle in relation to the street. Everyone I've talked to is dismayed at its position...now the committee is expecting the city to make it blend in. In my eyes, very poor planning. It is nothing but a brick wall coming from the south...anything but a good angle. It blocks the view into the park."

Commenter Whitten agrees with the previous posting and adds: "The positioning of the structure is horrible. It blocks the whole view of the park...Not attractive at all. I could not believe this was not more thought out or designed better. What an eyesore. I don'tsee any way possible to get this monstrous wall to 'blend in now.'"

Commenter Interloper also agrees stating, "I also agree with the poor placement and overall designs of the memorial....You only see a huge pile of bricks, in what used to be a cute little park....The designers and committee members should all have their heads examined. the idea of a memorial for these men is a wonderful thing, leave it to North Canton to screw it up...."

The North Canton Hoover World War II Veterans Monument committee has not only failed in the implementation of its plan for the memorial but the committee has also not kept their word.

A January 6, 2010, Repository story titled, "North Canton may get veterans memorial at Bitzer Park," states that the W.H. "Boss" Hoover statue will be relocated. plans submitted to the city show that the memorial wall was to be located where the "Boss" Hoover statue now stands.

That is not where the Memorial wall has been placed.

At the very outset of the public discussions I stated that placing that large of a memorial in Bitzer Park was like putting twenty pounds of potatoes in a ten-pound sack.

In the same Repository story, Jim Repace states that "...he also hopes the project will help correct drainage problems in Bitzer Park and that [he] is confident that fundraising will be finished quickly enough to have work completed by Memorial Day." We all know that has not panned out.

Apparently the confidence of Mr. Repace has evaporated regarding the group's efforts to raise funds and they now come to the city requesting financial assistance to the tune of $65,000. If anyone thinks the completion of Phase I of the memorial wall is going to spur financial contributions from the public, the comments I read to you from the Repository story would tell you absolutely NOT!

As we all know by now, the memorial wall has not been placed where we were all told it would be placed. The decision to abandon the plan presented to council should have been re-presented to council for further study.

The decision to change plans for the location of the memorial wall was a fateful decision that destroys not only a cute little park but also undermines the very goal we all hoped to achieve, a fitting memorial to honor our veterans.

In the same Repository story, local architect Ken Dansizen states, "...the design uses existing features in the park and no trees will be removed...."

But in reality two large trees were removed contrary to promises made publicly to this body. Furthermore, limbs continue to be trimmed to further accommodate the project.

In City Council minutes of January 11, 2010, Jim Repace is quoted as saying, "...there's some concern if we do the first part of this project what happens--will the city be on the hook if we can't finish the project; absolutely not. We will be able to get enough funds for this project. There's no doubt in my mind we'll be able to get enough funds. The city will not be on the hook."

Apparently, those statements are not true like so many other statements made by members of the committee.

Further investment of monies, public or private, cannot salvage this debacle. The North Canton Veterans Memorial fails to pass muster and deserves a dishonorable discharge.

I urge this council to halt any further construction on the Veterans Memorial in Bitzer Park and not pass Resolution 72-10.

This country's veterans deserve a more fitting location for a memorial.

The memorial is intended to stand long after we are gone from this earth. Please do not memorialize a structure that clearly is poorly placed in a small park that only serves to elicit derision every time it is seen when it should be a source of pride for North Canton and its residents.

Thank you,
Chuck Osborne
Resident, City of North Canton

$15,000 Audit of State Auditor’s Performance Audit Was an Utter Waste of Public Funds

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
July 12, 2010

On February 11, 2008, Item 13 on the North Canton City Council agenda was Ordinance No. 10-08. The legislation, presented by the Finance & Property committee for passage on an emergency, was introduced as “authorizing the Mayor of the City of North Canton to enter into a professional services agreement by and between the City of North Canton and the Auditor of State for completion of a Performance Audit of the various City of North Canton departments, in an amount not to exceed $64,500.”

On January 6, 2009, Auditor of State, Mary Taylor, presented her findings in a 123 page report. The cover letter to the Performance Audit is addressed “To the Residents, Mayor, and City Council of the City of North Canton.” In it Taylor states, “The audit provided an independent assessment of select City services and administrative processes, and identified opportunities to optimize operational and service levels. The recommendations in the audit are intended to assist the City in its efforts to prepare for its projected financial condition.”

