‘Premier’ Cecil Clarke Would Consider $100M CB Rail Upgrade

This couldn’t have been more timely: just as we’re all talking about ports again, veteran journalist and sometime Spectator contributor Rick Grant got in touch to say he’d attended the Halifax Needham PC Association AGM on June 20 and had taken the opportunity to quiz the four PC leadership candidates in attendance about upgrading the Sydney-Truro rail line to service a potential container terminal in Sydney.

Back in January, Grant reported for the Spectator on a study by the Hatch consultancy that said upgrading the rail line, which is operated by US-based short line operator Genesee & Wyoming (G&W), to Class III standards would cost $100 million. Such upgrades would increase the speed at which trains could travel the route as well as allowing for double-stack rail cars, both of which would be necessary to service a container terminal for ultra-large vessels (ULCVs) such as the one proposed for Sydney harbor.

The current Liberal provincial government under Stephen McNeil is paying G&W $720,000 a year to keep the company from applying to abandon the line from Sydney to St. Peter’s, which G&W has made clear it wants to do. But the McNeil government hasn’t ruled out the possibility of funding the upgrades. Shortly after the release of the Hatch report, then-Transport Minister now Business Minister Geoff MacLellan told the Cape Breton Post:

This is a private-sector operation so as they’re developing the business plan, looking at what’s got to be done at the port, what’s got to be done with the rail, attracting the investors to build it, attracting the shippers to keep the market flowing and actually have the business on the ground … like everything else, when an infrastructure request is made, we’ll consider it.

Fair game, then, to ask the contenders for the PC leadership what they’d do about the line.

 

Business case

Halifax Farmers’ Market executive director Julie Chaisson was not present at the Needham AGM, but of the four candidates who were — CBRM Mayor Cecil Clarke, Pictou East MLA Tim Houston, Kings North MLA John Lohr and Cumberland South MLA Elizabeth Smith-McCrossin — Grant reports all four said they would need to see a business case for the investment.

Cecil Clarke (Source: Facebook)

Cecil Clarke (Source: Facebook)

That includes Clarke, who has spent the bulk of his five-and-change years in the CBRM mayor’s office leading the charge for a container terminal in Sydney harbor, but who apparently has yet to see a business case for the project. The world of international business is truly a strange place.

What Clarke said exactly, when asked if, as premier, he’d put taxpayer money into “restoring that railway” was that he would “put money into anything that has a business plan behind it that can add to the prosperity of the province of Nova Scotia.”

But Grant wanted an answer that actually referenced the rail line so he continued to press Clarke:

Grant: Specifically that railway, would you put money into it?

Clarke: I would put money into the Port of Halifax, I would put it into Melford for a short line and definitely, if the market supports something in the Port of Sydney. So what I know is, as governments, are we open in terms of Atlantic Gateway? Yes, I am. As a premier, I want to market all of Nova Scotia. As a premier, I want the right ferry service going to New England that’s going to market goods, not just people.

If you needed further proof of the strangeness of the business world, there it is: the head cheerleader for the Port of Sydney project finding nice things to say about both its rivals. But Grant still hadn’t got his answer:

Grant: Is that a long yes?

Clarke: My point is is that I would make the right investments based upon a business case and I’ll wait to see the business case.

Grant: And that includes the railway?

Clarke: Of course it does, otherwise we wouldn’t have been working on the study for the rail. We have to have defined numbers, you have to do those things to make informed decisions

And not only does Clarke see room for all the ports, he sees a role for all levels of government:

I think, quite frankly, whether there’s a development for the Port of Halifax, Melford or Sydney, governments both [sic]…at the municipal, provincial and federal levels all have a role to play. And [what] I know is we have three competitive port opportunities, we have current-generation port and there’s next generation and as we’ve seen in British Columbia, both of them have grown as a result of working together. And so…we have to look at Nova Scotia as a broader, global opportunity versus one against the other. In fact, one can complement the other.

So there it is, as premier, Clarke would be prepared to support three port projects and consider at least two rail projects.

 

East coast strategy

Maybe that’s the kind of thinking that inspired a recent Journal of Commerce (JOC) article by Hugh R. Morely about Canada’s lack of a port strategy on its east coast.

Madeleine Paquin (Source: Logistec https://www.logistec.com/team-member/madeleine-paquin-2/)

Madeleine Paquin (Source: Logistec)

Morely (in an article which I can link to but be warned: there’s a paywall) was reporting from the JOC-sponsored Canada Trade Conference in Toronto last month.

During a session entitled “Eastern Ports and Networks: Preparing for Growth,” he reports that Tony Boemi, the VP of growth and development at the Port of Montreal, argued for “some sort of control” over the port development process on the east coast. “Without that,” Boemi said, “there is definitely going to be over capacity.”

