Greater Sudbury city council spent three hours Feb. 18 debating the final report on the core services review.
At the insistence of council, accounting firm KPMG conducted a review of the city's core services, including arenas, parks, recreation programming, assets and facilities management, road operations, community grants and long-term care. The core services review final report debate will pick back up at council's next scheduled meeting on March 10.
The review concluded that the city could save up to $4 million a year in operating costs in a relatively short period of time by making changes to what it funds and how much it charges for municipal services, though the results of the report did not sit well with all of council.
Ward 3 coun. Gerry Montpellier tore the report to shreds (figuratively), calling it "shameful" and stating, "Accepting this report would truly be Sudbury's lowest and darkest moment. Who would seriously consider living or investing in a city that knowingly chooses to destroy itself?"
While Montpellier was unrelenting in his criticism of KPMG review, CAO Ed Archer clarified repeatedly during the Feb. 18 meeting that the 200-page report is merely a guiding document with suggestions as to where the city could find cost savings. And despite councilors discomfort with some of the suggestions (user fees and parkland naturalization being particularly controversial), it was council that asked for the report to be produced in the first place, when Ward 8 Coun. Al Sizer introduced the motion on May 14, 2019, calling for a review of the core services provided by the city.
Council passed an amended motion on May 28, 2019, directing staff to initiate the required work and, prior to any detailed analysis of potential changes in specific services, report information about all of the municipality’s services, their cost and performance relative to the city’s benchmarking partners.
Sizer raised the matter again at a July 9, 2019 finance committee meeting, highlighting the fact that the core services review could have implications for Pioneer Manor and its future as a city-owned facility (more on that later).
Ultimately, council has the final say as to whether arenas or parks are closed, whether or not user fees are increased at the city's recreation facilities and what levels of service the city is to provide.
KPMG outlined in their review what it called the top 10 opportunities for savings. They are as follows:
- Facilities rationalization
- Creation of a digital city
- Implementation of a lean management system
- Review of school board agreements
- Modernizing phone systems
- Review user fees and cost recovery
- Expand facilities management systems
- Optimize office space
- Review maintained parkland requirements
- Outsource ski hills
The scoring system was based on measuring Sudbury against five other cities: Thunder Bay, Regina, Windsor, London and Guelph. The report was returned to city staff, who then turned the 10 opportunities into five recommendations, which can be found here.
Of the 10 opportunities, KPMG’s assessment indicates five of them could be implemented within the next two years. Of the remaining five opportunities, three could be implemented within four years, while two would require more than five years to implement fully.
For some of the opportunities, such as developing staff capacity for lean management practices, financial investments will be required that facilitate the anticipated benefits KPMG identified.
The biggest savings outlined by the KPMG report is in the area of facilities rationalization, with an estimated cost savings of $1 million, and review maintained parkland requirements, which has an estimated cost savings of $980,000.
How does Sudbury stack up?
When it comes to parkland, Sudbury is well above the average of the comparator cities and had the most maintained parkland per 100,000 population of any of them. Sudbury maintains 867 hectares of parkland per 100,000 people, more than double the average of 432 hectares.
In total, the city maintains 1,400 hectares of parkland over the municipal district, providing a service level of 7.3 hectares per 1,000 residents, far higher than the provision of 4.0 hectares per 1,000 residents outline in the city's Parks, Open Space and Leisure Master Plan.
Because Greater Sudbury has so much parkland, KPMG found city staff are stretched so thin that maintenance of existing parks falls below standard.
If the city simply stopped maintaining about 633 hectares of parkland — a process called 'naturalization' — the city could realize savings of up to $1.8 million per year in reduced operating/maintenance costs.
If a portion of these savings were to channeled into increasing the maintenance service level for the remaining parkland (increasing the existed budget by 30 per cent per hectare), the net savings would be still be approximately $980,000.
This recommendation was third on the list at the Feb. 18 meeting and was amended in order for staff to take a closer look at land utilization before moving ahead with steps to naturalize more than 600 hectares of parkland.
The recommendation was amended to read as follows, "that council direct staff to prepare a report and policy describing minimum utilization rates and other similar criteria to support council's further deliberations about KPMG's recommendations to rationalize facilities and review maintain parkland requirements to be presented to council by the end of the third quarter of 2020."
How much indoor rec. space do taxpayers fund?
Sudbury also surpassed the average for indoor recreation space, as highlighted in KPMG's report under the opportunity to save $1 million a year through facilities rationalization. The city currently manages more than 600 facilities and since the amalgamation of towns and cities to form the City of Greater Sudbury, there has not been a detailed assessment of the number of facilities in place and whether all facilities are needed.
