BP is about to start a deep-water well off Nova Scotia; what could possibly go wrong?

News

1. Weather

There was weather.

2. The new convention centre is already a financial disaster for the city

I reported Friday afternoon:

The city expected to have a $1.8 million deficit on its Halifax Convention Centre account this year, but that figure has nearly doubled — to $3.5 million. And a revised analysis of the account shows that what had been a projected $5.89 million surplus after 10 years is now a $17.78 million deficit. That’s a swing of $23.67 million. Worse still, even that forecast relies on rosy assumptions.

Click here to read “The new convention centre is already a financial disaster for the city.

The status of the convention centre account is illustrated in this chart:

I should point out that the most recent revelations merely reflect the sudden discovery that property tax receipts on the Nova Centre are going to be far lower than initially expected — that is, far lower than was used as justification to fund the convention centre. Obviously, city staff has known about this for some time; I don’t know why they waited so long to tell the rest of us.

We’ll see, but I suspect that the revised forecast, which assumes “assessed values [will] start to recover in Year 5 through 7,” is itself extremely optimistic; if that supposed recovery doesn’t happen, we’re looking at at least another $7 million or so deficit (on top of the $17.78 million deficit) by Year 10. And remember, this is a 25-year agreement, meaning the deficits could balloon into far greater numbers over the lifetime of the convention centre.

And that’s just the tax receipt side — money coming in from the Nova Centre, which we now know is woefully less than promised. We don’t yet know what the operational losses of the new convention centre — money going out — will be, although those payments out will almost certainly be much, much more than promised.

Why the pessimism? Well, for one thing, the staff report released Friday shows that the old convention centre had a whopping $4 million operating deficit in the 2017/18 fiscal year.

Let’s think about this…

Probably some of that lost business reflects the decision of convention organizers to hold off from planning Halifax events for another year so they could book into the new convention centre. That makes sense to me, anyway.

But that’s not all that was going on. Additionally, there was $1 million (over and above the $4 million) paid as “incentives” to “conference participants disadvantaged by the delayed opening of the facility.” See, some big conventions were scheduled for last year and the year before in the new convention centre but had to cancel because the thing wasn’t finished yet.

This is how a May 26, 2015 staff report described the situation for the 2016/17 fiscal year (at that point, staff thought the convention centre would open in January 2017; the actual opening was January 2018):

The number of national and international clients choosing Nova Scotia’s new Halifax Convention Centre to host their events continues to grow. TCL is on track to achieve the public market projections. While the change in opening date to 2017 did impact some clients, TCL has successfully rebooked 14 of the 17 impacted clients in the existing facility or moved them to a future year.

Here’s the thing, however: those 14 conventions were enticed into rebooking by the incentives. They were essentially bribed into rebooking their conventions for a later year.

Maybe it made marketing or business sense to pay the incentives — besides simply filling it, there’s the reputational hit the Halifax Convention Centre has taken because it opened two years behind schedule, and spreading around a little “we’re so sorry” money might heal some sour feelings. But shouldn’t Joe Ramia have paid for the “incentives”? After all, Ramia promised that the building would be finished by January 2016, and it’s his fault it wasn’t, and so therefore it’s his fault that all those conventions had to be cancelled and rebooked, and it’s his fault that the incentives had to be paid in the first place. I don’t see why taxpayers should have shouldered the bill.

In any event, city staff makes the additional claim in the new report that:

The new Halifax Convention Centre is currently exceeding expectations for convention bookings.

Well, that’s one way of looking at it. Another way of looking at it is that many conventions that had been booked for the two-year period when the new convention centre was delayed have been paid to rebook in the next few years, inflating what would otherwise be a lower number of conventions.

I’ve always said that a “honeymoon period” in the number of conventions should be expected for the first several years of the newly opened convention centre — it’s shiny and new, a lot of money was put into marketing, and now we learn of these “incentives” paid to convention organizers.

I stole that “honeymoon period” phraseology from HLT, a consultant hired by Trade Centre Limited to make projections for the number of conventions that might be attracted to the new convention centre. HLT explicitly warned (page 42) that the honeymoon period would be short-lived:

The projections [HLT made of the number of conventions coming to the new Halifax Convention Centre] reflect a stabilized operating year. Other Canadian convention centres have experienced a “honeymoon” period after opening as pent up demand in anticipation of a new facility combine to create greater interest. Therefore for modelling purposes the stabilized year for convention activity should be viewed “Year 4,” with Years 1, 2, and 3 generating 85%, 115% and 110% of Year 4 event activity.