Morely noted the difference between the east and west coast approaches to port development:

That lack of consensus contrasts with the experience on Canada’s west coast over the last two decades, where the industry has leveraged public money to attract billions of dollars of investment in Canada’s Pacific Coast ports and infrastructure, and as a result has captured a growing share of US Midwest cargo from Seattle and Tacoma.

(Now, you might say this actually echoes what Clarke is saying about ports “complementing” each other and I could almost see a parallel between Vancouver/Prince Rupert and Halifax/Melford given that Melford, like Prince Rupert, is supposed to be a pure-rail port. But I’m not seeing how Halifax/Novaporte fits this model, let alone Halifax/Melford/Novaporte.)

Finally, Morely reports that during her keynote address Madeleine Paquin, president and CEO of Logistec, said that:

…any investment should focus on the nation’s existing key ports – Montreal, Halifax, Vancouver and Prince Rupert. She urged “collaboration” among stakeholders, adding that the concept had been noticeably absent from the proposal by Quebec City to build its own terminal.

I wonder what she makes of the level of “collaboration” here in Nova Scotia?

While you’re thinking about that, take a listen to the full exchange between Grant and Clarke, it includes some additional questions about how close port promoter Albert Barbusci is to a deal, whether Clarke still supports 99-year leases and whether the China Communications Construction Company is still in the picture:

 

 

Rick Grantl

 

 

Longtime CTV reporter Rick Grant began his television journalism here on the Island. He is now based in Halifax.

 

 

 

 

 

 

 

 

 

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Fast & Curious: Port Days Edition

Shout out

Let’s start this out on a positive note: the staff at the Port of Sydney are really great.

CEO Marlene Usher referred to them as her “small but mighty” team during her opening remarks at Port Days on Thursday and it’s true, the entire operation — including cruise, and the craft market and maintenance — is handled by 10 people. I especially appreciate them because they always make sure I have a seat at the press table (and on Thursday, they also made sure the press table had a light).

I have questions about many Port-related things, but I don’t question the professionalism of the people who work there. In fact, I would argue their dedication is yet another reason why the people making the decisions about the Port should be held accountable.

 

Where’s Cecil?

There were a few glaring absences from Port Days 2018 but CBRM Mayor Cecil Clarke’s wasn’t one of them. He was there delivering opening remarks at 8:45 AM and he was there outside the door of Pittman Hall talking to a reporter as I left at noonish. (Yes, I left Port Days before the mayor did.)

And yet, he still made it to Middleton in time for the first PC leadership debate:

NSPC leadership debate, Middleton, 24 May 2018. (l-r) John Lohr, Cecil Clarke, Elizabeth Smith-McCrossin, Julie Chaisson, Tim Houston.

I wonder where he’ll be today?

 

Newsworthy

I also need to point out that while the Cape Breton Post spent the days leading up to Port Days running port-related stories — like this one about Membertou’s intriguing plans to build fishing boats on the harbor — the actual event didn’t generate a front-page story.

In fact, it ceded the front page to a man who managed to eat a six-pound donair in one hour.

Make of that what you will.

 

Regrets, they had a few

I mentioned a couple of glaring absences from Port Days 2018 and the first has got to be the representatives of Ports America, the company supposedly on board to operate any container terminal built here.

The version of the Ports Day Agenda I posted Wednesday was clear: at 9:45AM, Ports America VP Mike Journeycake and Director of Engineering Kevin Dickman would provide an update on “Novaporte,” the name our port promoters have given the project. (Click the image to enlarge.)

 

I was actually quite interested to hear what they had to say, although my first question was, “Are they being paid to attend?” In fact, I actually asked Port of Sydney CEO Marlene Usher if she could tell me which speakers were being paid fees or having their travel covered by the Port for the event. She responded in an email:

Mary, I think the subject matter for these speakers would make for a more interesting story. Just my thoughts.

In any case none of the speakers are paid. However we are paying for travel expenses for the Stantec speaker and the speaker from the Charlottetown Development Society.

(In passing, most of what the speakers at Port Days had to say — for example, a 25-minute presentation on “commissioning and startups” — was not “interesting.”)

I thought Usher’s reply meant the Ports America reps were coming on their own dime and I was really impressed — until I arrived at Port Days, opened the official agenda and found that while a “Novaporte Update” was still scheduled for 9:45AM, there were no longer any names attached to it. And then the MC attached a name to it and it was Barry Sheehy’s.

Sheehy said that he was replacing his partner, Sydney Harbour Investment Partners (SHIP) CEO Albert Barbusci, who, like the Ports America reps, also sent his Port Days regrets. (He was unable to attend because BUSINESS.)

Sir Thomas More (l) and Barry Sheehy.

