The controversy regarding the unfounded pensions and benefits of Oshawa Transit employees has been a recent topic in the news media. I believe that this liability should have been assumed by the region at the time of the acquisition. Let me offer this analogy:
If you had a car worth $13,000 but still had $10,000 owing against it, your equity would be $3,000. If you decided to sell it, there would be two options: sell it for $13,000 and pay off the $10,000, leaving you will $3,000, or sell it for $3,000 and have the buyer take over the $10,000 debt. Either way, you end up with $3,000. You don’t have to be a professional negotiator to realize that selling the car for $3,000 and continuing to be responsible for the $10,000 would be idiotic.
However, that seems to be the case with the acquisition of Oshawa Transit by the Region of Durham. For the region to take over the assets of Oshawa Transit without assuming the liabilities related thereto is contradictory to common sense. How is it possible that the City of Oshawa negotiated such a deal? Why would the City of Oshawa agree to turning over the depot on Farwell Street and all of the buses to Durham Transit and still be responsible for the unfounded pensions and benefits? How could an arbitrator not see through this fallacy and decide in favour of Oshawa by now?
Recent reports show that close to a million dollars in legal fees have been incurred trying to resolve this issue. Who ends up paying these mounting legal fees? The taxpayers of Oshawa and the other seven municipalities of Durham Region. In addition to that, the taxpayers are also on the hook for the $8.9 million in unfounded liabilities regardless of who wins the legal battle.
It would be interesting to know if Oshawa signed off on this deal under the assumption that the Region of Durham would be responsible for the $8.9 million, but did not include it in the agreement.