No City of North Bay takeover as sole operator of Cassellholme

North Bay City Council opted not to proceed with the transition of Cassellholme Home for the Aged to a municipal home maintained by the Corporation of the City of North Bay.

Officially, the general government committee received the Cassellholme Transition Business Case Analysis prepared by CFO Margaret Karpenko for information purposes only following an in-camera session of a July 11 special committee meeting.

"Based on the analysis," Karpenko writes, "there are no financial or operational benefits that would accrue to the City if Cassellholme became a municipal home."

The committee-level poll of its members was unanimous and later, council voted to make the recommendation official.

The idea was broached in 2021 when a proposal from the council of the day included a potential move to try to place Cassellholme under the municipal umbrella, while also incorporating an agreement to approve the long-term care facility's reconstruction financing to get the $122-million project underway.

See related: City of North Bay could take over Cassellholme in latest proposal to move redevelopment forward

The City of North Bay would have been left to solely own Cassellholme as a municipal asset, instead of paying into Cassellholme and having nothing to show for it on the municipal books, as a debt liability. In exchange for their support for the financing agreement, the partner municipalities potentially had a way out of the consortium and the future operating costs of Cassellholme.

See also: Bonfield supports Cassellholme ownership transition

During a special committee meeting in May, a consultant's study prepared by KPMG indicated transitioning to a municipal home would provide the City of North Bay full authority over governance, but there would be a number of potential risks associated with the municipality becoming the sole operator of Cassellholme.

Risks include added annual costs associated with assuming the levy contributions of Cassellholme’s eight other member municipalities, as well as potential future added costs related to operating pressures. As part of its analysis, KPMG looked at information provided by the City and Cassellholme, including financial statements and annual reports, financial forecasts, capital redevelopment information, financing agreements and in-person discussions.

See: City takeover of Cassellholme has risks: study

The recent report by Karpenko agreed with the KPMG feasibility study: Transitioning from a district to a municipal home could "result in potential financial and organizational risks that have not been fully quantified. It is reasonable to assume that there will be potential impacts and risks to the City."

A 2021 forecast shows Cassellholme’s projected operating levy post-redevelopment is $2,541,000, while the City’s current responsibility is 79.84 per cent of the total amount forecasted after development. Karpenko states a transition to a municipal home post-redevelopment may add approximately $512,266 in additional costs to the City based on the 2021 forecast.

See: Cassellholme redevelopment officially underway

Economic and labour factors weigh heavily in the CFO's recommendation to forego taking over Cassellholme.

"The City would take responsibility for 100 per cent of the unfunded inflationary and legislative risks rather than 79.94 per cent. Should Council decide to make Cassellholme a municipal home, it would then be necessary to enter into discussions with the province and the municipal members to negotiate any required agreements and seek to effect legislative change. These could involve costly, protracted and complex negotiations between the City, current municipal members and the province to reach an agreement satisfactory to the City."