Sir Thomas More (l) and Barry Sheehy.

Sheehy then began — I swear — with the same remark he opened with the last time I heard him speak at Port Days, in 2016: he said climbing the stairs to the stage in Pittman Hall always made him feel like he was going to the scaffold. He expounded further this time, saying the sensation put him in mind of the famous last words of one of his personal heroes, Sir Thomas More, who also felt like he was going to the scaffold when he climbed the stairs to the podium to report on the status of his Ultra-Large Container Vessel (ULCV) terminal project. Just kidding! He felt like he was going to the scaffold when he was going to the scaffold — and reportedly told the soldier accompanying him, “Pray Sir, see me safe up; and as to my coming down, let me shift for myself.” I’m not sure where the parallel is, given that Sheehy’s head was not chopped off and he actually did “shift for himself” when it came time to get off the stage, so I’m just going to put it down to “historian humor.”

Sadly, Sheehy said he was not familiar enough with the file to fill us in on all the detailed (and “very expensive”) engineering work they are currently undertaking in preparation for the terminal, but he told us that they (presumably he and  Barbusci) had made a series of “successful” trips to Beijing, Shanghai and Tokyo. Some of the outcomes of these trips were “exciting.” Others were “very exciting.”  As he did not tell us what any of these outcomes were, we will simply have to take his word on the excitement factor.

Sheehy says they are working to consolidate the “powerful consortium” they’ve assembled to build and operate the port. They are also working to guarantee shippers 100,000 loaded export containers (annually, presumably), a project they’ve dubbed “Novations.” (By way of comparison, in 2016, the Port of Prince Rupert, BC, shipped out 166,291 loaded export containers.)

He then expounded on the financial crisis and the shipping industry and the need for greater foreign direct investment in Canada before ending with “an incredible video” made for them by AECOM.* Not to be confused (although I confused them) with Aecon, the Canadian construction company that China’s state-owned China Communications Construction Company (CCCC) was going to buy until the federal government put the kibosh on the deal Wednesday. CCCC is, of course, the company that has supposedly signed on to build Novaporte.

The video, I’m sorry to say, was not “incredible.” It was a silent, animated depiction of our state-of-the-art container port in action. It looked like the Lego Movie if the Lego Movie had been made by a gifted elementary school student.

I didn’t feel particularly updated and neither, it seems, did the Cape Breton Post‘s Nancy King, who has also been keeping a close eye on the container terminal project.

I kind of felt like we were all being led to the scaffold.

 

Second berth

Engineer Richard Morykot of CBCL updated the assembly on the progress of the second cruise ship berth in Sydney Harbour and fortunately for the assembly, he was familiar enough with the file to offer something other than Thomas More anecdotes and musings on the 2007 financial crisis.

Artist's rendition second cruise berth Sydney, NS

There was lots of good stuff about bedrock elevations and fendering systems and rock-socketed piles, but the item that caused my ears to perk up was the environmental testing they’d done on what Morykot called “the Nickerson property,” the waterfront land the CBRM is in the process of expropriating from local businessman Jerry Nickerson for the construction of the second berth.

The consulting firm CPCS, in its due diligence report on the second berth, said “the cost of environmental remediation” of the property was “at issue.” Cape Breton Post reporter Nancy King tried to get a copy of an environmental assessment of the property from the CBRM but was turned down.

But Morykot assured the Port Days audience that all was well on this front. CBCL had “reviewed existing data” (so, presumably, the CBRM shared the environmental assessment with them) and conducted their own tests:

We had some exceedances but nothing that I would be very concerned about on the site.

Call me a pain, but I would like to know what those “exceedances” were. I’d also like to know what will be involved in remediating the property. But Morykot moved on to other subjects (pipe piles, ice forces, breasting dolphins, dredging) and in the time for questions that followed, no one asked about it.

 

Library

The best presentation I heard on Thursday was that of Sharon Haley-Mancini of the Halifax Central Library (although that might just be my bias talking — I love libraries, I’m less fond of cruise ship piers and commissioning and startup processes.)

Haley-Mancini was on the “Sydney Waterfront Panel” which was not really a panel in the sense that there was no give and take between panelists and the moderator, Jim Wooder, didn’t have anything to moderate — the “panelists” just took turns making presentations.

Atrium, Halifax Central Library.

Atrium, Halifax Central Library.

(I would also note that not only was Haley-Mancini the only woman on the “panel,” she was one of only three women presenters on Thursday — the other 13 were all men and the Port Days audience also skewed male. Because it’s 2018.)

Anyway, Haley-Mancini had the best subject to present on — how can you lose talking about Halifax’s beautiful, $57 million central library? She drew a funny comparison between the new Halifax library — with its meeting rooms and auditoriums and cafes and study carrels and recording studios — and the Glace Bay library of her youth, where she remembers being intimidated by a librarian who went to patrons’ homes in search of overdue books!