The Performance Audit is comprehensive in its scope and contains 40 recommendations to help city leaders identify cost savings and opportunities to optimize efficiency and deal with forecasted deficits.

The recommendations are broken down into three major areas. The area of Administration and City Management has 22 recommendations for improved cost savings and efficiencies. The area of Safety Services has nine recommendations as does the area dealing with the City’s Service Departments.

Apparently this “Paint by the Numbers” guide that details specific opportunities to optimize operational and service levels and identify cost savings and opportunities was not of as much help for Mayor David Held as one might expect.

In little more than four months from the January 6, 2009, release of the Performance Audit by the Auditor of State, City e-mails indicate that then City Administrator Earl Wise was advised by Bruner-Cox, on May 14, 2009, that Mayor Held had asked the firm of Bruner-Cox, LLP, “to assist The City of North Canton in regards to the January 6, 2009 Performance Audit….”

Mayor Held, I do not understand and I hope you can explain. Why would anyone need assistance understanding the recommendations made to the City in the Performance Audit?

On July 13, 2009, Mayor Held signed a letter of engagement with Bruner-Cox, LLP. The engagement letter states that their services are “for the purpose of assisting in the proposed review, implementation, and evaluation of the recommendations in the [Performance Audit].”

Why does the City of North Canton, whose Mayor has a master’s degree and a City Administrator who is a licensed attorney need assistance in reviewing, implementing and evaluating recommendations in the Performance Audit?

The engagement letter states that the services that Bruner-Cox are to perform for the City do not constitute an audit made in accordance with generally accepted accounting procedures, commonly referred to as GAAP.

The engagement letter states that fees for the services will range from $12,000 to $15,000.

On October 14, 2009, City Administrator Earle Wise signed a purchase order authorizing the expenditure of $15,000 for the Performance Audit Review by Bruner-Cox.

On January 9, 2010, Bruner-Cox provided a draft of what I call an “Audit” of the “Audit.” The draft is labeled “Review of the North Canton City Performance Audit Project.”

Despite my repeated written records requests to City Administrator Wise for copies of the Bruner-Cox draft report, Administrator Wise has never complied.

At this time, I have no idea if Bruner-Cox has ever complied with the terms of its engagement letter with the City of North Canton with the submission of a final report. It has been six months since the draft report was provided to the City.

What did Mayor Held get for his expenditure of $15,000 of taxpayer funds? Seemingly nothing of any value!

The review of the North Canton City Performance Audit by Bruner-Cox in my opinion is an utter waste of $15,000 in public funds.

The review consists of 32 pages which simply restate the recommendations made in the Performance Audit along with brief interviews with City employees.

Mayor Held, if you wanted to know the current status of operations in the City, why did you not talk to your City Administrator or your department heads?

As a former City Administrator yourself, I would suspect that you were quite personally familiar with City operations and City departments. With six years’ experience in the City of North Canton, two years as City Administrator and nearly four years as Mayor, I do not understand why you felt you needed added guidance into the administration and operation of the City of North Canton.

Mayor, if you are wondering why city council is formulating plans to limit your authority on future expenditures, I do not believe you need to look any further than this expenditure of $15,000.

This expenditure was an “utter waste” at a time when this city can ill afford it. There is no plausible explanation for this waste of taxpayer funds.

How could you possibly think this would have been of any benefit to the City of North Canton?

Why has this expenditure by Mayor Held not been discussed publicly by city council?

Where is the accountability and transparency in government that is so desperately needed here in North Canton?



Thank you,
Chuck Osborne
Resident, City of North Canton

$100,000+ Annual Cost of Christmas Bonuses Burdens North Canton’s Budget

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
June 28, 2010

“In January 2008, the City of North Canton requested a performance audit to assess its Administration and City management; safety services; street operations; and civic center. The City also requested the audit include the development of a five-year financial forecast. The administration and City Council requested the performance audit to help identify cost savings and opportunities to optimize efficiency.”

These words come from the first paragraph of the cover letter of the performance audit completed by Mary Taylor, Auditor of State for Ohio, dated January 6, 2009.

