There goes the neighbourhood: Queen’s Marque construction is hitting nearby businesses hard

The proliferation of bulldozers, cranes, and work crews punching new towers into the Halifax skyline has also raised a controversial question at ground level: should businesses whose sales are hurt by the construction receive compensation from the developer and/or the public purse?

The question gets even stickier when government is an investor — as it is in the Nova Centre on Argyle Street and, to a smaller extent, in the Queen’s Marque development on the waterfront.

Last summer was the best year yet for the many “Murphy’s” enterprises on that stretch of prime waterfront real estate. They include seven different boat tours (e.g. the tall ship Silva, Theodore Tugboat, and the amphibious Harbour Hoppers) and Murphy’s Cable Wharf restaurant and gift shop.

According to Dennis Campbell, who leveraged revenue from his Ambassatours motorcoach business to purchase the harbourside juggernaut from the Murphy family three years ago, the Halifax boardwalk draws more visitors to Atlantic Canada than any other attraction. TallShips Rendez-vous 2017 could deliver even more.

But with excavation and construction underway on the Queen’s Marque project, a 10-storey, $200 million development between Prince and George Streets, this year’s experience for sightseers and waterfront businesses is bound to be different.

Both the parking lot in front of Murphy’s and pedestrian access to the waterfront between Prince and George Streets have been eliminated by the fenced-in construction zone (about a dozen parking spaces still remain near the ferry terminal and Tim Hortons and Stayner’s). Vehicular traffic along the already congested Lower Water Street will be restricted to one lane.

Over the next three years, the Armour Group will build Queen’s Marque on public land leased from the Waterfront Development Corporation (WDC), which is a provincial crown corporation. The new building will include underground parking, office space, restaurants, luxury rental units, as well as public access to plazas and a rooftop view of the harbour.

Financial compensation for Murphy’s?

Unsurprisingly, business owner Campbell is worried about the toll three years of construction could take on his phalanx of waterfront businesses operating under the Murphy’s name. The Halifax Examiner asked Campbell if he has had any discussions with either the Armour Group or the WDC about potential financial compensation if his businesses experience a drop in sales over that period.

“It’s a work-in-progress,” Campbell replied.  “What’s most important is the fact the Province is investing in putting in a floating boardwalk or seabridge that will give people access to the boardwalk between Prince and George Streets. For us, that was a game changer in the right direction.”

Campbell said his “worry meter” is now at “7.5 compared to 10” — 10 is where it was before the government decision to install a temporary boardwalk. Here’s part of the announcement from a January 18, 2017 news release from the WDC:

During construction Waterfront Development and The Armour Group Limited are committed to minimizing impacts on neighbouring businesses and on the boardwalk experience. The construction of an accessible, temporary, floating boardwalk will help to minimize disruption. It will provide a pedestrian route on the water side of the Queen’s Marque site and be open whenever possible during the construction period.

While the press release suggests that both WDC and Armour are both “committed” to minimizing disruption from construction with the floating boardwalk, in fact taxpayers are paying the entire $850,000 for installing the floating boardwalk, erecting signage, and improving public spaces to help visitors and businesses such as Murphy’s and Nova Scotian Crystal.

Prior to Campbell raising his concerns, the province had already contributed $4.75 million to the Queen’s Marque development. In January, WDC announced it had increased its Queen’s Marque development expenditures by $1.75 million, $850,000 of which is dedicated to the floating boardwalk. (The remainder is for site remediation — WDC is paying for the excavation of the site, the disposal of toxic wastes, and the infilling with gravel.)

Campbell says verbal discussions about the possibility of financial compensation if his sales plummet are taking place exclusively with the Waterfront Development Corp (WDC), a provincial agency. The WDC leases land along the waterfront through contractual agreements with Murphys at Cable Wharf and with Scott McCrea’s Armour Group, which is building Queen’s Marque.

Because there is no landlord-tenant relationship between Murphy’s and Armour, Campbell says he has been advised it is unlikely the developer could be forced to compensate him for any sales lost due to the seven-day a week construction. Both Campbell and Kelly Rose, a spokesperson for the WDC, insist no written agreement exists between Campbell and the provincial agency regarding any financial compensation.

