1. Irving tax deal
Yesterday, Halifax council agreed to a tax deal with Irving Shipyard. Throughout the two-hour discussion, councillors fell over each other demanding that no one call it a “deal,” but it is, in fact, a deal — Irving’s implied threat of tying up the city in court for the next 25 years as it contested each and every annual assessment was what drove the city to the deal.
The deal sets up a calculation for the value of the shipyard property that applies to no other property in Halifax but is based loosely on calculations of value for other Canadian shipyards that were arrived at after long and expensive litigation. In essence, it’s assumed that the shipyard property can be used for nothing else, and so an “external obsolescence” discount of 75 per cent is applied to the value of the buildings.
The basic terms of the deal are outlined in a declassified staff report to council:
• a 25-year agreement, with the potential for two five-year extensions
• a fixed $569,000 payment by Irving, which will increase by one per cent annually
• an additional payment of $1,000 per employee (calculated as full-time equivalent), up to 3,000 employees
Although it paid it, Irving had contested its 2014-15 assessment, which brought a property tax bill of $1.6 million. Under the terms of the deal, that bill will be reduced to $563,000, with the balance refunded to the company. This year’s tax bill will also be $563,000, and the $569,000 fixed payment, with the one per cent inflator, starts next year.
It’s impossible to say exactly what the Irvings would pay in property tax without the deal, as it would depend on future assessments. But if we take the $1.6 million tax bill from last year (applied to a building still under construction) as a starting point and multiply it out for 35 years we get $56 million. It’s also impossible to say exactly what the proceeds will be from the deal reached yesterday, as it depends on the levels of employment from year to year, but the loose figure bandied about yesterday was $35 million. So I think it’s safe to say that at the very least the Irvings have theoretically saved $21 million. Probably much, much more. But that’s “theoretical” in the sense that the no-deal payments would never materialize in this universe, as the courts would intervene.
I’m not overly critical of the city for making the deal. It’s true that Irving could’ve caused the city to spend millions of dollars in court battles that it would probably lose, and the deal isn’t out of line with other deals given to other shipyards across Canada, so court rulings would probably result in something that looks a lot like what council agreed to yesterday.
But it’s also undeniable that in the end, as councillor Stephen Adams said, council is giving a deal to the third wealthiest family in Canada. It’s also undeniable that the taxpayers are funding the Irvings on both ends: taxpayers are paying for the ship contract, and they’re paying in terms of reduced tax receipts.
Rich people play by a different set of rules.
2. Nova Star
The company operating the Yarmouth ferry is discounting tickets by as much as 40 per cent, reports the CBC:
The director of cruise marketing, Danny Morton, says the operator was “learning” throughout the past year and started making adjustments as early as June 20, 2014.
Based on CBC estimates, a family of four and an animal would spend $1,060 in Canadian dollars for a return trip on a mid-week in July. At the original prices last year, it would have cost nearly $1,500.
Children under the age of 14 can now ride for free. Previously, Nova Star charged nearly $130 per child for a return trip.
3. University Avenue bike lane
On a vote of 11-5, Halifax council yesterday approved the University Avenue bike lane. Those opposing the bike lane were led by councillor Gloria McCluskey, who argued that it discriminated against disabled people attending the Rebecca Cohn Theatre, but a city staffer said the proposal was vetted with Dalhousie University’s Accessibility Committee, which did not oppose it.
Curiously, hot dog vendor The Dawgfather says the bike lane is an attack on his business. “The bike lane would be the shortest in the world and its only intention according to well placed student sources, is to effect (sic) my business,” he claims on a “Fighting the Haters @ Dalhousie” GoFundMe page set up to raise money for his legal challenge to the bike lane. “Dalhousie University, is a multimillion dollar corporation and the city of Halifax, is using my own tax dollars to put me out of business in order to please Dalhousie.”
But the city staffer said that the bike lane will not preempt The Dawgfather’s business, and he will continue to have the sidewalk vending permit he’s held for many years. The Dawgfather says the bike lane will prevent him from parking his car in front of the hot dog stand, but the area where he parks has always been a no parking zone, and he has racked up tens of thousands of dollars in parking tickets.
As of this morning, The Dawgfather has raised $30 of the $50,000 he says he needs to hire a lawyer.
