Service Delivery and Operational Review

Complete Town of Espanola Service Delivery and Operational Review (pdf)

Executive Summary

Since its creation in 1899 as a company-owned Town until the present day, the influence of the pulp and paper industry is evident in the Town of Espanola.  Similar to other resource based communities in Northern Ontario but more specifically, those municipalities with pulp and paper mill activities, the Town of Espanola has experienced the rise and fall of this sector.  Beyond the Town’s resource based economy, the Town of Espanola serves a regional hub providing a full range of services to its residents but also to those along the Highway 17 corridor as well as Manitoulin Island.

In 2013, Domtar, the current owner of the pulp and paper operations in the Town and largest industrial property, sought out a re-assessment from the Municipal Property Assessment Corporation (‘MPAC’).  The company was successful in their appeal to MPAC and the decision resulted in a reduction of approximately $16 million dollars with the total assessment being reduced from $26 million to $9.9 million.  The impact of the reduced assessment was two-fold on the municipality – the Town had to provide Domtar with a $5 million rebate for taxes collected on the previous assessment and from a go forward perspective, the Town lost $1.2 million on an annual basis because of the lowered property assessment.

In response to the re-assessment of the Domtar operations, the Town implemented a number of changes as part of its 2013 budget process and significant changes were made to the Town’s operations and staffing complement.  The changes made by the Town resulted in a reduction of $1.4 million in operating costs with every department budget across the organization being impacted.  To achieve the $1.4 million, the following changes took place:

• The elimination of 5 fulltime positions – Economic development and recreation

• The elimination of 11 part-time/casual positions including reductions in custodial staff and summer students

• Restructuring of jobs within the organization

• Service level reductions – reduced hours of operations within recreation

• Reductions in training budgets across the organization

• Capital budget was reduced by 28%

In order to assist the Town with the identification of additional potential opportunities for change (operating efficiencies, increases in non-taxation revenue, alternate service delivery and/or adjustments to service levels), KPMG was retained to undertake a service delivery and operational review that involved an evaluation of the Town’s operations, personnel and financial performance with the intent of identifying options to contribute to the long-term financial sustainability of the municipality.

The service delivery and operations review identified a number of progressive policies and programs already initiated by the Town of Espanola which contribute to long-term financial sustainability including a continued commitment to investing in the Town’s infrastructure as part of its annual budget process.

As part of the initial consultation process with Council, reductions to service levels and staffing levels were not identified as a priority but still remained part of the review process.  More importantly, identifying operational change as well as non-taxation revenues (user fees and potential shared service agreements) appeared to be the priority of the Town’s Council.  As a result, the majority of the potential opportunities focus on operating efficiencies, potential change with respect to user fees and the potential of the Town of Espanola building upon its roles as a regional hub to neighbouring communities.  Additionally, where service levels of the Town were identified to be higher than similar sized municipalities, opportunities for change were presented.

We recognize that the ultimate decision as to type and level of services provided by the town of Espanola rests with Council and we trust our report assists with the decision making process.