Waterloo continues to struggle financing the RIM Park debt
RIM Park may be a valuable facility to local residents, but its construction did not come without a cost. Today, the City of Waterloo continues to pay the price of the unforeseen legal, political and enormous financial implications.
In order to finance the construction of RIM Park, the 500-acre recreation complex in northeast Waterloo, the City of Waterloo entered a financial agreement in September 2000 with MFP Financial Services Ltd. of
Mississauga, now Renasant Financial Partners Ltd. Shortly after, however, it was revealed that the contract indicated a 9.2 per cent interest rate, as opposed to the 4.7 per cent the City thought it was approving, drastically increasing financial obligations.
Based on the insights from a City-conducted sport-amenities study, the City of Waterloo planned the construction of the RIM Park complex, including soccer fields, baseball diamonds, ice rinks, Grey Silo Golf Course and Sportsplex, at a total cost of $56.7 million.
the year the contract was signed between Waterloo and MFP
the year the contract ends
the amount the city anticipated to be paying out in total for the debt
the actual payout over 30 years determined by the law suit
of unexpected debt
interest rate compounded sem
Council voted in favour of signing a deal with MFP Financial for a $48.3 million loan, under the impression that the interest rate was 4.73 per cent, an obligation that would require 1.2 million tax dollars annually for 30 years. However, sixth months after entering the contract, an investigation by the Waterloo Region Record found that the City actually agreed to a much higher rate of 9.2 per cent, equalling a total payout of $227 million over the 30 years.
But it wasn’t just Waterloo that took a hit, explained Mike Connolly, a regional councillor for the City of Waterloo at the time of the signing. The City of Toronto, which, among other former clients had previously advised Waterloo of their satisfaction with MFP’s services, reviewed its documents and found that interest was at the proposed rate only for the first few years, after which it increased for the remainder of the contract, just like the RIM Park deal.
In hindsight, Connolly acknowledges various “fishy” happenings in the RIM Park deal process.
Waterloo filed a law suit against MFP, and, as a result, the $227 million was reduced to $145 million over 30 years.
Further litigation, including action against MFP and former City employees John Ford, CFO, and Tom Stockie, CAO, remains outstanding. The City of Waterloo refuses to disclose the associated legal costs of this action.
According to the Judicial Inquiry released in 2003, “Council relied exclusively on the reports from the CAO and CFO.” Connolly explained that, by standard procedure, Council never actually saw the contract.
The Judicial Inquiry states various troubling facts, including: the social relationship between Tom Stockie and MFP Vice President David Robinson, a potential conflict of interest; Robinson’s minimal paper trail, limited engagement of City lawyer William White; reliance on John Ford, who “lacked the knowledge and sophistication to undertake the due diligence that this transaction deserved;” and the insufficient communication that left Mayor Joan McKinnon poorly informed on certain matters.
While the Judicial Inquiry reported, “Mr. Robson, on behalf of MFP, but unknown to his immediate superiors, deliberately misled Mr. Ford, Mr. Stockie, and other members of the staff of the City,” there is, after ten years, still no definitive direction in which to point the finger of blame. Somewhere the RIM Park deal went very wrong, and the City of Waterloo continues to manage the largely financial fallout.