Recommendation 2.15 of the Performance Audit states: “The City should attempt to renegotiate provisions within its employee bargaining agreements that exceed peers or industry standards. These provisions are costly to the City, and successful renegotiations could result in significant savings.”

The audit finding further states that “The City’s collective bargaining agreement for Patrolmen, Fire and Paramedic, and Clerical and Service employees are comparable to peer cities in some areas, but more [emphasis added] generous than peers or recommended practices in other areas.”

The audit listed seven areas where North Canton’s agreements exceed those of peers or recommended practices. These areas were 1) Maximum number of sick-leave days accrued and sick-leave payout; 2) Vacation leave; 3) Sunday overtime; 4) Personal leave with pay; 5) Personal time with holiday; 6) Uniform allowance and stipends; and 7) Holiday counts as overtime.

Unfortunately, the performance audit failed to identify another contract benefit that by all probability exceeds peers or recommended practices. This is the annual practice of providing Christmas bonuses to city employees. ” I refer to it as a Christmas Bonus as it comes just before the Christmas holiday season.

These annual payments are titled “Longevity Pay” in labor contracts with seven unions representing city workers as well in a city ordinance for 17 city employees who are classified as exempt.

Language describing “LONGEVITY PAY” for contract and exempt city workers states: “All employees shall receive longevity pay at the pay rate of seventy dollars ($70.00) per year of full-time employment with the employer. Annual longevity payments shall be made during the first half of the month of December to all employees who have completed at least five (5) years of continuous service and who are employed by the employer on November 30th of the year in which the longevity payment is made.”

Five of the union contracts as well as the language for exempt employees further expand the number of city employees who are eligible for the payments with added language stating, “Any employee hired prior to August 1, 2003, shall begin to receive longevity after completion of three (3) years at the above rate.”

How much, one might ask, do these annual Christmas bonuses cost the citizens of North Canton?

According to figures supplied to me earlier this year by Finance Director Alex Zumbar, “Longevity Payments” to all city employees are clearly a significant cost for the city. The annual cost to the city to provide “Longevity Payments” to city employees each December just before Christmas for the past seven years is:

2003 -- $ 81,360; 2004 -- $ 99,190; 2005 -- $106,400; 2006 -- $106,120; 2007 -- $100,730; 2008 -- $99,400; and 2009 -- $102,340.

For as long as I have been involved in North Canton city government, I had no idea city employees received such benefits.

My question to any city official who can answer this is why have these costs not been openly discussed on the floor of council? Surely, an elected body can report to its citizens how tax dollars are spent and the purpose of the expenditures!

Taxpayers should not be kept in the dark about the business of government and deserve to know how their tax dollars are being spent and if those tax dollars are being spent prudently and wisely.

Painting a broad brush on anything and everything related to personnel and cloaking those discussions in executive sessions behind closed doors does not provide accountability to taxpayers. Everyone in government talks a good game about transparency in government but no one works to make it happen.

I say this because the number of Executive Sessions held by the North Canton City Council has multiplied exponentially in the last few years and I think this practice is being abused. When I was on council in the early part of this decade, I do not believe I attended more than a handful of executive sessions in a whole year. Over the last year or two, city council has an executive session every week.

As for the performance audit for which the taxpayers expended over $64,000, city leaders do not appear eager to follow through on areas where significant savings can result.

This December, the estimated cost to provide a Christmas Bonus, or should I say “Longevity Pay” to city
employees is a staggering $102,550.

For Mayor Held, I would like to ask why have you elected to cut manpower and services over the last five years rather than seek elimination of labor benefits that exceed peers or industry standards and further inflate labor costs?

In my entire forty-year working career all I ever saw handed out at Christmas was the choice of a ham or a turkey.

Unfortunately, in North Canton, City officials are turkeys for continuing such a practice. And taxpayers are left not with ham for Christmas but with a lump of coal and growing deficits.

Thank you,
Chuck Osborne
Resident, City of North Canton

Aqua Water Agreement Exposes North Canton to Risks and Is Unfair to Citizens

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
May 10, 2010

Two weeks ago, I remarked to this council that if the water production costs detailed in the Arcadis Water Utility Rate Study were accurate then practically all the water being sold by North Canton is being sold at a loss.