She made the case for the value of a library in revitalizing a downtown with the aid of a couple of startling statistics: in 2014, before the new library opened, a foot traffic count on Spring Garden Road near the library’s current location totaled 1.7 million.

A count in the same area in 2017 totaled 7 million.

The gate count at the new library has averaged about 1.6 million per year compared to 390,000 for the old Spring Garden Road library and the new library has been ranked by readers of The Coast as the “best student hang” in Halifax for the last two years in a row, beating out all the city’s pubs and coffee shops and restaurants.

 

Musical buildings

Richard Paul, chief operating officer (COO) of Membertou Corporate Division, was also on the Sydney Waterfront Panel — replacing another prominent Port Days no-show, Membertou Chief Terry Paul.

Artist's rendering of CBRM Central Library.

Artist’s rendering of CBRM Central Library.

Membertou Corporate has apparently joined forces with developer Marty Chernin’s Harbour Royale Group to promote a waterfront development plan that includes a proposed new central CBRM library. (Except Harbour Royale is not going to fund the library, it’s just going to advise the library committee on accessing federal money, if I understood correctly. Honestly, I still don’t understand how the library came to be lumped in with Chernin’s project.)

Richard Paul noted that when Chief Terry Paul saw the architectural rendering (by Spiro Trifos) of the library on the waterfront he said, “That’s a Mi’kmaq drum.” And that drum, said Richard Paul, could take its place on the waterfront next to the Big Celtic Fiddle.

I was struck by this because I think the new library looks like the lid of an ice bucket. But once I had the drum idea in my head, I could easily imagine what would follow — demands that Chernin’s office tower be built in the shape of a traditional Acadian accordion while the new casino reference some Eastern European stringed instrument.

Our library committee has clearly decided that hitching its wagon to Chernin’s star is the best way to get a new central library for the CBRM, even though Chernin has been trying, unsuccessfully, to develop something on the Sydney waterfront for years and his latest plan comes with a lot of uncertainties, like, will the casino move to the waterfront? Will the Holiday Inn expand? Can you provide sufficient parking for a casino and a library and an expanded hotel on land underpinned by “fractured bedrock?” And should we be developing anything that close to the harbor given the realities of climate change?

So many questions. I may have to go to the library.

 

*NOTE: This article has been updated to clarify that AECOM produced the container port video not, as I had originally suggested, Aecon.

 

 

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When Former PMs Come to Call

Pity the poor former world leader.

How do you follow up a first act like that? I mean, if you’re not former US President Jimmy Carter, who has dedicated himself to good causes (like Habitat for Humanity and world peace), making himself more popular in retirement than he ever was in office. (Full disclosure: I have had a soft spot for Carter since I discovered, back in the ’70s, that he let his daughter Amy read at the dinner table.)

Although there are spots of altruism here and there — former Canadian Prime Minister Paul Martin, for instance, has focused on Aboriginal issues since leaving office, funding the Martin Family Initiative — most former leaders tend to pick up their rolodexes and head for the corporate world.

 

Controversial clients

Tony Blair, World Economic Forum, 2008. (WEF on Flikr, CC BY-SA 2.0, via Wikimedia Commons)

Take former UK Prime Minister Tony Blair. According to the Financial Times (FT):

Since leaving office in 2007, Mr Blair swiftly built up a complex empire that has drawn widespread criticism for mixing lucrative advisory work with a handful of charities.

That was in a 2016 article announcing Blair was shutting down his consultancy, Tony Blair Associates (TBA) which had:

…muddied his post-government career by making millions of pounds from an array of controversial clients ranging from oil companies to the authoritarian government of Kazakhstan.

 

Dentons

Some pols, in addition to (or instead of) setting up their own consultancies join existing ones, like Dentons, the international law firm that is home to former US Speaker Newt Gingrich (or was home, he actually just announced his departure this week), former Democratic presidential candidate Howard Dean, former Canadian Prime Minister Stephen Harper, former Industry Minister James Moore, former Manitoba Premier Gary Doer and, of course, former Canadian PM Jean Chrétien.

For the viewing public, though, watching your former prime minister become just another paid consultant can be jarring, which may be why they tend to do their work behind the scenes. For instance, according to Democracy Watch co-founder Duff Conacher, former PM Chrétien has avoided controversy by doing business overseas. Conacher told CP reporter Michael Tutton that Chrétien ” just stayed away from the federal government when he left office.”

Which made his recent visit to Sydney in the guise of “international adviser” to port promoter Albert Barbusci’s Sydney Harbour Investment Partners (SHIP) all the more puzzling. Chrétien attended a conference at Membertou on March 20th and, as the Cape Breton Post‘s Chris Shannon reported:

[Chrétien] said he plans to meet with Premier Stephen McNeil today to discuss the Sydney port file. He also believes the provincial government should invest in the container terminal proposal.