This gets immensely convoluted, but you can read the whole story here. The short of it is that that “stabilized year” at Year 4 was then considered by advocates of building a new convention centre as the starting point — not the stabilized year at all — for future growth in the number of conventions. And then Trade Centre Limited threw out all the consultants’ reports and wrote its own (self-interested) report forecasting the number of conventions and delegates that would be attracted to the new convention centre — with the delegate count nearly double that forecast by the independent consultants.

The discrepancy is there even for the Year 1–Year 4 “honeymoon” period. But it grows crazy large after that point, nearly doubling the forecast delegate count.

All of which is to say, Friday’s staff report is alarming on the property tax receipt front, but a potentially equally large financial hit could come when the numbers of promised conventions and delegates fall woefully short, causing millions of dollars in added operational costs.

This convention centre budget shortfall will be taken up by Halifax council Tuesday, and undoubtedly we’ll be told there’s plenty of money to cover the shortfall, the sky won’t fall, etc. At the same meeting, council is being asked to limit the number of low income transit passes to 2,000 because there simply isn’t enough money to provide reduced-cost bus service for all the city’s most needy people.

3. Judge Lenehan and cameras in courtrooms

Last week, a review committee issued a report finding no basis for allegations of “misogynistic reasoning” and “gender bias” by Nova Scotia Provincial Court Justice Gregory Lenehan.

“As the review committee’s decision demonstrates, we need to know more than can be communicated in a 140-character tweet before leaping off the ledge to firing-offence conclusions,” writes Stephen Kimber. “The problem, too often, is that’s all reasonably informed people have to go on.”

No matter what we think of Lenehan’s actions or the review committee’s decision, Kimber offers an important suggestion that should be considered:

Why not open our courtrooms to cameras, including live and recorded video, so we could all see — and judge — what happens inside?

…

Having court proceedings live-streamed, or at least available on the internet as a permanent checkable record for anyone interested enough to become a reasonably informed person before rushing to judgment, could contribute to better public understanding of our how judicial system actually works and provide much-needed opportunity for context when we smack up against #ClearlyGuilty hashtags.

Click here to read “The judge and the complaints: finding the balance between judicial independence and public confidence.”

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4. Boer constrictor

Writes El Jones:

In 1901, Lord Alfred Milner was “lamenting” the “fact that the death rate among young children in the [Boer War concentration] camps was still not dropping. ‘The theory that, all the weakly children being dead, the rate would fall off is not so far borne out by the facts,’ Milner wrote. ‘The strong ones must be dying now and they will all be dead by the spring of 1903.’” On October 14, 1901 the cornerstone for the Boer War monument was laid at Province House.

Click here to read “White-washing the Boer War.”

5. Examineradio 152

Lawyer Ben Perryman walks us through the fight to stop Abdoul Abdi’s deportation. Plus, we discuss why the judge who said “clearly a drunk can consent” was cleared of bias and misconduct, and the fine you could face if you buy pot from the kid next door.

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6. BP set to drill offshore

The Canada-Nova Scotia Offshore Petroleum Board (CNSOPB) has given BP permission to prepare for drilling (but not yet to actually drill) on the Scotian Shelf. Specifically, the approval allows BP to position the oil rig Seadrill West Aquarius in Nova Scotian waters.

BP intends to drill one deep-water exploration well 330 kilometres from Halifax, at a depth of 2,800 metres. The company will start the actual drilling in the second quarter of this year, pending approval of its Environmental Assessment.

Seadrill has been contracted for a 120-day period for $31 million. The rig itself “is a sixth generation ultra-deepwater semi-submersible rig capable of drilling in harsh water environments and in over 3,000 metres water depth,” says BP:

The West Aquarius can accommodate up to 180 persons on board and has been used extensively for drilling on the Grand Banks and Flemish Pass offshore Newfoundland and Labrador.

Logistical support will be provided by supply vessels operated from an established shorebase in Halifax Harbour and helicopters from the Halifax Stanfield International Airport. During drilling, it is estimated that support vessels will make approximately two to three round trips per week between the West Aquarius and the shorebase and one helicopter trip per day may be required to transport personnel and additional supplies as necessary.

BP and deep-water drilling…. what could possibly go wrong?