The Chairman of Water, Sewer & Rubbish responded that water sold in the city at $4.60 per thousand gallons did not cover all the costs of water production. The Arcadis water study shows that in 2008 water consumption inside the city amounted to nearly 57 % of the city’s annual water sales.

Is it a fiscally prudent policy to sell more than half the city’s water below production costs? Shouldn’t all water customers be paying their fair share to ensure the water fund is financially sound?

Per the Arcadis study, in 2009 the city sold water to Aqua Ohio at a net effective sales rate of $1.52 per thousand gallons while at the same time, the total cost to collect and treat the water and pump the water into the distribution system was $2.20 per thousand gallons yielding a net loss of $0.68 per thousand gallons or more than $124, 000.

A look at table 2 of the water study presents a graphic picture of the outcome of the city’s current water agreement with Aqua. In 2008, with nearly identical quantities of water sold to Aqua and to outside residential and business water customers, Aqua paid $280,388 as opposed to the $3,242,067 paid by outside residential and business water customers.

Why was Aqua allowed to pay nearly $3.0 million dollars less than other water users for nearly the same quantity of water in 2008? What were the revenue shortfalls in the other four years that the present agreement has been in force? No one in the city has offered those figures for review. This is not a pretty picture for the North Canton water fund.

Under the renegotiated water agreement that is to be voted on tonight, Ordinance No. 33-10, water rates charged to Aqua will be increased to $3.60 per thousand gallons.

This raises the following question: If water rates of $4.60 per thousand gallons to city residents, admittedly, do not cover the cost of water production, why would you want to enter into an agreement to sell water at a lower water rate of $3.60 to Aqua?

Water sales to Aqua Ohio accounted for slightly over 21 % of the city’s annual water sales in 2008. If city water sales amounting to 57 % of total water sales are sold, at $4.60, admittedly below costs, and 21 % of water sales to Aqua are sold at $3.60 per thousand gallons, couldn’t one conclude that the city is selling as much as 78 % of its water at a loss?

What are the city’s water production costs?

According to the Arcadis study, total water production costs per thousand gallons vary widely from year to year for North Canton. The study shows that the city’s actual total water production costs per thousand gallons in 2006 was $9.38; in 2007 $10.45; in 2008 $5.55. The study shows budgeted water production costs for 2009 were $7.28 and projects water production costs for 2010 at $5.74.

What are the city’s water production costs for water sold to Aqua? Should there be any difference in water production costs between water sold to Aqua and water sold to any other water customer of North Canton?

All of the water is processed at North Canton’s water treatment plant. The water is all treated the same.

The Arcadis water study, dated January 2010, notes that water production costs to Aqua are $2.20 per thousand gallons. A subsequent e-mail from Bob McNutt to council, dated April 21, 2010, titled Aqua Agreement Review, now states that water production costs for Aqua are $1.15 per thousand gallons.

As the water production cost figures seem to change for political reasons to justify the planned political agenda to ratify the new agreement tonight, I again ask for an independent auditing agency, preferably, the state auditor, to audit the entire water fund to give city officials and the public reliable data from which decisions can be made with confidence on how best to set water rates and water policy for the North Canton water system.

As for the renegotiated agreement that is about to be hastily voted on tonight, I believe the 3 % rate cap and ten-year term in the renegotiated agreement present great risks for problems for the city in the future.

The renegotiated agreement with a rate cap of 3% only benefits Aqua. Further, any rate cap, especially with a ten-year term presents great risks for the city. Economic forces are already in play in the United States and globally that could bring about inflationary pressure within the term of the agreement and burden the city.

What is highly illogical about the new rate cap is that your very own consultant, Arcadis, has recommended a higher rate cap of 4 % and the present agreement with Aqua has a rate cap of 5 %. Why are you subjecting the city to such a low rate cap?

At the very least, why can you not continue with the same rate cap of 5 % as is in the present agreement?

A rate cap of 3 % for Aqua will not even keep pace with the historical rate of inflation which is 3.2 %.