“I hope so,” he said.

 

Lobbying

That item caught the eye of CBC legislature reporter Jean Laroche, who recognized meeting with the premier to discuss the Sydney port file for what it was — lobbying — and checked to see if Chrétien had registered as a lobbyist in this province. He hadn’t.

Albert Barbusci (fourth from left) and Jean Chrétien (fifth from left) visit China Communications Construction Company. (Source: Novaporte website)

Albert Barbusci (fourth from left) and Jean Chrétien (fifth from left) visit China Communications Construction Company (CCCC) in Beijing. (Source: Novaporte website)

That, in turn, caught the eye of retired CUPE Atlantic communications representative John McCracken, who registered a complaint about Chrétien with Hayley Clarke, Nova Scotia’s registrar of lobbyists. Clarke sent a letter to Chrétien at the beginning of April, informing him of the process for registering in NS. She told Michael Tutton of Canadian Press that she has no authority to do much else — although a conviction for unregistered lobbying carries a fine of up to $25,000, Clarke has no powers to conduct an investigation, which would be a matter for police.

McCracken says he’ll wait to see if Chrétien responds to Clarke’s letter before deciding his next steps.

Premier McNeil has denied he was lobbied by Chrétien about the Port of Sydney, telling the CBC’s Laroche:

“We talked about economic development…We talked about what it was like to be from a large family. We continued to share stories about that, but I can assure you there was actually no lobby.”

 

One big family

But there’s an interesting, extra bit of information in Tutton’s story about Chrétien’s post-conference comments in Sydney:

Asked by a Cape Breton Post reporter if he’d be meeting with the premier to discuss the project, Chrétien said he would be.

Chrétien told the reporter, “He (Premier Stephen McNeil) said he’s for the development and he wants development in Nova Scotia and he is the premier of all Nova Scotia. There’s always competition between one city and another but all the cities in Nova Scotia are in Nova Scotia.”

When he asked if the province should invest in the project, the former prime minister replied, “I hope so.”

When asked about another project along the Strait of Canso trying to develop a port, Chrétien replied, “So what? I’m working for Sydney. I’m not working for them.”

I find that jarring coming from a former Canadian prime minister. Isn’t he supposed to care about all of us, like we’re all members of one of those large families he and the premier like discussing?

I also find it pretty convincing evidence that he went to Halifax to lobby McNeil about the port project.

 

Featured image: Nova Scotia Premier Stephen McNeil and former Canadian PM Jean Chrétien on 21 March 2018 in Halifax. (Source: Stephen McNeil/Twitter)

 

 

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What You Don’t Know Could Totally Hurt You

I am rarely rendered speechless, but I am gobsmacked by the answers I just received from John Phalen, the economic development manager for the Cape Breton Regional Municipality (CBRM).

John Phalen (CBC photo)

John Phalen (CBC photo)

Phalen, you’ll recall, organized last week’s secret meeting between port promoter Albert Barbusci, CBRM councilors (nine of whom attended), Mayor Cecil Clarke and senior CBRM staff. I asked the CBRM for a list of councilors and staff in attendance and was told by spokesperson Jillian Moore:

Apologies, but the meeting was hosted by Albert Barbusci. CBRM did not organize the attendance and therefore do not have a list of attendees.

This is pure baloney, of course — Rick Grant reported right here in the Spectator that Phalen contacted the councilors to inform them of the meeting.

Apparently, it’s all part of the CBRM’s “confidentiality” agreement with Barbusci, which Mayor Clarke (a career politician with no private sector experience) discussed in the Chronicle Herald on Tuesday. Personally, I think most private sector companies would be green with envy at the level of secrecy enforced by the CBRM where, apparently, telling citizens which of their elected representatives met with a developer is against the “rules of industry.”

Barbusci was here to “update” council on his progress in developing a deep-water container port in Sydney harbor, an update the powers that be decided was best delivered in a hotel down the street from the Civic Centre, rather than in council chambers.

 

New powers

Barbusci’s visit followed hard on the heels of Municipal Affairs Minister (and Sydney-Whitney Pier MLA) Derek Mombourquette’s announcement that he had introduced legislation to amend the Municipal Government Act (MGA) to facilitate the CBRM’s port deal with Barbusci’s company, Sydney Harbour Investment Partners (SHIP). The bill would allow the CBRM to sell or lease land for below market value, enter into a 99-year lease and offer tax incentives — all powers the mayor has said we need to enter into the Option and Development Agreement with SHIP that was approved by CBRM council on 20 November 2017.

