Is it really a ‘Rip Off?’

Managing the media is a fine balancing act

Without buying into any nonsense about ‘fake’ news, we do know that the media has a hard time coming to grips with infrastructure issues and presenting them clearly to their readers.  This is true, even when the journalists are not seeking the sensational.

Take the following example.  In 2005, the City of Toronto faced a sudden $60M hole in its budget when the Province reduced its funding at short notice. It made a deal with Toronto Hydro, a wholly owned trading enterprise of the City, to buy its street lights for $60 M and lease them back to the City. The contract details, when released, showed that the City had agreed to pay $13.6 M a year to lease back the lights. The Press had field day and the Council went on the defensive.  (Additional fact: The City tried to block the release of the contract and it took 5 years for a Freedom of Information request to produce the information requested.)

The news story about Toronto City Council selling off its street lights and leasing them back put the City Councillors on the back foot, fending off public criticism of the “rip-off”. On the face of it, you can see why the public were angry when the figures were stated baldly as selling off for $60M and paying close to $420M over the next 30 years to lease them back.

So today, two questions

  1. Was this a fair comparison?  Are these figures really comparable?  Anticipating media reaction, what extra information would you  have required, what questions would you have asked – and potentially discussed in a media release?  How would you have handled this situation?   What would you have advised the Toronto City Council to do?
  2. Or, What have you learned from media storms like this that you could pass on to others, ways of ensuring readers could potentially get a better understanding of what is really happening?

One Thought on “Is it really a ‘Rip Off?’

  1. I didn’t dip into the details, but its seems Toronto Hydro is “the largest municipal electricity distribution company in Canada” (with a subsidiary, Toronto Street Lighting). It sounds to me like Toronto City was doing what NSW councils do with their water and sewerage businesses: generate a dividend from some of their more profitable assets to help fund things like libraries and parks that cost, rather than make, money (but generate lots of non-dollar value).

    It’s just they had to transfer some assets to justify it and given Toronto Hydro was the electricity generator, them leasing the street lights was a good fit! I’m not sure why the City couldn’t just impose a large dividend straight from Toronto Hydro (it doesn’t sound like the streetlights were a good deal anyway – but there’s the actual power costs, maintenance, etc. which would be in the millions for such a large city).

    Anyway, to answer the questions posed I suggest what’s missing here is visibility about where the City gets its money from and where it spends it – the services it delivers (and its financial and infrastructure resources – like street lights – are intimately related in all this). Funnily enough, this is just the sort of summary I’m working on for a few councils now!

    It’s easy to put a bad spin on a particular issue like this IF you’re not able to put a particular action in the context of this big picture… but more importantly, decision makers will struggle to make the “right” decision if THEY don’t understand the big picture!

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