Special Report: Pan Am

A Little Clarification on the Hamilton Future Fund

If you pay a Horizon Utilities bill for hydro use in Hamilton, you are paying for the $137 million Hamilton Future Fund.

By Connie Stefanson
Published January 31, 2011

On a scale of 1 to 10, what's your understanding of the Hamilton Future Fund?

I would have scored around a 3 or 4. As a regular patron of most of Hamilton's local online and printed media, I realized one day that, although I've read the phrase "Future Fund" a hundred times or more within comments and articles, I really didn't know much about it.

It fit into the context of many a sentence, but had anyone ever asked me any details about the "FF," I would have had little to offer outside of, "well, umm...it's taxpayer money that...a Board votes on...and...somehow it was given to us...and ...is used for community-building projects."

Which isn't entirely wrong; it's just a long way from being entirely correct. I'm by no means an expert on the Hamilton Future Fund, but I've done a little digging, and here's what I found. I hope this removes some of the ambiguity for you, as it did for me.

Commercialize and Retain Ownership

"Commercialization" occurs when a public board (e.g. Hamilton Hydro) is transformed into a regulated business/company (e.g. Hamilton Utilities Corporation, or "HUC") that could be sold to the private sector.

In 2000/2001, the Province of Ontario mandated that all hydro services be removed from the public sector. There were many ways for municipalities to go about this, but Hamilton chose to commercialize and retain ownership versus selling and privatizing the utility outright.

Subsequently, the hydro delivery component of HUC, Horizon Utilities, is owned by the City of Hamilton (79%) and the City of St. Catharines (21%), and is now a regulated business that could be sold to the private sector.

Should HUC go out of business, the City of Hamilton is not liable for their debts. As hydro users we would inevitably see some changes (e.g. increases) on our hydro bills, but our taxes would not be affected.

As part of the commercialization, HUC borrowed a significant amount of money to finance their capital structure and needs, and a part of this sum was a $137 million "pay-out" to the City of Hamilton, as the City was its sole owner.

The pay-out represented 60% of the value of HUC (e.g. generators, equipment). The debt repayment is being recouped by Horizon via hydro users' bills within the local distribution charge.

Strategic Use in City Building

Hamilton Council chose to retain these pay out monies for "strategic use in building a city that will work, grow, and prosper," and opted that the community be involved in the spending of these funds via the Hamilton Future Fund Board.

The Future Fund Board makes recommendations; Council ultimately decides what and how the monies are used. Hamilton Future Fund Board appointee terms are staggered; every year or two memberships expire and are then renewed or replaced, unlike City Council which turns over as a whole.

So the City of Hamilton received a lump sum of $137 million (plus interest) to spend on grant funding and/or re-invest as the Hamilton Future Fund Board recommends.

If the City does an internal borrowing (see below) from this account, or any other reserve fund, the monies must be repaid back into the account plus interest so that the fund itself continues to grow as well as keep up to inflation; these repayments are absorbed by taxpayers. If the City spends (grant funding) from this account, it does not have to be repaid.

An "internal borrowing" occurs when internal City funds are spent on capital projects such as waste management facilities (Materials Recycling Facility, the Composting Facility, Green boxes).

Funds A and B

Upon receiving the $137 million, $100 million was put into Fund A and $37 million into Fund B.

Fund A was supposed to be used as an internal revolving fund, i.e., the City would essentially borrow money from the fund to finance needed capital projects and then repay the fund, with interest. The repayments are funded from property taxes.

Hamilton's Waste Management Master Plan and related infrastructure facilities (about $70 million) have been financed in this way.

If the City builds the Pan Am Stadium and Velodrome, the Fund A monies would be used ($60 million) but Council decided not to repay the Fund (Committee of the Whole, April 14, 2009 [PDF]), so this would not have an impact on property taxes.

Currently there is about $20 million left unallocated in Fund A, with repayments being made annually. Fund B was used to support various community capital projects throughout the City. There is about $3.4 million left uncommitted. The current balance of the FF is $72.3 million, as of January 17, 2011.

Bottom line:

  1. If you pay a Horizon Utilities bill for hydro use in Hamilton, you are paying for the $137 million Hamilton Future Fund.

  2. Unless Council reverses its decision that Future Funds be granted for the Pan Am Games, we do not incur any further expenses for this expenditure via our property taxes.

Further Reading

Connie Stefanson was born in Hamilton and has spent most of her life here, having collected a dozen diverse addresses within the City boundaries. She and her family recently moved to the Strathcona neighbourhood and have fallen in love with everything that their new 120-year-old home and historic, vibrant location offers.


