Auditor general issues damning audit of city’s Springhill landfill contract

File photo of Ottawa city hall. Francis Vachon / The Canadian Press

The contract struck with the Tomlinson Group to operate the Springhill landfill site in Osgoode has been a terrible agreement for the city of Ottawa and city hall should seriously consider blacklisting the infrastructure and waste management giant from bidding on future contracts, the auditor general says.

A scathing report presented Thursday at the audit committee by Auditor General Ken Hughes told a story of longtime mismanagement by the city on the Springhill file, an alleged unwillingness by Tomlinson over many years to cooperate with city staff, and serious environmental contamination.

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Hughes also painted the 20-year-old contract, inherited by the city from the former township of Osgoode after amalgamation, as a “bad deal” across the board for Ottawa taxpayers – one that, in the end, will have cost the city far more than it ever earned from the contract.

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In a scrum with reporters following the meeting at City Hall, Hughes said his recommendation that the city re-evaluate its business relationship with a company is unprecedented but warranted given Tomlinson’s behaviour over the years.

“We have never taken a step like this and made a recommendation this severe … but given the relationship that existed between the city and Tomlinson we feel that it’s important,” Hughes said.

In 1998, the former township of Osgoode struck a deal with Tomlinson to privately operate the 100-acre landfill site, located at 7720 Springhill Road just west of Bank Street. Under the agreement – which expires when the landfill reaches capacity – Tomlinson is allowed to set, maintain and revise the dumping fees, with the city of Ottawa collecting 40 per cent of the dump’s net profits as royalty payments and the company keeping the rest.

As of 2017, the landfill is 75 per cent full, according to the auditor general’s report.

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The report marked the public’s first in-depth look at what went wrong with the contract and the city’s relationship with Tomlinson from December 1996 to February 2018.

Tomlinson has been a ‘difficult’ partner, city says

A major sore point highlighted in the report is that the city has only collected $6.3 million in royalty payments from the Springhill dump over two decades.

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Hughes said city staff tried for years to get financial records from Tomlinson related to the landfill’s operations – documents they’re entitled to receive under the contract – to verify the accuracy of its royalty payments, but Tomlinson allegedly didn’t play ball.

Without those answers, Hughes said his office has no way of determining whether the city was underpaid in royalties – and if so, by how much. His report also noted that Tomlinson-related companies dumping waste at Springhill are benefitting from “preferential tipping rates,” which led councillors to speculate whether the city lost additional revenue there.

The city actually entered into arbitration with Tomlinson from 2009 to 2016, which resulted in an award for the city that “somewhat made up for the lack of revenues going backwards,” Kevin Wylie, the city’s general manager of public works and environmental services, told reporters. But the amount of the payment remains hidden from the public eye due to a confidentiality order. (Lawyers for the city told councillors they’ve been fighting to have that confidentiality order removed.)

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When prompted, Wylie described the municipality’s partnership with Tomlinson on the landfill contract as “difficult” and that the city “doesn’t have a lot of tolerance” left going forward.

Tomlinson disputes claim it hasn’t been forthcoming

Tomlinson, however, denies the allegation that it’s withheld records from the city of Ottawa.

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“I can say with certainty that Tomlinson is unaware of any outstanding information or documents as we have always provided any documents the City has requested in a timely fashion,” Michael Clement, general manager of Tomlinson Environmental Services, said in a statement to Global News.

Hughes and city staff stated Tomlinson has become more communicative since the city’s chief procurement officer sent a letter to the company. Wylie confirmed senior executives met with city staff a few days ago and that the company recently coughed up four years’ worth of “detailed transactional data” the city had been demanding for years, which forensic accountants are now reviewing.

In Tomlinson’s statement, Clement said the company is committed to ensuring “the path forward is one of strong cooperation and one that is in the best interest of Ottawa residents.”

“During our last meeting with the City’s senior management team, we jointly agreed to move forward to address any outstanding concerns in order to improve waste management operations at Springhill and we have every intention of doing so,” the statement said.

City mismanaged contract for years, auditor general found

While it was universally acknowledged Thursday that the city inherited an “unfavourable” contract from the old township of Osgoode, Hughes still blasted the city for poorly managing the Springhill contract for years.

Hughes reported that over the past 17 years, there was a high turnover of staff managing the file, plus “poor” handover, documentation practices and record-keeping. The city’s contract management on the Springhill file was so bad, Hughes said, his audit team couldn’t find any evidence of “documented regular meeting minutes” between the city and Tomlinson prior to 2014.

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In response to pointed questions about these findings from West Carleton-March Coun. Eli El-Chantiry, City Manager Steve Kanellakos admitted the city should have performed better.

“Yes, we should’ve,” Kanellakos said. “We didn’t.”

The city said Thursday it has made policy changes to improve its contract and project oversight and management.

Landfill also contaminating groundwater, nearby wetland

As if financial controversy wasn’t enough, the auditor general’s report also revealed that the landfill has been leaking contaminated liquid into groundwater, which is migrating to nearby properties and affecting an adjacent wetland. The leachate has also been mixing with surface water.

The city said it took “immediate steps” to address the contamination when it worsened “significantly” in late 2017. The provincial ministry of environment has described the wetland’s condition as the “one of the worst in eastern Ontario,” according to Hughes’ report.

Under pressure from the city, Tomlinson stopped accepting waste at the Springhill dump as of May 4, 2018. The company will need council’s blessing to resume operating the landfill.

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The city said it’s monitoring the site and well water in the area and has come up with an action plan to deal with the contamination, which pegs clean-up costs between $7 and $8 million – with possibly future expenses in operating costs.

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Wylie told reporters the city will be asking Tomlinson to cover any and all costs associated with the clean-up because the environmental contamination stemmed from their operation of the site.

Kanata South Coun. Allan Hubley, who chairs the audit committee, called the audit’s findings “disturbing” and said he “would accept nothing less” than Tomlinson assuming full responsibility for the Springhill clean-up.

“Instead of the taxpayer being on the hook for the long-term maintenance of this landfill and how to close it … that should be out of their pockets,” Hubley said.

Osgoode Coun. George Darouze said Tomlinson has a “great record” of doing good work on other city contracts and he’s “very happy” to see the company working with city staff now. Darouze said he doesn’t want to see Tomlinson banned from doing business with the city of Ottawa but that the company should  be held responsible to its contract obligations.

Darouze said he thinks he accepted campaign donations from Tomlinson but insisted that “$750 wouldn’t colour” his views.

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