August 2010

The number of six-figure salaries has increased dramatically at City Hall. But are taxpayers getting good value for their money?

THAT VICTORIA CITY HALL exists in a kind of economic bubble floating well above the reality of the ordinary people that pay City Hall’s bills was confirmed in July with the publication of the City’s 2009 Public Bodies Report. Municipalities are required by law to list all positions (excepting police) for which remuneration is greater than $75,000. The City’s 2009 report showed the number of City Hall staffers making more than $100,000 a year jumped from 15 in 2008 to 50 in 2009. According to Statistics Canada (2006) only 4 percent of Canadians have annual income greater than $100,000.

City Manager Gail Stephens topped the list with remuneration of $186,418.09 and expenses of $168,443.94. The City’s Director of Communications, Katie Josephson ($115,369.52) said Stephen’s high expenses “included transition costs for moving to Victoria [from Calgary] that included losses on [her] house sale” as well as “moving expenses, travel and professional dues.”

Second-highest paid City staffer is Director of Parks, Recreation and Culture Kate Friars, whose remuneration of $166,503.58 was an athletic jump of 25 percent from her remuneration in 2008. Other notable leapers were Peter Sparanese ($161,051.27), who spent 2009 as Director of Engineering, and Mike Lai ($128,347.14), who spent 2009 as the Johnson Street Bridge project manager and Assistant Director of Transportation and Parking Services. Both Lai’s and Sparanese’s remuneration increased by roughly 20 percent in 2009.

The report also shows that remuneration to the mayor and councillors rose dramatically after councillors (excepting Geoff Young and Chris Coleman) voted soon after the November 2008 civic election to hike their pay. In 2008, then-Mayor Lowe’s remuneration and expenses totalled $63,139.04. The Public Bodies Report shows Mayor Fortin received $106,305.60 in remuneration and expenses in 2009. Councillor’s remuneration jumped from approximately $19,000 in 2008 to $40,000 in 2009.

This might, in part, explain the difference in perception between Mayor Fortin’s take on the local economy and, say, Greg Baynton’s. As you might recall, after the City announced in mid June that the cost to either fix or replace the Johnson Street Bridge had risen to roughly $100 million, Mayor Fortin appeared on CHEK TV attributing the increase over the year before to “extremely escalating” construction costs. But Greg Baynton, President of the Vancouver Island Construction Association demurred, saying construction costs had actually dropped in that time.

Perhaps Mayor Fortin was projecting the economic escalation in his own life to the world in general. Meanwhile, most business owners in Victoria were characterizing the change in the local economy as lying somewhere between “brutal” and “murder.”

Not long after the release of the Public Bodies Report, council was warned by City Finance Director Brenda Warner ($138,836.61) that a 4.7 percent increase in taxes in 2011 would be necessary to make up for a projected $4.7 million budget shortfall. This would come on top of a 4.3 percent tax hike for this year. Just so you know, many of the City’s highest-paid managers won’t be personally affected by these tax increases.  General Manager of Corporate Services, Mike McCliggott ($153,899.56), Warner, Stephens, Sparanese and Lai all live in suburban Saanich.

The link between level of compensation and the quality of decisions made by the City’s public servants and elected decision makers ought to be obvious to everyone, at least theoretically. The more taxpayers pay for help, the more talented and skilled that help will be, right?

Although much of what’s done by the City is routine maintenance, every once in a while some great crisis appears and the pool of high-paid talent is there for the intense problem solving that’s going to get the City out of trouble. Like the sudden discovery that a piece of infrastructure vital to the proper functioning of the city hasn’t been properly maintained. With highly-paid talent on hand to guide elected decision makers through a rigorous examination of all possible options, residents can go to sleep at night confident that when they wake up, the crisis will be resolved.

So how are they doing, the City’s talented, well-paid team of problem solvers? 

There probably isn’t a better example of a difficult problem that needs solving than the Johnson Street Bridge. It’s been the talk of the town for over a year, and you either know what its problems are or you’re living under the bridge. A referendum is scheduled for November and the City is going through a complex process of deciding what question to put to electors. Many people think the mayor and councillors have already decided what that question is going to be (Can we borrow the money to replace the bridge?), but they’re putting on a show of asking the public’s opinion to get brownie points for process.

Genuine or not, the City’s “public engagement” process includes sending a full colour eight-page publication called The Future of the Johnson Street Bridge to 30,000 city households. The Future includes a two-page photograph of the bridge taken from the west side that highlights the remarkable lack of maintenance on the bridge over the past five years. That photo forms the backdrop for a number of  statements about the bridge issue including one about “Public Safety” that I explored with the mayor, councillors, City staff, an MMM Engineering representative and seismic experts from the provincial government and Natural Resources Canada. What better way to find out if the high-paid talent is earning their keep?

As you probably know, the bridge issue arose because an engineering consultant’s report—the Delcan report—claimed the bridge had seismic issues. The bridge has, in fact, survived several earthquakes without any damage, including the 1946 magnitude 7.2 crustal earthquake whose epicentre was just west of Campbell River, and the 2002 magnitude 6.8 Nisqually earthquake near Olympia.

