What is Up with Business Cape Breton?

Business Cape Breton logo

Let me admit, up front, that whenever Mayor Cecil Clarke mentions “Business Cape Breton,” my ears perk up.

BCB used to be the Cape Breton County Economic Development Authority (CBCEDA). Eileen Lannon Oldford, the CEO of BCB, was also the CEO of CBCEDA.

In that capacity, in 2011, she hired Clarke, who had just lost his bid to become the member of parliament for Sydney-Victoria, as a “senior executive adviser on economic development issues.” His annual salary was $135,000, based on a 29-hour-week. The position was paid for by Enterprise Cape Breton Corporation (ECBC).

Clarke had a three-year contract which he abandoned after one year because, as he told his employer in July 2012, he was “going to be working in the private sector.” (Cape Breton Post, 4 September 2012 )

By which he meant he was going to run for Mayor of the CBRM.


Acronyms Galore

In 2013, when the federal government cut funding to CBCEDA, the CBRM (now under Mayor Clarke) gave its share of that funding to a newly established organization headed by Lannon Oldford—the Cape Breton Small Business Development Centre:

“When CBCEDA wound up activity, the municipality gave the Cape Breton Small Business Development Centre the remaining $188,000 from the original amount to continue CBCEDA’s mandate until next spring,” [Acting CBRM CAO Marie] Walsh said. (CB Post, 26 August 2013).

In place of the old regional agencies and authorities, the province formed regional enterprise networks (RENs). Port Hawkesbury joined a REN made up of Northeastern Nova Scotia municipalities while the CBRM, Inverness, Victoria and Richmond formed a REN of their own and Lannon Oldford’s organization (which had changed its name to Business Cape Breton) became one its two “delivery agencies,” the other being the Cape Breton Partnership.


At the CBRM’s Service

At a “special” CBRM Regional Council meeting last week, Clarke presented Council with one of his fun, surprise motions, asking them to agree that the CBRM should “opt out” of the REN, designate BCB as its “economic development entity,” and request that the province fund the CBRM directly, as it does the Halifax Partnership.

In fact, Clarke informed the Council that the CBRM had already, basically, opted out of the REN and that BCB has been providing services exclusively to the CBRM for an unspecified amount of time, while the Cape Breton Partnership has served the other municipalities.

Councillors Ray Paruch and Mae Rowe expressed concern that this was the first they were hearing of any of this. Rowe said she would have expected a “presentation” on the subject before being asked to vote on it. Clarke informed Paruch, “…that’s why it’s before Council today.” He offered no explanation to Rowe for the lack of a presentation.

But I have to say, a presentation would have been helpful, because the Mayor’s explanations left a lot to be desired:

The [BCB] budget remains the same as was approved by council, it’s about the commitment of the dollars and as they flow. So with the regional enterprise network structure, both Business Cape Breton and Cape Breton Partnership were doing the project delivery, Business Cape Breton for the CBRM function and Cape Breton Partnership for other municipal units.

As a result of the structure and some of the complexities, including having to charge HST because of the way it’s structured, the recommendation and what we want to do is the CBRM just designate Business Cape Breton as the economic development entity and that we would then have a cooperation agreement between CBRM and the other municipal units because of the complexities of this and that the city [sic] would then apply to the province for the other 50% of funding. So the budget’s before you, the recommended amount is there and I would, for council, be recommending that the approval of the commitment for Business Cape Breton to act as the economic development agency, with the budget presented.

He elaborated on the “complexities” in response to a question from Councillor Paruch:

[T]he separation would be on the basis of a cooperation agreement between the municipal units continued forward in the same vein that we have operated in in the past and that even the fact that the structure was requiring HST to be charged, by both entities and taking monies, thousands of dollars out as well.

(It was hard to follow during the actual meeting, but now that I’ve transcribed it, it’s as clear as a chunk of Donkin coal.)

Paruch expressed his discontent with the process and I think both he and Rowe are right: the truly accountable approach would have been to have the CBRM’s chief financial officer break down those charges—hell, maybe even put a more specific value on those charges than “thousands of dollars”—and make a cogent case for opting out of the REN. Perhaps—and I’m just blue-skying here—she could have provided this information in written form to the Councillors prior to the meeting.

Better still, Council could have been in on the discussions about opting out of the REN (which must have taken place, because Clarke knew about it, and Lannon Oldford knew about it).

Follow the Blooming Money

Budget documents made available last Tuesday (June 8) show BCB expects to receive $223,956 from the CBRM in 2016/17 and another $223,956 from the province (although, as I mentioned above, the province has yet to sign off on this).

That, combined with $18,000 in “cost recovery,” will give them a budget of $465,912.

By way of comparison, the Cape Breton Island REN’s total operating budget for 2015 was estimated at approximately $874,000 with half that—$437,000—coming from the province. This new arrangement seems to mean the CBRM will take half the provincial funding and leave half for the other three municipalities.

BCB also has a separate contract to run the Small Business Development Centre, for which it receives $285,080 from ACOA and $63,562 from the CBRM. Add in “revenues” and “In Kind” revenues and the centre has an annual budget of $380,106.

All in all, assuming the province is willing to go along with Clarke’s funding plan, BCB will have a total budget of $846,018 in 2016/17.

And to add a final twist to this tale, during that same meeting, BCB received a “sustainability” grant for its CBRM Blossoming Program (a project to hang flower baskets throughout the municipality, for which the ask was $150,000 a year for three years.)

Council gave BCB $115,000 for the program although CFO Marie Walsh noted that the BCB application and the application for funding for the CBRM’s New Year’s celebrations “are not sustainability issues and really don’t meet our criteria.” (The grants are intended for outside agencies.) Next year, she said, the flower project should be under the Parks and Grounds budget while the New Year’s Eve celebrations should be part of the Parks and Recreation budget.

But for 2016/17, BCB gets a “sustainability” grant, which means that by my calculation (and I invite any accountants in the house to verify my calculation) Lannon Oldford will oversee a total budget of $961,018. That’s a considerable chunk of change in a municipality like ours.

Withdrawing from the REN and making BCB the CBRM’s “economic development entity” is an arrangement our regional council should have been given ample time to debate and discuss. Instead, it was presented as a fait accompli which council accepted (with the exception of Paruch who voted against the motion).

I asked the Department of Municipal Affairs about the situation and had this response from spokesperson Sarah Gillis:

We are aware CBRM has withdrawn from the REN although nothing formal has been presented to the Department. We understand the other three municipalities wish to continue and we will continue to support them to grow the economy in their communities. The Department of Municipal Affairs is willing to meet with CBRM to look at options to move forward.

Would it be too much to hope that the CBRM Councillors will be permitted to attend that meeting?.

This article first appeared in goCapeBreton.com.