7. Rural high-speed internet

“Sometimes the politics of this place are mystifying,” writes Richard Starr:

A few weeks ago, with the alarming result of under funding long term care hitting TV screens, the government announced it will spend another $120 million on higher speed rural internet. What are the Liberals thinking, I wondered?

…

Far be it from me to argue against the proposition that all Nova Scotians — citizens and business — should have access to reliable broadband communications. As a middle class city dweller I have it, and I would not want to be without. My quarrel is with the way in which provincial governments, past and present, have approached the problem. We’ve gone this way before, with questionable results, but seem to have learned nothing from past experience.

Starr reviews that “troubled past” and then continues:

So before another penny is spent, we need to re-think roles and responsibilities. Nova Scotia has been much too quick to let the telecommunications giants and the federal government off the hook on rural broadband. In the old days, before neoliberalism took over the world, provincial taxpayers were not expected to forego improvements in social services to fund rural communications services. Up until the late 1980s, when the courts handed full jurisdiction to the federal government and the Canadian Radio Television and Telecommunications Commission (CRTC), provinces like Nova Scotia regulated telephone service while Ottawa had jurisdiction over broadcasting. Nova Scotia, like most other provinces, took its regulatory role seriously, recognizing the importance of reliable and accessible phone service to the social and economic wellbeing of rural communities.

Telephone companies were required to serve all customers at standard rates, averaging costs across the system so that essential services were available even in remote and hard to serve areas, the way electricity and other utility services are still provided in Nova Scotia and elsewhere. The CRTC adopted the same philosophy when it came to telephone, but not broadband. Even as broadband became increasingly important the CRTC left service decisions to the providers who would only extend the service if there was a “business case” — i.e. only if they could make a profit on it.

Nova Scotia governments seem to have accepted this philosophy without question. Taking Care of Business Minister Geoff MacLellan explained last week that inadequate internet service in rural Nova Scotia is the result of “market failure,” which he is gung-ho to remedy with a healthy injection of provincial money. “Quite frankly, there’s no private sector business case for anything we’re about to do, vis-à-vis $500 million of work, (sic) so this falls to the government, it falls to the taxpayers of Nova Scotia,” he told the legislature.

Where the minister sees market failure, someone with a longer view may see political and regulatory failure.

Government

City

Monday

Grants Committee (Monday, 1pm, City Hall) — below market rents for the Orenda Canoe Club on Lake Echo ($1 instead of market value of $6,300/year); the Kinap Athletic Club on Porters Lake ($1 instead of market value of $13,187/year); and the the North Star Rowing Club on Lake Banook ($1 instead of $36,827.50/year). On the last, the staff report provides an interesting history:

Located at Lake Banook in Dartmouth, the NSRC was founded in the late 1800s and originally operated on the Halifax Harbour (near Turtle Grove) until their clubhouse was destroyed by the Halifax Explosion. They relocated and rebuilt the boathouse on a parcel of land leased from Canadian National Railways between Porters Wharf and DND wharf. In the 1960s, NSRC asked the former City of Dartmouth to lease the land known as Governor’s Grove on Lake Banook. This request was denied however the NSRC was granted permission to continue occupancy of the Oakwood House and the building formerly known as the “carriage house” which is now used for boat storage. The NSRC has been at this location for over 45 years. On May 1, 2001, Regional Council approved the retention of the Oakwood House heritage property and authorized staff to enter into a five (5) year less than market value lease with the NSRC. The agreement included the carriage house, gardens, and the Oakwood House.

Public Information Meeting HPPAC- Case 20159 (Monday, 6:30pm, Harbour Suites A/B, Westin Hotel) — Eldorado Properties wants to redevelop the corner of South Park Street and Victoria Road. I wanted to get into this a bit this morning, but have run out of time. You can see the proposal here.

North West Community Council (Monday, 7pm, Acadia Hall, Lower Sackville) — here’s the agenda.

Tuesday

City Council (Tuesday, 1pm, City Hall) — discussion of bikes on ferries, the Khyber, low income transit passes, and of course the convention centre. I’ll be live-blogging the meeting via the Examiner’s Twitter account, @hfxExaminer.