An economical decision about how to solve the problem Delcan found would require that City staff and councillors have a solid grasp on the likelihood an earthquake strong enough would occur close enough to the bridge to actually damage it. If the chance was very small, it would be an uneconomical over-reaction to immediately move to replace the bridge without considering other options first. And worse, it would be a signal, like a fly struggling in a spider’s web, to any big engineering company lurking nearby that there was a quick kill to be made in Victoria. It’s awfully easy for a big engineering company to sell “public safety” to public servants. Nobody will fault the company for trying—they’ll claim they’re just looking out for the public good. But they don’t have to balance the City’s books or worry about other priorities.

So did the well-paid staff and councillors ever get that solid grasp on seismic reality?

Here’s what The Future of the Johnson Street Bridge says about the seismic risk: “Public safety comes first when it comes to earthquake preparedness. Victoria is located in the most active seismic zone in Canada and recent studies have indicated that there is a 30-35 percent probability of a major earthquake (magnitude 7.0 - 7.9) occurring in Victoria within the next 50 years.” The City is implying Richter Scale magnitude and cites no source for this statement. Previously they’ve credited Delcan and/or Natural Resources Canada, but Delcan never said this and Dr John Cassidy of Natural Resources Canada has said the City would be right only if it was referring to “intensity VII shaking level. Intensity being the Mercalli Scale.” A Mercalli Scale intensity VII earthquake is roughly equivalent to a magnitude 6.0 earthquake on the Richter Scale.

What’s the difference between that and the City’s “7.0 - 7.9”? A magnitude 7.0 earthquake releases about 32 times more energy than a magnitude 6.0 quake. A magnitude 7.9 earthquake would release close to 1000 times as much energy as a magnitude 6.0 earthquake. So the City’s claim is a significant overstatement of the size of earthquake likely to occur close enough to the Johnson Street Bridge in the next 50 years to damage it. How could a mistake like that be made with all the high-paid help at the City’s disposal?

I questioned the mayor and councillors about the lack of attribution for this statement and asked if they were committed to providing residents with the best possible information about the seismic risk to the Johnson Street Bridge. A couple of the councillors questioned whether seismology could accurately predict earthquakes. Lynn Hunter said, “As to Dr. John Cassidy’s statement, my work with scientists over the years has taught me there are divergent opinions on most things in the scientific realm.” Pam Madoff said “I expect that the one constant that your personal research may have revealed is the unpredictability of earthquakes and the imperfection of the science of seismology...”

John Luton offered a lengthy treatise on earthquakes and added, “I’m sure individual scientists are free, as Dr. Cassidy would be, to offer their opinions on the interpretation of information, but we will continue to rely on the comprehensive professional advice provided by our engineers and consultants.”

Mayor Fortin said he too stood behind the information provided by City staff and consultants and cited a Natural Resources Canada study as proof of the City’s claim. But the study he cited—which uses the Mercalli Scale—confirms what NRC’s Dr John Cassidy has said, that there is a 30-35 percent chance of a Mercalli Scale intensity VII earthquake in the next 50 years. That would be a magnitude 6.0-ish quake on the Richter scale. It doesn’t, of course, say how close it will be to the Johnson Street Bridge. As Dr Cassidy pointed out in last month’s Focus, “depending on how far from the earthquake you are...10 km, 50 km, 100 km...the strength of shaking drops off quickly.”

So what about the City’s consultant whose advice Mayor Fortin and other councillors say they have relied on? MMM Engineering Group’s Joost Meyboom offered exactly the same information to the mayor, council and public on June 14 as appears in the City’s brochure: A “35 percent probability of [a] major quake (M7.0 to M7.9) in next 50 years.” When asked recently where this information came from, Meyboom said “This information was developed by Dr Goldfinger at the Oregon State University and not by MMM. It is publicly available.” Dr Goldfinger’s research, which the City has never cited,  was only released on May 31. And when it was pointed out to Meyboom that Dr Goldfinger’s research only applied to the southern end of the Cascadia subduction zone, not the BC coast, he suggested there were other studies but didn’t name them. 

But wait. There was one person who seemed to be paying attention to what the consultants were saying. Referring to the $50,000 peer review study done by Stantec Consulting’s Andrew Rushforth, Geoff Young said “Rushforth appears to be saying that the probability of occurrence of the event for which the bridge is being designed or repaired is not 30 percent over 50 years, but less than three percent. If correct, this is a significant difference that should be explained in the material [the City is sending to residents], in my view, since the increase in the cost of repair to this standard is far greater than the increase in the cost of new construction.” Bingo.

Rushforth’s peer review made an unusual concession for the sake of comprehension. He listed magnitudes of earthquakes alongside the probability they would occur at the Johnson Street Bridge site. He gave a “478 year event (approximate magnitude 6.5)” a “10 percent chance of occurring in 50 years” and a “1 in 2500 year event (approximate magnitude 8.5)” a “3 percent chance of occurring in 75 years.” For those few zany people who want to know, interpolating between Rushforth’s figures for a 1 in 1000 year event (approximate magnitude 7.5), you get a 5 percent chance of occurring in 50 years. The City staffer who authored the high-probability major quake claim, Johnson Street Bridge project manager Mike Lai ($128,347.14), didn’t respond to a request for an explanation by press time. And also no word on whether councillors Madoff, Hunter and Luton are questioning the science behind Rushforth’s peer review.

David Broadland is the publisher of Focus Magazine