Lastly, I would like to say how disheartening it is to see elected officials show more concern for Aqua than the very citizens they are sworn to represent. I am talking about the residents of the Sanctuary who are served by Aqua for their water.

In recent weeks, Aqua has announced rate increases of 20 percent for its water customers which will include North Canton residents in the Sanctuary.

The renegotiated water agreement limits rate increases to Aqua to a cap of 3 % yet Sanctuary water customers have no such protection on rate increases from Aqua.

Aqua Ohio is Ohio’s largest investor-owned water utility. Their parent company, Aqua America, Inc., is the nation’s largest U. S. based publicly traded water company.

I would ask that before ratifying the renegotiated water agreement that equal protection from rate increases as afforded to Aqua be included in the water agreement for Sanctuary residents.

If that cannot be done, then I would urge you to not proceed with passage of the water agreement as the water agreement exposes North Canton to risks and is unfair to citizens.

Thank you,
Chuck Osborne
Resident, City of North Canton

North Canton Should Rethink City’s Water Policy and Restructure Water Rates

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
April 26, 2010

North Canton’s current water rate structure has become outmoded and is counterproductive in serving the needs of its customer base and in generating needed revenue to pay down the indebtedness of the water fund. I say this because there are some puzzling questions that arise as one studies the city’s water rate structure.

First, why do water rates increase as consumption levels increase for all water users except Aqua Ohio? Wouldn’t this tend to discourage water consumption by these water users who are paying higher water rates than Aqua? If anyone is unfamiliar with the city’s water rates, I should refresh your memory. Residential users, inside the city, pay $4.60 and outside $8.66 per thousand gallons for the first 15,000 gallons of water. Water usage above 15,000 up to 30,000 gallons rises to $5.27 inside and $9.28 outside.

Why does the city discourage higher levels of consumption for residential users who are already paying considerably more than any rate you ever expect to charge Aqua Ohio or any other bulk user? If your goal is to sell more water and bring in more revenue, the current rate structure is counter-productive and limits revenue for the water fund.

Inside and outside residential and business water rates need to be restructured to facilitate greater revenue to the water fund.

Before the city expanded its raw water capacity and its processing production, I surmised that the rate structure was designed to discourage water consumption and stretch limited water resources. The present water agreement with Aqua Ohio seems to indicate that raw water capacity and processing capacity are now of no concern to the city. If that is entirely true, water rates need to reflect that change in policy.

What is the goal of the city’s water policy? Do we want to encourage consumption or discourage consumption? Are you trying to ration limited resources? Water rates affect people’s behavior and thus consumption.

In regards to the Aqua Ohio water agreement, I must ask why the city wants to exhaust the newly added capacity of our water system? To promise two-thirds of the city’s newly added capacity in one gulp could find the city over-committed on water sales when it least expects it and long before the indebtedness of the water treatment plant is paid down?

My second concern regarding the city’s water rate structure is the bulk rate charged to Aqua Ohio of $1.52 per thousand gallons. This water rate defies logic when looking at water rates for all other businesses.

Prior to water sales outside the city, a bulk water rate applied only to bulk sales in the city. The bulk water rate charged to a high-volume business in the city supported jobs in the city from which the city received added income to the general fund in the way of income taxes. Selling water outside the city at a hugely discounted rate in bulk returns nothing to the city’s general fund. There is no added benefit for the city.

The city is not supporting jobs by selling water in bulk to Aqua Ohio. Why is the city interested in such an arrangement?

Clearly, bulk water rates outside the city should be looked at and priced much differently than bulk water rates inside the city.

At last weeks Council of the Whole meeting, the latest draft of the new water agreement with Aqua Ohio limited annual rate increases for Aqua to 3 percent per year for the ten-year term of the agreement. That proposed commitment to Aqua is just as fiscally imprudent as promising all remaining rate payers that same promise.

If you cannot make that same commitment to your constituents who vote for you and the citizens who are responsible for the indebtedness of the bonds on the water treatment plant, why would you make a commitment to Aqua Ohio, a public utility whose only interests are its water customers and its stockholders?

Whose well-being and interests are you putting first?

I would urge this council to table any further action on the Aqua Ohio water agreement until a complete assessment of the city’s water rates is completed and new rates are implemented.