“Halifax Rainmen player Forrest Fisher says the brawl that broke out, between the Halifax Rainmen and Windsor Express on the day of the National Basketball League of Canada championship game, started when the head coach of the Express tackled a Rainmen player,” reports the CBC:
Fisher says the brawl started when Express coach Bill Jones tackled Rainmen centre Liam McMorrow, which was then followed by Express player Tony Bennett hitting McMorrow with a chair.
As I’ve discussed the past few days, Ben Cowan-Dewar is the man behind the Cabot Links golf course, who was then named the chair of the newly created Nova Scotia Tourism Agency. Yesterday, I pointed out that Cowan-Dewar has been able to leverage public funds in order to build his fortune:
With partners like Keiser, ACOA, and the jobs fund, Cowan-Dewar’s personal risk appears to be minimal.
So yea, I think he played the game well. He leveraged big money, including taxpayer money, to make a fortune, or at least enough to not have to be present for the day-to-day running of the business.
I guess we’re supposed to bow down to such genius.
Let’s acknowledge upfront that Inverness is in a depressed part of the province, that people there need jobs, and that the golf course is providing jobs. Further, while some people oppose any government funding for private businesses, I think there is indeed a role for government to play in job creation. But does this absolve us of all accounting? Should public expenditures be completely beyond question, no matter what the amount, so long as somebody somewhere gets a job? I think not.
It turns out that I had drastically under-estimated the public money that is going into this project. After I published yesterday, several readers contacted me and pointed me to projects I had been unaware of. Let’s recap:
Coal Mine remediation
Back in 2002, the PC government spent $4 million to clean up the site that would later become the Cabot Links golf course. A press release explained:
The cleanup is required before any potential development can occur on the 60-hectare site, just west of Route 19, near the town of Inverness.
“This is a necessary step to minimize any current or future environmental risks,” said [then-Tourism and Culture Minister, later Premier, Rodney]. MacDonald. “It’s the right thing to do and an important step toward bringing new opportunities to this region of Cape Breton. The work, to be done next year, underscores our commitment to support economic development and
local prosperity, while observing all proper environmental safeguards.”
A coal mine operated on the site from the 1860s to the 1960s. The land has been vacant since then. Studies, however, indicated that waste rock at the site has produced acid over the years, covering at least 25 per cent of the site. Consultant CBCL Limited was hired by the province in June to complete a comprehensive site analysis and environmental management plan.
“It makes a lot more sense to tackle the problem now and not later,” said Mr. MacDonald. “Acting now is in the taxpayers’ best interest, since delays could lead to higher costs and raise liability issues. Our plan will bring the site back to a condition roughly similar to what would have existed before its use as a coal mine.”
In 2002 there was no hint that the property would later become Cabot Links, and arguably the government had a responsibility to clean up the mess from earlier industrial operations no matter what would subsequently happen to the property. The cleanup was successful, the Cape Breton Post later reported:
Dean Hart, an inspector with the provincial environment department, said a coal mine reclamation project at the former Evans mine near St. Rose, south of Margaree Harbour in Inverness County, has turned a longtime underground coal mine into a greenfield.
Wetlands have been restored and vegetation has taken hold, attracting moose, bear and other wildlife.
“It’s actually come quite nice,” Hart said. “It’s quite a transformation, quite a success story.”
He said the 200-acre property was converted into a surface mine reclamation project in 2003 and was finished about three years later.
It’s now under long-term monitoring by environment and natural resources officials.
But while the cleanup would’ve been necessary no matter what happened to the property, there’s no denying that Cowan-Dewar was a beneficiary of the expenditure. Especially since…
One correspondent tells me the old coal mine land was simply given to Cabot Links, for free. I can’t verify that — I can’t find any orders in council or government press releases this morning concerning the land transfer, which in itself is odd.
Cowan-Dewar “had to piece together and buy 14 land parcels from various owners,” reported the New York Times, but the bulk of the property appears to have been the old provincial land.
Cabot Links golf course
According to ACOA, construction of the Cabot Links golf course cost $6.254 million. ACOA financed $2.5 million of that through a no-interest loan in 2008.
