Auditor general slams city's deal with BIXI
Published Monday, June 20, 2011 10:45PM EDT
MONTREAL - Montreal auditor general Jacques Bergeron finally released his report Monday on the Public Bike System Company, or BIXI, and it painted the entire arrangement as one rife with procedural and legal irregularities.
Bergeron's report states that from its infancy in 2007, the fast-tracked implementation of the BIXI program was poorly planned, with no feasibility studies, no market research, no cost-benefit analysis, little risk analysis of any kind.
After the city – with the blessing of the Ministry of Municipal Affairs – approved last month to give BIXI a $37 million loan and acting as guarantor for another $71 million in loans, the city runs the risk losing a significant chunk of that investment.
"The general purpose of this report was to ensure that the BIXI project had been managed and controlled in a thorough manner," Bergeron's report concludes. "However, we found that several basic rules of management were neglected or circumvented. Moreover, the city's passivity coupled with the loose actions of the SCSM (Stationnement de Montréal) and PBSC boards of directors raise several questions in many respects.
"The significant amounts of money involved, the need to protect the city's corporate image, the potential losses to eventually be assumed by it, its involvement in the financing of both companies and the risks it entails, added to the questionable accounting treatments, the weaknesses found with regard to control and the lack of transparency, are all factors that require corrective measures be taken as soon as possible."
Furthermore, the decision to have Stationnement de Montréal – the city's parking authority, or SCSM – manage BIXI also resided in a legal grey area that both the city and the executive management of SCSM.
"The choice to constitute the PBSC, made on Sept. 6, 2007, was a way of doing indirectly what the city and the SCSM could not do directly," Bergeron's report states. "It should also be noted that the October 2007 decision summary, drafted by the city SITE Direction des transports, made no reference to the creation of such an organization.
"In light of what was stated in this section, we conclude that project stakeholders (i.e., management, members of the Board of the SCSM, city officers, and Executive Committee) were informed of the legal difficulties related to the implementation of the public self-serve bicycle system."
Stationnement de Montréal announced shortly after the release of Bergeron's report that it plans on complying with all its recommendations, that several changes to the parking authority's governance had already been made since current Chairman of the Board Rémi Racine took over in 2010, and that its financial link to BIXI has now ended with all the cash advances repaid.
"As BIXI is now a totally independent organization, the management team of Stationnement de Montréal intends to concentrate entirely on accomplishing its mission," Racine said in a statement.
The payments of those cash advances were thanks largely to the loan BIXI received from the city, a loan Bergeron's report states was granted at a rate of 2 per cent, one that is far below market value and which, in Bergeron's estimation, is essentially a subsidy.
It did not take long for the opposition parties at city hall to jump on the report and Mayor Gérald Tremblay's administration.
"The real objective of Mr. Tremblay by launching his project in 2008 and 2009 was that the bicycles be on the street before the election of 2009," said Projet Montréal Leader Richard Bergeron. "That was the only objective. It will cost what it will cost. We will do it in any way to be sure that the bicycles will be on the street, because I want to win my election of 2009. And he succeeded. Mr. Tremblay succeeded. He was re-elected. Congratulations, Mr. Tremblay."
Vision Montréal Leader Louise Harel sang much the same tune, suggesting council was misled when it was asked to vote last month on the loans.
"Under false representations, the municipal council was asked to vote on an agreement to finance the deficit-ridden operations of the Public Bike System Company for $37 million," she said in a statement. "Vision Montréal is calling on the management of BIXI and the city of Montreal's director of finance to answer the questions of the city's elected officials so that we can really know the costs of BIXI in Montreal. If BIXI needs to become a municipal service like any other, it is essential that we know all the ins and outs of running such a service."
The city's executive committee member in charge of transport, Michel Bissonnette, said the city has amended an article requiring a call for tenders on all accounts above $100,000 and have them approved by the executive committee, a amendment that would have kicked in for the BIXI deal were it in place at the time.
However, PBSC chief executive Roger Plamondon made no apologies and assured that should ongoing contract negotiations with New York, Los Angeles and San Francisco bear fruit Montrealers would be off the hook financially.