Province

Monday

Law Amendments (Monday, 3:30pm, Province House) — to be deliberated:

Bill No. 65 – Psychologists Act (Clauses 6 and 7 of the Bill “require applicants for registration to have the current capacity, competence and character to safely and ethically practise psychology.” That’s going to trip up a bunch of ’em.)
Bill No. 79 – Property Valuation Services Corporation Act
Bill No. 82 – Halifax Regional Municipality Charter (“This Bill provides authority for Halifax Regional Municipality to require that any future development in the Cogswell Redevelopment Area be connected to a district energy system to be established for that area.”)
Bill No. 84 – Halifax Regional Municipality Charter (“This Bill allows for incentive or bonus zoning in all areas of the Halifax Regional Municipality. Previously, incentive or bonus zoning was only permitted in the HRM by Design Downtown Plan Area and the Centre Plan Area.”)
Bill No. 87 – Fisheries and Coastal Resources Act (This bill “sets the process to submit proposals by holders of aquaculture licences and aquaculture leases to advance an application for an adjudicative amendment to the licence or lease”)
Bill No. 99 – House of Assembly Act (This Bill “amends the House of Assembly Act respecting the establishment of electoral boundaries as a result of the recommendations of The Commission on Effective Electoral Representation of Acadians and African Nova Scotians”)
Bill No. 104 – Research Nova Scotia Corporation Act (this bill establishes the Research Nova Scotia Corporation, which “is not and may not be designated as a crown corporation under the Finance Act or otherwise,” so don’t call it that, mk? However, there’s no prohibition in the bill of calling Research Nova Scotia a slush fund or a kickback to connected insiders, so that language is perfectly legal.)
Bill No. 106 – Insurance Act (“This Bill amends the Insurance Act to protect the financial interests of an innocent person when the person’s property is damaged by another person with whom that person shares an insurance policy.”)
Bill No. 107 – Labour Standards Code (This Bill allows a victim of domestic violence to take a leave of absence from their job.)
Bill No. 108 – Cannabis Control Act (This Bill will almost certainly mean that Chris Enns will be arrested again.)

Tuesday

Legislature Sits (Tuesday, 1pm-10pm, Province House)

On campus

Dalhousie

Monday

Ophthalmology and Visual Sciences 29^th Annual Research Day (Monday, 8am, the Westin Nova Scotia) — Wallace Alward will speak on “A Thirty-year Journey With a Glaucoma Family.”

Composition Recital (Monday, 11:45am, Sculpture Court, Dalhousie Arts Centre) — students of Jérôme Blais will perform.

Senate (Monday, 3pm, Theatre A, Tupper Building) —  Dal’s schedule has no link to the Agenda.

What Can I Do With a FASS [Faculty of Arts and Social Sciences] Degree? (Monday, 7pm, in the auditorium named after a bank, Marion McCain Building) — Jure Gantar, Dean of the college, is hosting a panel discussion to dive into this issue. But in the meanwhile, I hear the Smiling Goat is hiring.

Tuesday

Engineering Capstone Conference (Tuesday, 8:30am, The Westin Nova Scotia) — senior year Engineering students show off their projects.

Putting the Heart Into Youth Bipolar Disorder (Tuesday, 3:59pm, in the theatre named after a bank, Halifax Infirmary) — Ben Goldstein from the University of Toronto will talk about bipolar disorder and the risk of early-onset heart disease.​

No Child’s War: A Night of Performance and Storytelling (Tuesday, 6:30pm, Rebecca Cohn Auditorium, Dalhousie Arts Centre) — El Jones emcees “musical performances and readings by children’s rights advocates and former child soldiers Evelyn Amony and Emmanuel Jal, with closing remarks by LGeneral (ret’d) Roméo Dallaire.” $17.25/ $28.75 Tickets here.

Saint Mary’s

Tuesday

What Does Ethical Banking and Financing Look Like? (Tuesday, 6:30pm, President’s Lodge, Atlantic School of Theology) — Goran Jeras from the Co-operative for Ethical Financing, Croatia, and Sonja Novkovic from Saint Mary’s University speak. $5 donation. Register here.

In the harbour

7am: Falcom Maryam, oil tanker, moves from Imperial Oil to anchorage for bunkers
10:30am: Viking Queen, car carrier, arrives at Autoport from Emden, Germany
11am: Falcom Maryam, oil tanker, moves from anchorage back to Imperial Oil
1pm: HDMS Ejnar Mikkelsen, Danish military ops ship, sails from Dockyard for sea
7pm: East Coast, oil tanker, arrives at Irving Oil from Saint John

Footnotes

We’ll be publishing a piece from Jennifer Henderson later today.