Details of that agreement have not been made public but here’s the motion passed at that November meeting:

That the Cape Breton Regional Municipality enter into an Option and Development Agreement with Sydney Harbour Investment Partners Inc. and that the Mayor and Clerk be directed and authorized to execute the Option and Development Agreement presented between the Cape Breton Regional Municipality and Sydney Harbour Investment Partners Inc., acting in its capacity as general partner for Sydney Harbour Investment Partners LP, that was presented to Council on November 20, 2017, and that the Mayor and Clerk be authorized to execute the Port Facility Lease and Agreement of Purchase and Sale contained in the Option and Development Agreement in accordance with the terms and conditions set out in the said Option and Development Agreement. That in the event a sale of the Port Site is required as a result of the inability of the Municipality to obtain consent to a 99 year lease agreement; that the lands be conveyed to SHIP by way of an Agreement of Purchase and Sale, which document shall contain all rights, conditions, benefits and protections in favour of the CBRM as exist in the Lease Agreement attached to and forming part of the Option and Development Agreement.

The only glimpse of the agreement we were given was in a letter from an “independent” auditor chosen to give council an opinion on the deal. (I put “independent” in quotation marks because Richard Deslauriers, a Montreal-based PricewaterhouseCoopers partner, was chosen by CBRM staff and “outside counsel” Jim Gogan, the very people who had negotiated the agreement.) Deslauriers wrote that the agreement included:

The option to lease lands comprising an area of approximately 431 acres located in Edwardsville for the purpose of developing a wharf and a container terminal. This is referred to as the PORT SITE.

The option to purchase the freehold title to lands comprising an area of approximately 1,000 acres for the purpose of developing a multi-tenant logistics site. This is the LOGISTICS SITE.

We also know, because of a second motion passed at that same 20 November 2017 meeting, that:

When the option agreement is exercised with Sydney Harbour Investment Partners Inc. in relation to the Port Site, the payment of $10,000,000 will be held in reserve and will be used in lieu of borrowing for capital purposes until the reserve is depleted.

When I first read that motion, I assumed it applied strictly to the Port Site, which Deslauriers defined as the greenfield site, but CAO Marie Walsh told me it applied to the “overall deal.” So apparently, that $10 million covers both the sale of 1,000 acres of land for the logistics park and the lease (or sale) of the greenfield site.

This is the deal Mombourquette’s amendments pave the way for.

 

No comment

I feel like I’m trying to punch my way out of a paper bag on this one — it could be the most straightforward deal ever signed in the history of port development but the secrecy surrounding it and the full-court press that was put on council to approve it quickly makes everything seem suspicious. (Especially as we’ve gone from the Mayor’s starry-eyed prediction of big port news as “an early Christmas present” to Barbusci’s declaration that fall 2018 is a more “realistic” target.)

I tried to get some more details about the deal from CAO Walsh who told me she was on vacation but would forward my questions to Phalen to answer.

Here, then, is what I asked Phalen and what he said:

1. If Minister Mombourquette’s bill passes and the CBRM is given the powers outlined in it, what happens next?

1) We will be able to sell land for below market value and offer tax incentives.

And enter into 99-year leases, presumably. But my question was actually, what is the next step in the port development process? Is there any further role for council? Or as I put it:

Will council have to approve the sale or lease of land at below-market value? Does that mean the CBRM may receive less than the $10 million provided for in the Option and Development Agreement or is that $10 million considered already to represent a below-market-value price?

The rest of your question is part of the agreement and not public.

I tried rephrasing this question, pointing out that the $10 million price tag is pretty much the only information about the deal that is public and asking if Phalen could simply confirm that we will receive $10 million for the lease/sale?

He responded:

Confirmed.

I also pushed for an answer as to whether there is any further role for council in this deal, asking a follow-up question:

Is it correct then, to state, that once the CBRM has the power to sign a 99-year-lease and sell land below market value, this agreement may be exercised by the Mayor and the Clerk, provided SHIP has met the conditions laid out in that agreement, or will Council have a further role to play?

To which Phalen replied:

They have to meet conditions in the agreement…….its [sic] an option agreement.

So does this mean there is no further role for council? Why can’t Phalen just say, “There is no further role for council” or “Council will then do X?” And who will decide whether SHIP has met conditions in the agreement? I’m asking these questions aloud now, I didn’t bother sending them to Phalen because it was getting ridiculous. Without knowing what’s in the agreement, trying to ask reasonable questions is like playing battleship.

(And might I just add, if Phalen’s goal with that extended ellipsis was to distract me from my purpose, it almost worked. I found myself trying to decide whether his period key had gotten stuck or if he was actively trying to create suspense before the big reveal: “its an option agreement!” I guess I’ll never know.)

