Ombudsman chides rural CAO for ignoring tendering rules in garbage case

Nova Scotia's ombudsman has concluded a rural municipality on Nova Scotia's Eastern Shore did not follow proper tendering procedures related to work at a local landfill, a case that ended up in small claims court.

The situation involves Marvin MacDonald, the CAO of the Municipality of the District of St. Mary's, who in the fall of 2016 asked a contractor to bury some large piles of municipal garbage. There was a verbal agreement only, and the bill came in $20,000 more than expected.

"It didn't go out to tender and it ended up costing a lot more than they originally thought," said local resident Brad Harpell, who lodged a complaint last fall with the Nova Scotia Office of the Ombudsman.

"And when they tried to not pay that they lost in the courts. That's why I put it before the ombudsman."

He believes the case illustrates a breakdown in accountability and communication, and reveals larger problems at the rural municipality of about 2,200 people, issues that are hitting residents in the pocketbook who cannot afford it.

A review by the office of the ombudsman in February agreed the municipality "did not act in accordance with the Sustainable Procurement Policy, the Public Procurement Act and the Municipal Government Act."

According to a letter from the ombudsman's office to Harpell, the CAO acknowledged the error and in the future "would adhere to established tendering and procurement processes."

The case involves Leslie and Benn Contracting of Port Hawkesbury. According to a court ruling, an employee of the company was burying creosote timbers from a wharf in the landfill transfer station on Gegogan Road.

MacDonald, the municipality's chief administrator, asked the contractor to bury three piles of municipal garbage at the same time.

The excavator was given the green light to do the work based on a verbal quote of between $12,000 and $15,000. But the total bill came to just over $35,000, which the municipality only partially paid.

The dispute went to Nova Scotia small claims court. In October 2017, an adjudicator ordered St. Mary's to pay another $14,300, bringing the total paid to just over $28,000 including HST.

MacDonald said in an interview that the garbage case was an unusual situation and "I was trying to save the municipality some money." The lessons learned, he said, include having written agreements in place.

"We accept the ombudsman's assessment, just as we accepted the small claims court ruling," said MacDonald. "And we've moved on."

But Harpell has a list of other concerns with how the municipality is spending money. They include the 2013 construction of a $1.8-million municipal building he doesn't believe was needed, and a $202,000 cost overrun on a waterline upgrade project last year in the community of Sherbrooke.

Harpell spent 30 years in the oil and gas industry before retiring to Indian Harbour Lake, where he grew up. Based on his experiences he blames the cost overrun for the waterline project on an improperly worded contract.

In an email to Harpell, the CAO insisted there was appropriate oversight of the project and said it went over budget because contractors had to deal with a lot more rock than expected.

As for accountability and transparency in general, MacDonald insists the municipality has brought in a number of changes over the past few years.

"We've been doing a lot lately as far as going to the public and getting opinions," he said. "There is an opportunity to come and hear about budgets and sessions on strategic planning."

Taxes going up

Harpell points out there are only about 2,200 residents in St. Mary's, many of them seniors on fixed incomes who cannot afford ongoing tax increases.

"It has stretched older residents within the community," said Harpell. "They are deciding between drugs, heat and food."

The median household income in 2016 in St. Mary's was $49,900, which is well below the average for rural municipalities at $57,750, according to provincial statistics.

The general government costs in St. Mary's, which include council and administrative salaries, make up almost 24 per cent of its $3.1-million budget. On average, government costs for rural municipalities in Nova Scotia make up 16 per cent of a municipal budget.

The residential tax rate has crept up over the past three years from 89 cents per $100 of assessment to 94 cents per $100 of assessment. According to the province, the total value of property assessments in St. Mary's increased over that same time period from $175 million to $181 million.