In 2012, ACOA made two loans to Cabot Links totalling $750,000 for construction of a hotel that it says would cost $7 million. The loans were also no-interest.
In 2013, the province loaned Cabot Links $8.25 million. Announced the press release:
Construction has begun on Cabot Cliffs, a second 18-hole golf course at Cape Breton’s Cabot Links resort. The development will further establish Inverness as a world-class golf destination.
The province is lending Cabot Links $8.25 million toward the $14-million Cabot Cliffs development and hotel expansion. The interest-bearing loan is fully repayable. The province’s loan will only be provided when all regulatory requirements are met.
In 2014, ACOA loaned Cabot Links an additional $2.75 million as part of the same expansion.
Apart from the government loans, Coawn-Dewar had to find just $3 million in financing for the $14 million project.
I’ve been unable to independently verify it, but I’m told that the municipality of Inverness extended water services to Cabot Links at a cost of $750,000.
An interesting letter to the editor appeared last year in the Inverness Oran, the town newspaper:
I am writing to your attention to reiterate my concerns regarding the matter with the reservoir on Broad Cove Banks Road. Two tanker trucks were parked on the opposite side of the road pumping water from the reservoir on Saturday, July 26th with no traffic control in place. The RCMP were immediately notified to address the safety concerns due to the high volume of traffic on the Broad Cove Banks Road given it was Inverness Gathering week. The RCMP Corporal requested the work be halted until traffic control was put in place.
(On Wednesday, July 23rd, 2014 Ben Cowan from Cabot Links was at the reservoir.)
I, myself stopped at the reservoir to express my concerns directly. I restated what was told to residents at a previous council meeting by Joe O’Connor. Mr. O’Connor advised that the reservoir was to be used to hold water for the all residents living above Cameron Drive in case of a fire. The response I was given by the Cabot Links employee with the RCMP present was as follows “we’re taking every drop of water from there because the quality of water is perfect for the grass at Cabot Cliffs. Council approved it and that all the permits were in place.” When I asked if I could see the permits I was told they were not on hand.
Due to extreme dry conditions this summer it is imperative that a reservoir of water is readily available in case of an emergency or fire. Mr. Mustard contacted Mr. O’Connor to address my concerns regarding the reservoir. Mr. O’Connor responded by stating the decision never went through council; Mr. O’Connor personally approved the water removal from the reservoir. Apparently, there is now an intention to install a fire hydrant next to the Gerkie residence on Broad Cove Banks Road within the next two weeks.
Without the knowledge of the residents this agreement was made. There are many safety concerns associated with the reservoir being depleted. It appears that the priority lies with the development of Cabot Cliffs not with the local residents. Residents of Broad Cove Banks Road have been lobbying for the installation of fire hydrants for the past four years. Suddenly, a fire hydrant is said to be installed within the next two weeks. A serious oversight has occurred in the decision making process with the reservoir being emptied and no working fire hydrants in place during dry season. Local residents are not being informed about important decisions that are being made behind closed doors not through the public local council.
Sadly, the imminent safety and concerns of local residents are not being taken into account regarding emergency situations and potential danger(s). I understand the local development of the golf course(s) is the mandate. However, no residents are informed about key decisions that could potentially place themselves or their [homes] in danger. Again and again, the residents of Broad Cove Banks are let down.
Thank you for taking matter forward.
Mr. Melvin O’Brien
Broad Cove Banks Road Resident
Margaree Airport Expansion
An Inverness municipality report explains that:
In December 2014, Inverness Municipality submitted an application to the Build Canada Fund to expand and upgrade the existing Municipal Airport in Margaree to create the ‘Cape Breton Island Airport’ (CBIA).
The airport is located adjacent to the world renowned Cabot Trail (Nova Scotia`s premiere icon) and central to Cape Breton’s finest attractions. The focus of the airport will be tourism. The expansion is about bringing new incremental business to Cape Breton Island – business we are not attracting with our current infrastructure. The development of Cabot Links Resort and Golf Course has been game changing and drawing unprecedented attention. Golf is unquestionably emerging as a strong new selling point for Inverness County. Cabot Links has attracted 39% of its visitation from the US and 25% from Ontario. Most impressive is that 90% of the American visitors and 50% of the Ontarian visitors were first time visitors to Nova Scotia, with the majority arriving by air. A significant opportunity has presented itself. Cabot Links has drawn a high value visitor. We know that the high value visitor, which our region has the potential to attract in much higher numbers, demands convenient and “direct air access” to destinations.