We asked the Armour Group why it didn’t cost-share a portion of the $1.8 million for the temporary boardwalk and construction mitigation, but the company has not responded.

“We’re taking the high road, encouraged by the fact the WDC is keeping the door open for more discussion,” said Campbell. “It’s a matter of wait-and-see. It’s even conceivable the floating boardwalk could become an attraction on its own and drive up business.”

Nova Centre and Construction Mitigation

The temporary floating boardwalk ends literally at the patio door of the Murphy’s Restaurant and gift shop. Kiosks selling tour boat tickets are next door.

The floating boardwalk might be perceived as tangible recognition of the kind of business disruption another development has created just a few blocks up the hill. Small business owners from the Grafton-Argyle Street area now lie in the shadows of the mammoth Nova Centre project, which is nearly two years behind schedule. However, their protests and requests to be compensated for lost sales appear to have fallen on deaf ears.

Lil MacPherson and Christine Bower, owners of the Wooden Monkey restaurant, are taking legal action to try to recover some of the $500,000 they claim the noise, dust, and street closures related to the Nova Centre construction have cost them. They will appear before the Utility and Review Board this fall to argue for compensation under the Expropriation Act from both the province and HRM (partners in the development with Joe Ramia’s Rank Inc).

Both levels of government are contesting the claim, arguing the Act doesn’t apply to this situation. Three other restaurants on the perimeter of the new convention centre (The Foggy Goggle, Economy Shoe Shop, and The Carleton) have either moved or changed hands.

In the wake of the Nova Centre controversy, the city did, however, work with developers and business owners to come up with a Construction Site Management policy to try to head off concerns about subsequent projects. That policy requires the development of a Construction Management Plan for specific developments, which will give direction regarding adequate notice, signage, noise and traffic flow during the project.

But the Construction Management Plan for Queen’s Marque, developed by HRM in cooperation with the Waterfront Development and The Armour Group, is not a public document. The Halifax Examiner has applied to HRM’s Information and Privacy officer to see it; both corporations have two weeks to give HRM their views and then the City must decide if the Plan can be shared publicly.

Mitchell House

While Dennis Campbell worries about how construction at Queens Marque may affect his Murphy’s businesses this summer, Calum Johnston has first-hand experience of  what the loss of a sidewalk and 150 parking spaces can do. He owns Strange Adventures Comix and Curiosities, a shop located in Mitchell House, a heritage stone building on Lower Water Street, kitty-corner from the construction site. It was built in 1820 by ship’s chandler George Mitchell who lived and worked in the waterfront area.

“Yes, the #QueensMess is affecting us,” says Johnston, hashtagging the project in an email:

We’re down about 30% and have had to cut back on staff hours. The lack of interest shown by developers / construction crews in their surrounding neighbours is disheartening to say the least. We moved a few years ago due to the ‘No Va’ (ed. note: “no go”) Centre and the dark clouds of construction have followed us here. I don’t want to move, I love this building and the location. It’s housed a Gyroscope dealer, ghosts, pirates and hopefully a comic book store for many years.

Johnston’s landlord is Mike Turner (co-owner of Turner Drake Partners), who owns Mitchell House with his wife. He’s reduced the rent to try to keep other tenants from leaving, although one has recently given notice.

Turner says vibrations from diesel hammering that drives piles into the bedrock have already caused one partition to shift. It’s a concern that required him to hire a structural engineer and masonry firm to monitor for any potential damage related to the construction.

After an initial positive meeting with WDC chief planner Peter Bigelow, Turner says he was “astonished” the WDC hasn’t shown more interest in protecting a vulnerable heritage landmark like the Mitchell House.

“It’s one of the oldest houses in Halifax with a close link to the waterfront,” says Turner. “The WDC mandate is purported to be to enhance and protect the waterfront. But every time something happens with a developer, they simply throw up their hands and say it has nothing to do with us — it’s the developer. If there turns out to be damage, sue the developer.”