Greater Sudbury has the most indoor recreation space of any its comparators with total of approximately 114,000 m2 compared to comparators at an average of 78,000 m2, and Sudbury is in line with its comparators as far as recreation facility expense per indoor recreation square meter at $137/m2.
The KPMG report identified facilities with both low usage and cost recovery percentages. This list includes two arenas, four community halls/centres and two pools. The facilities outlined in the report as having the lowest usage arenas were: Capreol No. 1 at 37.3 per cent utilization in 2019; Capreol No. 2 at the double-pad facility had 59-per-cent usage last year, while the arena as a whole recovered 54.1 per cent of its costs. The IJ Coady Arena in Levack had the lowest usage of all of the city's community arenas at 32.8 per cent and recovered 41 per cent of its costs.
On the subject of cost recovery, KPMG outline in the report that the city currently does not have a framework to guide what portion of recreation costs should be recovered via user fees versus what should be paid for via a tax levy.
The city recovers an average of 28 per cent of its total recreation costs through user fees and service charges, falling just below the comparator average of 29 per cent. Based on a one-per-cent increase to user fees, the city could earn an additional $245,000 to reduce the burden on tax levies from user-paid services.
The second recommendation in the report dealt with the city's user fee policy, stating that the chief financial officer update the user fee policy to include a framework that guides what portion of recreation costs should be recovered by user fees and the rate of subsidy that should be provided by taxpayers for council's review and approval by the end of the third quarter of 2020.
From there, council can decide whether or not to implement changes to user fees which could be brought into effect as early as budget 2021, according to the KPMG report.
So what about Pioneer Manor?
During a July 9 finance committee meeting, Ward 8 Coun. Al Sizer brought up Pioneer Manor and questioned whether or not the city should be in the business of long-term care homes at all, as they have been costly for the city to operate every year and is a service the city doesn't have to provide.
“That certainly is a major outlay for us, and we're looking at a $5.4-million deficit plus capital expenditures,” said Sizer. “So that's the big one. But it's one we have to look at and see if there's an interest in (selling it). But there has been talk about it before, so we'll see whether that appetite is still there.”
Ward 9 coun. Deb McIntosh brought up Pioneer Manor at the Feb. 18 meeting, in order to shed some light on why it was not highlighted as a cost-saving opportunity by KPMG. She said there are many members of the public who wonder why the city operates a long-term care home when it isn't a mandatory service.
"Why are we in the business of Pioneer Manor — there are a lot of people saying [we should] get out of the business of Pioneer Manor," said MacIntosh.
"I would just like someone to speak to why we're in it and why there's no recommendation on here (the KPMG report) to sell Pioneer Manor."
Chief Administrative Officer Ed Archer explained the process of divesting a long-term care home in a municipality's control is a lengthy one, involving a five-year transition period that would include public consultation. He then directed MacIntosh's question to Aaron Archibald, director at Pioneer Manor.
Archibald said while it is true the municipality has the ability to close the facility, selling off a long-term care home isn't an easy task under provincial legislation.
"Divestment of long-term care services is quite a process for the city to go through under the Long-term Care Act," said Archibald. "The city operates with an approval from the Ministry of Health and Long-Term Care — that is not a license that we can transfer, we can't give it away and we can't sell it. We are not able to transfer ownership or sell a license."
If the city did want to find another operator, the process would be at a minimum five years where the city would have to go out and locate an operator, meet with the Health Ministry to notify officials of the city's intent to transfer operation. The new operator would then have to apply to the ministry to take over ownership, with the ministry having final say.
"Ultimately, even though the Long-term Care Act states that a northern municipality may maintain and operate a home, the ministry would have the final say if the city could change operators," said Archibald.
Additionally, if the city were to get out of the long-term care business and divest itself of Pioneer Manor, there would be another wrinkle to consider: the city could very well lose the funding for the number of beds at the manor.
"Funding for the beds are not guaranteed to stay in Sudbury or in the northeast," said Archibald.
"We met with the Northeast LHIN and posed the question of what would happen if these beds were closed and they told us that the funding would not stay in the northeast. They told us about a recent closure somewhere in the northeast where a couple of beds were closed and they were unsuccessful in keeping the funding for those beds in the (region). The funding for those beds would be re-allocated somewhere else in Ontario."
KPMG's report states, "considering Pioneer Manor is the single largest provider of care home beds in the Greater Sudbury area, this would have a significant effect on the community, including an increased burden on hopitals within the Sudbury area."