2. Albert Barbusci says he wants to lease 200 hectares and buy 400 hectares — does this mean he would lease the greenfield site and buy the land designated for the logistics park, as provided for in the Option and Development Agreement?

3. What is required to trigger the Option [and Development] agreement?

4. Is there any timeframe on the development of a container port once the Option and Development Agreement is triggered?

2) and 3) and 4) These details are part of the agreement and not public.

5. Is there anything to stop SHIP from using the 1,000 acres it intends to buy for a purpose other than a Logistics Park?

5) we would expect the development of the Logistics park would spur economic development and jobs in all sectors.

That’s a lot of confidentiality, but Phalen is something of a municipal man of mystery: there was no official announcement of his appointment as economic development manager, he just appeared in the Post one day under that title. There is no economic development department listed on the CBRM web site, nor is there any mention of or contact information for Phalen himself. Moreover, his LinkedIn profile still lists his old job — CBRM Public Works Manager.

Phalen says CBRM council has seen the Option and Development Agreement “in in camera sessions,” so presumably our councilors know (and are satisfied with) the answers to these questions (although District 6 Councilor Ray Paruch was not and voted against approving the agreement).

But is it really enough that council alone should be privy to this information? These seem to me like some pretty basic questions — what does SHIP have to do to trigger this agreement? How long do they have, once the agreement is triggered, to actually develop a container port? Is there a possibility we’re simply allowing a Montreal real estate developer (Canderel, Barbusci’s partner in SHIP) to sit on 1,500 acres of port and port-adjacent land until opportunity knocks? Does it even matter what type of opportunity knocks? I have to say, Phalen’s answer to question 5 makes it sound like it doesn’t.

Again, I come back to a thought I had last week: before our municipality is given the power to enter into an agreement like this, I think we should have some stricter ground rules in place, and insisting on public answers to these pretty basic questions seems like a good place to start.

 

 

 

 

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Mayor, Council to Meet Barbusci at Holiday Inn Today

Albert Barbusci (via Novaporte website)

Albert Barbusci (via Novaporte website)

Mayor Cecil Clarke and the CBRM council will meet port promoter Albert Barbusci on Wednesday afternoon in what was supposed to have been a secret session between 1:30 PM and 3:30 PM at the Holiday Inn.

Barbusci, of Sydney Harbour Investment Partners (SHIP), flew into Sydney Monday night, according to CBRM economic development manager John Phalen, who told the Spectator the Montreal-based port promoter wants to update councilors on his progress developing and marketing a container terminal for Sydney.

CBRM Municipal Clerk Deborah Campbell Ryan is aware of the meeting, the clerk’s office told the Spectator, but was not involved in organizing it — that job apparently fell to Phalen, who notified councilors of the event.

Councilors with whom we spoke were not provided an agenda. Contacted on Monday afternoon, Barbusci declined to comment on his progress during a telephone interview with the Spectator.

 

Ch-ch-ch-changes

The subject of the meeting may be a sweetheart land deal for SHIP – a company owned by Barbusci and Montreal-based real estate developer Canderel.

Last Thursday morning, Nova Scotia Municipal Affairs Minister (and Sydney-Whitney Pier MLA) Derek Mombourquette introduced amendments to the Municipal Government Act (MGA) designed to facilitate the development of a container terminal in Sydney.

Phalen says there are three purposes to the legislation that CBRM requested the Stephen McNeil government introduce, all critical to a deal going forward between CBRM and SHIP:

• Allow for the sale and/or lease of land below market value

• Allow for a tax abatement on the land

• Allow for a 99-year lease.

The revised legislation states that if the CBRM chooses to sell or lease “eligible municipal property” valued at more than $10,000 dollars at less than market value, council must first hold a public hearing on the matter. Proceeding with the sale or lease would then require a two-thirds majority vote by council.

The lease agreement would be about the same length as that between the United Kingdom and China for Hong Kong. Phalen explained that the lease and tax arrangement is a century long to ensure the estimated $700 million investment in a container terminal operation can be recouped, something both he and Mayor Clarke say could not be achieved with a 20-year lease. (Of course, no one signing the agreement today will be alive to say whether the investment has paid for itself by the time the lease expires.)

 

Greenfield Site

In announcing the proposed changes to the MGA, Mombourquette told the Cape Breton Post he “didn’t have the details of the deal the CBRM is proposing, but said the CBRM did its own vetting of its proposal by hiring PriceWaterhouseCoopers.”

We’re basing these changes based on the proposal that they brought forward and the work they’re doing with SHIP.

Greenfield site or Novaporte, if you prefer.

