Lessons from Ben Eoin Part II

I recently received a batch of documents from the Atlantic Canada Opportunities Agency (ACOA) as a result of an access to information request about the Ben Eoin Marina. (Those of you who like your source material straight up will find it here.)

Ben Eoin Marina & Yacht Club

“Because of the combination of distance and treed vegetation, this development will not be seen from the Road.” (CBRM Issue Paper, June 2011)

I didn’t learn much that was new because local media coverage of the Ben Eoin Marina story at the time was excellent (especially the work of the Post‘s Nancy King, who tracked down every angle you could possibly think of).

So rather than simply rehash the marina story (although I’m going to rehash bits of the marina story because how could I resist?) I decided to look to it for lessons and I think I’ve found two. Here’s the second:

Question dubious assertions.

Sometimes, people trying to sell you on something will say anything. Questioning what they tell you is not just okay, it’s imperative — especially when expenditures of public money are involved. Here’s a sampler of dubious assertions from the Ben Eoin Marina file.

 

The Biggest Employer in Ben Eoin

One of the first steps toward the realization of the Ben Eoin Marina project was the valuation of the land on which it now stands. This exercise was important because the land was to be the marina board’s contribution to the project and would figure into the calculation of its overall value, thus influencing how much money the board could receive from Enterprise Cape Breton Corporation (ECBC).

The land for the marina (and golf course) was purchased by The Cape Breton Ski Club in 1999 with financial assistance (in the form of two, $300,000 forgivable loans) from ECBC and the Province of Nova Scotia. (The golf course was not actually built until 2007.)

In the 2009 Cape Breton Marina Study (which was actually the 2009 “Bras d’Or Lakes Marina Study” or the “Don’t Tell Ingonish We’re Funding Marinas Again Study”), the Ben Eoin Marina board was said to be valuing the land it would contribute to the marina at $600,000 (although for tax purposes it was assessed at just over $300,000).

Mackey Appraisals Ltd. did the valuation in 2010 and started things off with a few lines about the economic situation in Cape Breton:

Locally, there is much discussion on offshore oil and gas exploration. Sydney has a geographical advantage over other ports in this industry due to its close proximity to the potential oil fields and its three, good quality docking facilities. There is much optimism that the entire industrial area will benefit from the potentially large oil fields located off the Coast of Cape Breton Island.

Add to this the assertion that waterfront properties along Route 4 sell “very quickly” and “often above the asking price;” that Sydney’s downtown core is “is still considered to be the hub of business activity for Cape Breton;” and the not quite baseless but surely useless assertion that the Ben Eoin ski hill has become “a major winter employer in the area” (in much the same way I am the tallest woman in my living room) and you get the flavor of the report.

Mackey also offers this interesting assessment:

The Lakes Golf Course has recently opened in Ben Eoin. This world class golf course adjoins the Ski Ben Eoin hill which has been established for many years. A marina complex is also planned for the immediate area.

The development of these recreational facilities has, and will continue to increase the desirability and market value of the area, potentially stimulating future development.

The marina complex was not just planned “for the immediate area,” it was planned for the actual piece of land Mackey was evaluating making this the land appraisal equivalent of an Escher drawing.

There are lots of dubious assertions in this report, not least its final conclusion that the land in question was worth $700,000 (later bumped up to $800,000), but nobody questioned them.

 

The Four Seasons

In its “business plan,” the Ben Eoin Marina board argued that the marina, combined with the Birches at Ben Eoin Country Inn, the golf course and the ski hill would form the core of a “four seasons resort” on an Island that, famously, does not have four seasons. The “plan” provided not a shred of evidence to back the assertion that tourists would flock here 12 months a year while actively ignoring evidence suggesting they would not.

Case in point: if Ben Eoin were really a “four seasons” resort, would the Birches Country Inn shut down amenities in the fall and close its doors completely from December to May (i.e. the entire ski season)?

Consider this 2016 review from TripAdvisor (where, it must be said, the reviews of the Birches—and particularly its restaurant—are uniformly glowing):

My wife and I stayed in the MacPherson suite on November 2. We were the only guests at the inn and dined alone.

Or this, from a guest who stayed in October 2015:

Hot tub was closed for the season but would be nice on warmer days.