View Comments: Nested | Flat

Read Comments

[ - ]

By mystoneycreek (registered) - website | Posted January 31, 2011 at 14:33:09

Thank you, Connie, for clarifying this often misunderstood topic.

This article should be stored in the RTH FactFile.

(Pending corrections. Naturally.)

Permalink | Context

[ - ]

By mrjanitor (registered) | Posted January 31, 2011 at 14:33:51

Thank you Connie! That was great reporting, I did not fully understand the FF as much as I thought.

Permalink | Context

By ems (anonymous) | Posted February 01, 2011 at 12:58:21 in reply to Comment 58912

i thought the article was great. very well researched.understand alot better all the hoopla than i did before.you should be in politics for our city ems

Permalink | Context

[ - ]

By GrapeApe (registered) | Posted January 31, 2011 at 15:08:56

Thank you for the information, I did know about the board, but not about the payments.

Unless Council reverses its decision that Future Funds be granted for the Pan Am Games, we do not incur any further >expenses for this expenditure via our property taxes.

However, we will have depleated most of the FF and future city building initiative probably will raise our taxes. It's a shell game which I am sure will now be (re)phrased to all WH supporters "how much is it worth".

Permalink | Context

[ - ]

By mrgrande (registered) | Posted January 31, 2011 at 16:10:17

Thanks for this. I was unaware that there was a Fund B. Does anyone know of any of the "various community capital projects" that Fund B has supported?

Permalink | Context

[ - ]

By Cityjoe (anonymous) | Posted January 31, 2011 at 20:49:46

Horizon is a magic company! One day you are with somebody else, & suddenly "POOF!" You are a Horizon customer. Bloody Amazing!

Permalink | Context

By grumpy (anonymous) | Posted November 07, 2011 at 21:17:44 in reply to Comment 58966

Yep, and it just happened again to some of us.

It's hidden under "News" on their website, and who knows if/when they intend to mail out that letter. It's dated tomorrow, November 8. A company called Sandpiper Energy Solutions will be taking care of water heaters from now on. Apparently Sandpiper is a division of Oakville Hydro, although some people there never heard of them.

Which wouldn't be too big a deal if my water heater hadn't started leaking around 10:30 this morning. After close to an hour on hold with Horizon, they told me that they could replace the water heater free of charge, but the temperature valve would cost $250 and they didn't know when they could send a service person. But if I called a company called Reliance Home Comfort, they'd be able to set me up as a new customer immediately. They wouldn't charge for the valve because my building apparently has some kind of special arrangement with them.

Of course Reliance's overseas call centre had no idea what this arrangement was, and they couldn't set me up as a customer because they had no account number. More smoke and mirrors than magic there. Four hours of dickering later, I was no closer to getting the leaking heater fixed or replaced.

Praying that the unit below wasn't filling up with water, I called Horizon again. Got a contact number for Sandpiper, who spoke to someone at Horizon. The same woman who couldn't help me this morning called around 3:30 to say their plumber would call me "shortly". He finally showed up around 6:30 p.m.

This is very bad magic indeed.

Permalink | Context

[ - ]

By rednic (registered) | Posted February 01, 2011 at 00:21:02

So if i disagree with the use of the future fund to build bob's world, What percentage should i deduct from hydro bills ?.. and where is that velodrome ... I'll start paying again if some one can tell me that one !

Permalink | Context

By Undustrial (registered) - website | Posted February 01, 2011 at 09:56:30 in reply to Comment 58986

Deduct 100%. I really never though I'd list a new Ti-Cat stadium as a compelling reason to go off the grid, but here ya go.

I support publically owned electrical generation, but I'm tiring greatly of "Publicly" owned utilities. In so many ways these types of generation (especially nuclear and hydro) are simply venue to heap enormous amounts of debt on populations (look at any World-Bank-Backed dam in the Developing World). And while kilowatt for kilowatt they may be (arguably) as efficient as alternatives like wind and solar, centralizing the facilities and parking them out of town means huge power drains over transmission wires, and huge financial drains at head office. From Edison onward engineers knew smaller, decentralized generation was a far better ides - just one they couldn't profit off.

Horizon is a dinosaur. The future of energy production looks a lot more like a chipmunk.

Permalink | Context

[ - ]

By Woody10 (registered) | Posted February 01, 2011 at 00:30:14

And the pool???