Our objective is to accommodate increasing number (sic) of visitor’s (sic) direct access to the Cabot Trail and world class tourism offerings of Western and Northern Cape Breton — world class golf, fishing, touring, music and dance. Their expenditures will drive economic growth, and the benefits will spread across the Island. From a tourism perspective Cabot Links and the new Cabot Cliffs will become the main driver for activity at the airport.
The CBIA can be operational in 2016 with an approximate $9.4 million investment for runway expansion, operational infrastructure and a modest terminal structure. Annual operating expenses (including management, fixed and variable expenses and capital reserve) are estimated to be $130,000 to start, with operational revenues in the same range and growing to $190,000 in a 5-year span. The business case is built upon a fee for service model that is estimated to contribute to 100% of operational costs. Inverness Municipality is seeking support for equal funding contributions from three levels of government ($3.1 million each).
The development of CBIA constitutes a strong step forward in addressing a critical challenge laid out in the recent Ivany Report (The OneNS “Now or Never” Report) of the need to keep pace with our competitive environment.
So we’re talking about something like $25 million in public financing, only about half of it in the form of repayable loans (at no interest) that primarily benefit one property owner — Cabot Links.
From what I can tell through the government documents, Cowan-Dewar has had to find independent financing of about $13 million for the capital costs related to mine remediation, golf course and hotel construction and expansion, water services, and airport expansion.
Is that appropriate? People can disagree about that. But shouldn’t the full public cost have been considered upfront, before the deals were made? And if the various levels of governments, that is, we taxpayers, are putting up so much for Cabot Links, shouldn’t we get an ownership stake in the operation?
I’ll no doubt again be accused of simply hating rich people. But these are legitimate public policy issues.
Two different sources have told me that Cowan-Dewar has been building a house for his family in Inverness, and that the construction site has been repeatedly vandalized. Clearly, there’s no excuse for vandalism, but it does suggest that there’s resentment of Cowan-Dewar among some locals in Inverness.
2. Cranky letter of the day
I’m getting tired of all the letters by members of Kings Citizens Coalition.
I am against Berwick merging into the County of Kings. Why would anyone want to merge into a municipality with such a dysfunctional council?
I live in the beautiful Town of Berwick. It is friendly and small enough to walk everywhere. It has grocery stores, pharmacies, hardware stores, doctors, dentists, parks, exercise classes, library, just about everything I need, all within walking distance. I can just walk to the town hall and talk to the mayor or the CAO, or be present at council meetings. There is Kings Transit to take me to the malls in New Minas or Greenwood, or to the hospital and medical specialists in Kentville, the few times a year that I need or choose to go to such places.
Were Berwick to merge into the County of Kings, meeting with my representatives face to face or getting to council meetings would be rather unlikely, as I don’t have a car and the last bus leaves Kentville at 7 p.m., which does not give much time to be present at the 6 p.m. council meetings. Access to the town hall would cost twice $3.50 for the bus, plus about one hour commuting for things such as building permits, forms and information. I much prefer the present level of access to everything.
I say, “No” to merging.
Maria José Faria Graça, Berwick
Halifax and West Community Council (6pm, City Hall)—there are three public hearings, to consider:
• an 18-storey residential building at 5885 Spring Garden Road
• an extension of the first and second storeys of a 12-storey building at 5881 and 5883 Spring Garden Road
• a change to zoning laws to more plainly limit the number of bedrooms allowed on parcels in the south end
Public Accounts (9am, Province House)—Peter Vaughan, Deputy Minister of the Department of Health and Wellness, will testify about long term and continuing care.
In the harbour
CPO Miami, container ship, arrived at Pier 41 this morning from Charleston, South Carolina
Zim Tarragona, container ship, arrived at Pier 42 this morning, will sail to sea
Atlantic Companion, ro-ro cargo, Liverpool, England to Fairview Cove West
Resolute, cargo, Houston, Texas to pier TBD
I’ll be on the Sheldon MacLeod Show, News 95.7 FM, at 4pm.