Further, I would like to encourage the city to look closely at the city’s water production costs on page two of the Arcadis Water Study. The city’s water production costs are all over the board, ranging from a low of $5.55 per thousand gallons to $10.45 per thousand gallons. Wide fluctuations in water production costs as detailed by Arcadis are not reality. If these figures are true, practically all water being sold by North Canton is being sold at a loss.

It is common knowledge that water funds must be kept separate from all other fund accounts as water is an enterprise fund. In order to have accurate information on water production costs, only actual expenses directly related to water production should be allocated to water costs.

Rumors abound from several sources that the current administration is using creative budgeting and bookkeeping to charge the water fund a percentage employees payroll expenses to the city’s water fund. I fear something is going on as water production costs in the water study vary wildly and are clearly excessive.

Drinking city water out of a city water fountain does not warrant charging that employee’s expenses to the water fund. I have heard these reports from several reliable sources. If these reports are true it is very unfortunate. Fiscal crisis is apparently leading to desperate actions on the part of the administration.

Creative accounting is simply going to lead to confusion and disaster and put the water fund in the same fiscal crisis that we now are facing with the city’s general fund.

I would urge that an independent auditing agency, preferably, the state auditor audit the entire water fund to give city officials and the public reliable data from which future decisions can be made with confidence on how best to set water rates and water policy.


Thank you,
Chuck Osborne
Resident, City of North Canton

Economy Provides North Canton Opportunity to Undo Inequities of Aqua Ohio Water Agreement

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
April 12, 2010

The City of North Canton has negotiated many agreements in the course of conducting the public’s business but, unfortunately, many of those agreements have resulted in financial loss for the taxpayers of North Canton. Some of these agreements that have lead to financial loss are the agreement to lease Arrowhead Golf course to Kevin Larizza and the option agreement to purchase twenty plus acres of swamp land on the east side of town from the Crowder family.

The Cooperative Economic Development Agreement (CEDA) agreement for the Sanctuary is another negotiated agreement that has resulted in financial loss for the City of North Canton. In that agreement, no one in the city bothered to negotiate any concessions on behalf of the City. There were three signers to the agreement, Plain Township, City of North Canton, and McKinley Development Company. In the CEDA, Plain received assurances that North Canton would not pursue further annexations for a period of three years. McKinley Development received a less cumbersome annexation process.

But what did North Canton negotiate for itself in its 2003 CEDA agreement? Nothing!

North Canton could have negotiated the water distribution rights to the Sanctuary if city
leaders had negotiated a CEDA that benefited all parties to the agreement but the city did not do so.

The present water agreement with Aqua Ohio allowing Aqua to serve the Sanctuary is another agreement that has cost the city dearly. Rushed through city council in 2005 on an emergency, the water agreement has led to the sale of water at below cost for five years, resulting in millions of dollars in revenue losses.

Luckily, for the City of North Canton, the unforeseen downturn in the economy has a silver lining for North Canton. The build out of the Sanctuary of nearly 206 homes as well as other planned development has not happened and is not likely to happen in the foreseeable future.

Aqua does not want to be committed to a required minimum purchase of 500,000 gallons per day which increases to 600,000 gallons per day beginning May 1, 2010. Paying for water, even when North Canton has discounted the water price at less than North Canton’s production costs, is an expense to Aqua when it does not take delivery of the water. Aqua does not want to continue in this fashion.

North Canton may not be accountable to its citizens for financial losses resulting from water sales but Aqua Ohio is accountable to its shareholders for operational expenses and the bottom line.

Any renegotiated water agreement with Aqua needs to be handled with due diligence and a study lest this city find itself again on the losing end of another agreement.

Aqua Ohio is Ohio’s largest investor owned water utility. Their parent company, Aqua America, Inc., is the nation’s largest U. S. based publicly traded water company. Neither company is responsible for the millions in debt owed by North Canton’s water fund. The rate payers and citizens of North Canton are responsible for these bonds on the water treatment plant.

The citizens of North Canton should not be enriching public corporations as has been the case with the current water agreement with Aqua Ohio.