Think about that: with the golf course, the marina and the ski hill all operational, there is not enough tourist trade to keep a 12-room inn open year-round. (Tellingly, the reviewer from October 2015 referred to being there in the “off-season,” which should not be possible at a four-seasons resort.)

The golf course does seem to attract tourists (although not enough to stop its owners going to the CBRM for money for upgrades) but it closes in October and the Ben Eoin ski hill may be an excellent place to learn to ski, but is it reasonable to expect it to attract experienced skiers from other parts of the country, or even the province? My friends who skied went to Quebec or New England for March Break; I don’t believe they crossed paths with an equal number of Quebecers and New Englanders making their way to Ben Eoin.

 

Transients

When ECBC awarded the Ben Eoin Marina board $4 million to construct the facility, it did so under its (hastily compiled) Guidelines for Assistance: Marine Related Facilities (or the “Don’t Tell Ingonish We’re Funding Marinas Again” guidelines) which stated that applications for financial assistance under these guidelines must be strategic in nature and support the growth and economic development of the recreational boating industry in Cape Breton.”

To that end, marinas seeking financial assistance from ECBC had to guarantee that 25% of their berths would be designated for “transient boaters.” And yet, the Ben Eoin Marina board, in its “business plan,” stated baldly that it could not meet this demand:

Through much discussion and consultation with other marinas, the Board has assumed the split between seasonal and transient berths to be 85% seasonal and 15% transient. Based on the current financial landscape and the need to at minimum break even, the Board does not feel it is financially feasible to increase the percentage of transient berths in year one.

At which point, ECBC should have said, “Too bad, so sad—we can’t fund your marina.”

Instead, it chose to disregard its own guidelines and its own rule against providing more than 75% funding to a project and give the board $4 million, or 83.3% of the project costs.

In actual fact, the marina now has 68 seasonal berths and 7 transient berths—which means it has set aside 9.3% of its berths for visitors. By way of comparison, the St. Peter’s Lions Club Marina, according to its website, reserves 20 of its 64 berths—31%—for visitors. Of course, St. Peter’s has a grocery store, a hardware store, a liquor store and a number of eateries, all of which make it more attractive than Ben Eoin to “transient” boaters. (As one of the reviewers on TripAdvisor said of The Birches, “I was so pleasantly surprised to find a five star hotel in the middle of nowhere.” Ouch.)

 

 

Private investment

The loopiest parts of the marina board’s “business plan” (I still can’t bring myself to drop the quotation marks) involve a number of imaginary developments that would be key to the success of the “four seasons” resort. They included a hilltop hotel and housing development (houses/chalets/condos), a zip line, an equestrian center, a life-sized replica of the Taj Mahal and an industrial-sized slingshot for propelling people into the middle of the lake (I made the last two up but I swear neither would have raised eyebrows at an ECBC board meeting).

And here, I’m going to turn things over to a familiar figure. Although her area of expertise these days is state-of-the-art automated container terminals and international shipping routes, in 2013, as acting CEO of ECBC, Marlene Usher specialized in resort development:

At a press conference last week, acting ECBC CEO Marlene Usher said that by building on Ski Ben Eoin, The Lakes golf course and now Ben Eoin Marina, they estimated that more [than] $58 million in new investment will be spent, with $30 million of that being tied to potential new residential development and construction of a hotel. [Cape Breton Post, 4 February 2013]

Of course, all that materialized was a $1.1 million (ECBC funded) access road to 16 building lots (one of which, apparently, sold, the rest of which are up for sale by Public Services and Procurement Canada, which inherited all ECBC’s property holdings when ECBC imploded in 2014; ECBC had expected to earn $70,000 to $100,000 for the lots which are now priced between $45,000 to $70,000).

Believe it or not, Usher’s confidence that the golf course, ski hill and marina would be “an economic development catalyst and generate residential and construction and commercial investment,” proved misplaced. I’m going to leave you with some recent photos of the Aerie Estates housing (and hotel) development in Ben Eoin just to show you how misplaced (I really think the sign at the road should say, “Look on my works ye Mighty, and despair!”) but before I do, I’m going to reiterate Lesson Two:

Question dubious assertions — especially when the person telling you dubious things has told you a lot of other dubious things in the past.

 


 

 

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