The owner of the Mitchell House says although he personally finds the Queen’s Marque building “hideous” (note: Councillors approved the design over the objections of city planners critical of the street-facing wall that will be almost double the allowable height), he has so far had no problem dealing with the Armour Group. Turner says the WDC referred him to Armour’s president Scott McCrea after Mitchell House commercial tenants complained that the windows and sides of the building were being pelted with mud and gravel from pile-driving at the construction site.

Turner says McCrea agreed to erect some protective plywood boarding, and to wash the ground floor of the building twice a week and the upper floor once a week. Dirt will continue to coat the windows once excavation begins and as many as 200 trucks a day start rolling this fall. After a couple of hiccups, Turner says Armour has followed through with the window washing. But he hasn’t been able to convince the Waterfront Development Corporation to share the cost to monitor Mitchell House.

“We are losing money on that building; we’ve reduced rent and we’ve lost tenants,” said Turner. “So we asked the WDC: would you be prepared to help us pay for the monitoring of the historic site? Because without the WDC, the Queen’s Marque project would never have gone ahead. The WDC answer to that is ‘No,’ which sort of blows my mind. “

“There’s so much development in the downtown now we are sick of it,” said Turner. “We’ve got three heritage buildings, all three of them are impacted by developments in the immediate vicinity. We’ve been through four years of the Nova Centre – its absolutely miserable for the tenants and miserable for us. And we are going through the same thing with the Mitchell House.”

The money train

Mike Turner, owner of the Mitchell House, says Waterfront Development has rejected his request for help in dealing with construction of Queen’s Marque — even for covering the relatively minor expense of monitoring the effects of construction on his historic building. Meanwhile, however, Waterfront Development has already committed $850,000 for a floating boardwalk that may have other benefits, but which certainly goes a long way to addressing Dennis Campbell’s concerns that his Murphy’s businesses will suffer during construction.

And Campbell may get still more help via the public purse.

Construction Management Plans organized by the city do not provide any avenue for nearby business owners to seek compensation. Instead, proprietors are expected to suck it up in the short-term in return for more customers and higher sales in the long term.

Campbell says he “gets” that, but he also thinks municipal taxpayers should be willing to support an initiative he spearheaded to improve access to the torn-up Halifax waterfront (and his Murphy’s businesses) this summer.

A proposal before city council’s Grants Committee requests $50,000 for this season and about $70,000 over the next two years to operate an open-air “road train” to carry visitors from the Seaport Market and Discovery Centre at one end of Lower Water Street, past Murphy’s, to the Armour Group’s Historic Properties at the other end. The free ride would follow a route similar to the FRED bus before it was discontinued.

Campbell has already acquired the road train (“not a cheap undertaking,” he says) and is asking both municipal and provincial taxpayers to cover a large portion of its lease payments. The Waterfront Development Corporation is also currently reviewing a request to kick in some operating money. A non-profit group called the Halifax Community Road Train Society would operate the daily service.

Directors of the Road Train Society are Campbell; Mary Dempster, who is the Chief Operating Officer at Ambassatours; and Sean Buckland, the Director of Sales & Logistics at Ambassatours. Campbell is the group’s president, while Dempster serves as secretary. There are no directors or executives of the non-profit who are not associated with a Campbell-owned business.

But while he is asking for public money to operate the non-profit society he arguable controls, Campbell is not willing to publicly disclose the average annual revenues from his privately owned Murphy’s on the Waterfront.

“It’s not Murphy’s asking the City for money, although we sure hope there is an indirect benefit by being able to move more people toward the waterfront,” says Campbell. “There’s not a penny of profit we can make from this. We hope the non-profit can pay back our lease costs but if not, Murphy’s will cover the loss for at least the first year.”

An optimist by nature, Campbell is starting the season with hopes the downside of construction may be offset by increased numbers of visitors to the province and expanded services. Ambassatours has bought two double-decker motor coaches suitable for highway travel, and Murphy’s has purchased two Harbour Hoppers that are wheelchair accessible, the first in its fleet.

Campbell says “the WDC is prepared to work with us” and on the basis of those verbal discussions he thinks the province’s door is open to a later reckoning should his waterfront business take a significant hit.