Regarding the draft of the new water agreement, I have the following remarks:

One: Water rates charged to Aqua should be handled as any other BULK WATER user and subject to rate increases as any other water customer the city serves. Restricting rate increases to Aqua will add inequities to the city’s water rate structure as other water user’s rates are increased at a higher rate over time and create greater problems in the future.

Two: The water rate charged to Aqua should take effect as soon as the contract is ratified. Given that the Arcadis Water Utility Rate Study has documented that the city is selling water to Aqua below the city’s production cost, it is not financially prudent to agree not to raise Aqua water rates in the first year of the new water agreement.

Three: The ten-year term for the new agreement is not prudent and exposes the city to a great deal of uncertainty and financial risks. There is no benefit to the city for a long term agreement. A two or three year term would be much better and allow the city to weather an unforeseen financial downturn arising from water sales.

Four: Reserving 2.0 million gallons per day (mgd) for possible sale to Aqua is an unfair provision in the agreement. In effect, Aqua is asking that North Canton provide the basis for Aqua’s future growth of water sales at the expense of the citizens of North Canton.

Five: Monthly billing, late payments, and penalties for late payments should be brought in line with North Canton’s policies that are presently in effect for all water users.

I ask city leaders to look closely at all aspects of any agreement and understand the agreement you ratify. North Canton must negotiate agreements in the future with a keener mind. The city cannot weather too many more financial boondoggles and giveaways.

You must negotiate agreements like it is your money. The city does not have the funds to pour down the drain as has been the case in the past.

North Canton must do better.



Thank you,
Chuck Osborne
Resident, City of North Canton

North Canton Water Study Highlights Failures of City’s Water Agreement with Aqua Ohio

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
March 22, 2010

On July 10, 2006, I presented concerns in public to city council regarding a water agreement with Aqua Ohio that had been ratified in legislation by North Canton City Council. The ratification of the agreement had been approved unanimously by city council on an emergency on February 28, 2005, as Ordinance No. 49-05.

Four current members of this council, Jon Snyder, Jeff Peters, Marcia Kiesling, and Doug Foltz, were members of that council in 2005 when the Aqua Water agreement was ratified. For reference, I have a copy of my 2006 comments for you today.

In that presentation I stated, “The Aqua Ohio water agreement, to put it mildly, is grossly unfair to the City of North Canton….”

The recent Water Utility Rate Study completed by Arcadis, dated January, 2010, comes to the very same conclusion that I came to nearly four years ago. Unfortunately, no one in city government took me seriously when I presented my concerns in the summer of 2006.

For you present members of council who voted to ratify the water agreement with Aqua Ohio, I think it is fair to ask why you didn’t ask for a water study before ratifying the water agreement?

In those remarks of nearly four years ago, I noted that former City Administrator Michael Miller negotiated the Aqua water agreement without input from the City’s water superintendent and did not ask the City’s finance director for her thoughts on the agreement. Was Mr. Miller qualified to negotiate an agreement such as this?

The Arcadis Study would indicate that Former Administrator Miller was not qualified to negotiate the agreement.

How much did it cost the North Canton to have Arcadis tell you the very same thing I told you nearly four years ago? Finance Director Alex Zumbar has advised me that the Arcadis Water Utility Rate Study cost $18,500.

My study of the Aqua Water Agreement and public presentation of my concerns came at no cost to the City of North Canton.

My 2006 presentation was lengthy as I took great pains to detail the overwhelming shortcomings of the agreement. A few of the concerns I presented were:

Under the Aqua Ohio Water Agreement:
1) Water rate increases for Aqua Ohio were limited to a maximum of five percent yet future water rate increases for residential customers were as high as 7.1 percent.

2) Aqua was allowed until the thirtieth day of the month to pay their monthly bill and was subject to a late penalty of one percent (1%) per month if payment was late. At the same time, North Canton’s policy for residents regarding payment of water bills required payment by the fifteenth of the month and a five percent penalty for late payments.

3) There was a stipulation in the agreement stating, “If during the agreement, additional facilities are necessary for sale of water hereunder, such facilities will be constructed by the city.”

I never heard anyone ever ask what possible expenditures and at what cost to the City these expenditures would entail. I would like to know what additional expenditures the city has been required to spend in order to facilitate water sales to Aqua Ohio? Does anyone even know? Has this been tracked and how does this stack up against the pittance the city has received in water revenue from Aqua Ohio?