Permalink | Context

[ - ]

By Mark-Alan Whittle (anonymous) | Posted February 01, 2011 at 09:40:31

I predict the Future Fund will be tapped (drained) to pay the $15 to $20 million dollar short-fall on a permanent 24/7 Valodrome facility. Two locations are in play, the West Harbour, where $10 million has already been spent expropriating property, or building it at the Dundas Driving Park, which is preferred by Russ Powers and other suburban councilors. Staff are due to report back to council at the end of February. So far, not a penny of private sector dollars have been offered, nor by any other cycling groups who will use this facility. If citizens thought the stadium debate was rancorous, the Valodrome debate will be like entering the Twilight Zone. If Future funds aren't used, taxes would have to be raised. No way on earth that will happen.

Permalink | Context

By Woody10 (registered) | Posted February 01, 2011 at 22:10:47 in reply to Comment 59003

I don't think it was the driving park, it was Olympic park which has some access to highway six although not very good.

Permalink | Context

[ - ]

By trevorlikesbikes (registered) - website | Posted February 01, 2011 at 09:56:04

Its vElodrome... sure hope they put it in the WH as it is central to all communities. And why would any private sector money been ponied up for this project after seeing how far council will bend over. I'd have no problem having my taxes go up for a vElodrome rather than another subsidy to Bobby the younger and his welfare cats.

On another unrelated note: has the city changed it's plowing policy? Cause my street never gets plowed anymore...probably terry's fault, but you would think he would have it plowed so he could wear his flipflops.

Permalink | Context

[ - ]

By Andrea (registered) | Posted February 01, 2011 at 09:59:28

Didn't Brad Clark table a motion to ask the Feds for the shortfall to make the vElodrome permanent? (or was I hallucinating by then?)

Dundas has always been mentioned as a potential location, however, I thought that the Pan Am facilities had to have access to transit.

Permalink | Context

By mymy (anonymous) | Posted February 01, 2011 at 19:42:43 in reply to Comment 59006

If my memory serves me correctly, city council directed staff to approach the feds for $22.5M

Permalink | Context

By Andrea (registered) | Posted February 01, 2011 at 20:35:25 in reply to Comment 59057

Thanks - I thought that is what I heard.

Permalink | Context

[ - ]

By mrjanitor (registered) | Posted February 01, 2011 at 15:15:08

Yes, because Dundas NEEDS city building projects so very much.

I remember reading about Dundas issues in the follow up to the Spec's Code RED series. It was called Code GOLD: Wealth, Health and Privilege in Dundas under attack from Hamilton's urbanist elites.

Provocative reading that Code GOLD series...

Permalink | Context

By tnt (registered) | Posted February 02, 2011 at 13:24:39 in reply to Comment 59043

LOL very good, and yet also sobbering.

Permalink | Context

By Woody10 (registered) | Posted February 01, 2011 at 22:12:04 in reply to Comment 59043

There are a few places in this city that are wealthy so I guess we need to run them all down right??

Permalink | Context

[ - ]

By bobinnes (registered) - website | Posted February 02, 2011 at 13:22:21

I missed something. Since there is only $20+3.4 million unallocated, where does the balance of $72.3 million come from?

Anyway, the prudential equity of the HUC was converted into debt (probably at a dangerously variable rate) plus a slush fund which is being squandered as fast as greedy-guts can get their mitts on our "golden goose". While China ploughs past profits into factories, high speed rail, city building, foreign assets, etc., all we can do is vomit our future into the pockets of skimmers, banksters and manipulators in return for a white elephant bauble. Enjoy the moment Hamilton, our future is sold out from under us. Let the children pay.

Permalink | Context

[ - ]

By ConnieStefanson (registered) | Posted February 02, 2011 at 20:37:25

@BobInnes & mrgrande – the numbers that were reported to me apparently were “round numbers at a high level”; additionally, approximately $7 or $8-million has been drawn from the Future Fund for Pan Am already. That pretty much bridges the editorial gap in figures. I’m also awaiting an HFF update report, listing each project by fund, and will post it when received.

Permalink | Context

By ConnieStefanson (registered) | Posted February 03, 2011 at 20:06:55 in reply to Comment 59149

There are two HFF reports linked in the Further Reading section now. The report doesn't "list each project by fund" but between the two reports, it would appear that all the expenditures are covered and detailed.

Permalink | Context

View Comments: Nested | Flat

Post a Comment

You must be logged in to comment.

Events Calendar

Recent Articles

Article Archives

Blog Archives

Site Tools