4) Aqua Ohio could tap North Canton water lines and extend water lines to service areas outside the city. There is nothing more devastating than a clause such as this for ending the growth and expansion of the North Canton water distribution water system.

The shortcomings of the water agreement with Aqua Ohio cover every aspect of the agreement. Four years I stated, “The Aqua Ohio water agreement is so patently unfair as to be nearly criminal.” The Arcadis Water Utility Rate Study validates my remarks in “spades.”

The very sad part of this situation is that this agreement has continued in effect for five years at great cost to the City and without any concern of Mayor David Held or City Administrator Earl Wise.

The losses to the North Canton water fund are quantified on page 2 of the Arcadis Water Utility Rate Study. In table 2, water sales in 2008 to residential and business customers total 22.3 percent of the total water sales for the year and resulted in revenue of $3,247,067. Water sales in the same time period (2008) to Aqua Ohio total 21.2 percent of total water sales for the year and resulted in revenue of $280, 388.

Nearly identical volume of water sales and yet the resulting revenue to the City is nearly $3.0 million less from sales to Aqua Ohio. These are not my figures but your very own consultant’s figures.

On page 6 of the Arcadis Study, the report cites the fact that the City of North Canton has sold water to Aqua Ohio in 2009 at a net effective sales rate of $1.52 per thousand gallons while at the same time, the total cost to collect and treat the water and pump the water into the distribution system was $2.20 per thousand gallons. The report concludes, “This would yield a net loss of $0.68 per thousand gallons.”

Is this an oversight? Is this ineptness? Who is in command of the city?

Mayor Held, I did attend your State of the City presentation. Why did I not see any commentary from you on the conclusions of the Arcadis Study presented in your State of the City speech?

Four years ago I noted, “The Aqua Ohio water agreement appears to totally ignore the City of North Canton’s production costs and how they are allocated.” The 2010 Arcadis Water Utility Rate Study remarks are similar.

Why did city leaders not look more closely into all of the concerns I presented in 2006?

Basing water rates on known water production costs for North Canton water users while at the same time ignoring those production costs when setting water rates for Aqua Ohio is unfair and financially perilous.

In addition, water users in North Canton have been subsidizing the profits of the nation’s largest U. S. based publicly-traded water company for the last five years.

In my 2006 presentation, I calculated that the City of North Canton was losing $7,254.57 per day in revenue as a result of the artificially low price of water sold to Aqua Ohio. In a year’s time, that equates to more than $2.6 million dollars in uncollected revenue under the Aqua water agreement.

Why is the bulk water rate charged to all other bulk water users not good enough for Aqua Ohio?

I believe it is safe to say that the City of North Canton has lost between $2.6 million per year (my projection in 2006), and $3.0 million per year, (using figures from the Arcadis 2010 Study) since the Aqua Ohio agreement has been in effect.

Factoring in the five years that have elapsed since the contract was ratified results in a loss to the North Canton water fund of between $13.0 and $15.0 million.

Again I ask, why has this agreement not been challenged before now?

Where are our investigative journalists who truly report on the actions of our elected officials instead of parroting their propaganda?

The Arcadis Study states on page 6: “…the City may realize benefits by renegotiating agreements with Outside City Users, with specific emphasis on the Bulk Water Sales agreement with AQUA.”

The Arcadis Study continues “…the City is selling its water capacity at a rate of $1.65 per thousand gallons to AQUA while the current rate schedule for Outside City Business Accounts sells at a rate of $9.72 per 1,000 gallons.” An $8.07 per thousand gallon discount over other Outside City Business Accounts is unfair to those users and undermines the fairness and integrity of the rate structure set by the city for all waters customers of the city.

The argument in the past has been that the reduced water rate to Aqua brings in added revenue. Generating added revenue by selling a product below cost just to say we are bringing in added revenue to the city is not only illogical, it is also financially unsound.

The Aqua Ohio Water Agreement is a total failure. I urge this council to void this Aqua Ohio water agreement in its entirety without further delay and adhere to bulk water rates that apply equally to all.


Thank you,
Chuck Osborne
Resident, City of North Canton