In fact, the only terms made public from the Option and Development agreement the CBRM signed with SHIP last November were those included in a letter from that PwC auditor, Richard Deslauriers. Deslauriers wrote that when the Option and Development Agreement is triggered, SHIP will receive:

The option to lease lands comprising an area of approximately 431 acres located in Edwardsville for the purpose of developing a wharf and a container terminal. This is referred to as the PORT SITE.

The option to purchase the freehold title to lands comprising an area of approximately 1,000 acres for the purpose of developing a multi-tenant logistics site. This is the LOGISTICS SITE.

Barbusci told the Spectator he wants to lease 200 hectares (500 acres) and buy 400 hectares (1,000 acres). Another 100 hectares (250 acres) are owned by First Nations.

The amount of land involved is almost 10 times the size of Point Pleasant Park in South End Halifax which is adjacent to the 30 hectare (75 acre) Halterm Container terminal.

Payment for the property was spelled out in a second motion passed during that November council meeting:

When the option agreement is exercised with Sydney Harbour Investment Partners Inc. in relation to the Port Site, the payment of $10,000,000 will be held in reserve and will be used in lieu of borrowing for capital purposes until the reserve is depleted. The equivalent borrowing amount shall not be increased as a result of this reserve which will result in an accelerated debt repayment and resulting in increased available operating funds.

CBRM CAO Marie Walsh said last November that $10 million price tag included both the Port Site and the Logistics Site.

Mayor Clarke also told the Spectator the land in question is valued at $10 million. Neither Clarke nor Phalen would say what the sale and lease prices would be. Barbusci declined any comment on price but offered to discuss the agreement in about a month. When asked for details of the SHIP/CBRM agreement, Mayor Clarke and Phalen said they were subject to an exclusivity agreement and could not be provided.

Whatever the price, it would be below the actual value of the land sold or leased and the property itself could be subject to a tax abatement for up to 99 years.

But another element of the revised provincial legislation is that the CBRM council and citizens must be informed of the details of the agreement. Phalen says the agreement will not be finalized until after the legislation passes; however, the economic development manager says the municipality is consulting lawyers to see if citizens must be informed of the contents of the agreement before it is finalized.

He promised to respond to inquiries about the timing of a public meeting by Tuesday, but has not been available to answer questions.

 

Political Response

Vernon Pitts

Vernon Pitts

Guysborough County Warden Vernon Pitts says the amendments to the Municipal Government Act are unfair and tilt the playing field.

He says Guysborough taxpayers paid about $3.2 million dollars to buy about 100 hectares (250 acres) of land for a proposed container terminal at the Strait of Canso. The warden says the property was then sold at market value ($3.2 million) to the developers of the proposed container terminal, the Melford Group.

Pitts says it’s very likely that Guysborough municipal officials will formally object to the legislation when it comes before the Law Amendments Committee.

But while he objects in principle to selling and leasing land below market value and granting tax abatements, Pitts says if the legislation is passed, Guysborough will seek the same authority from the province. Pitts predicts that the legislation will trigger “a race to the bottom” as municipalities compete with one another to attract big projects and businesses.

The Nova Scotia Progressive Conservative Party and Nova Scotia NDP are keeping quiet for now on where they stand on the legislation. Neither would commit to support or oppose the legislation.

Some CBRM councilors contacted said they were unable to see the benefit to taxpayers of a 99-year lease and a below-market-value land sale with a century-long tax abatement.

The explanation may come in the closed door, secret meeting at the Holiday Inn on Wednesday.

Rick Grant

 

 

Longtime CTV reporter Rick Grant began his journalism career in radio here on the Island. He is now based in Halifax.

 

 

 

 

 

 

 

 

 

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With Greater Powers, Greater Transparency?

Transparency icon from https://www.eff.org/es

Transparency icon via Electronic Frontier Foundation

Discovering, thanks to the reporting of Rick Grant, that the CBRM mayor and council are holding a secret meeting today with port developer Albert Barbusci sends a chill up my spine.

The meeting is being held at the Holiday Inn to avoid the bother of calling a special in camera session of council. While in camera meetings are good for hiding the matters under discussion from the public, they have a huge disadvantage in that they must be announced, so the blighters will know you’re up to something. Meetings at the Holiday Inn are much better that way (until nosy reporters get wind of them, anyway).

Barbusci apparently wants to “update” council on his “progress” in establishing a container port for Ultra-Large Container Vessels (ULCVs) in Sydney harbor. I guess a visit from Barbusci, the president of Sydney Harbour Investment Partners (SHIP), is a consolation prize for the visit Mayor Cecil Clarke told the Cape Breton Post we could expect in the early days of 2018:

I can say that…we will be welcoming a working group of both the Sydney Harbour Investment Partnership [sic] and their international partners, who will be coming in the early New Year to Sydney as part of the followup to that agreement and what it represents in terms of development of the container terminal.

I don’t think any “international partners” are accompanying Barbusci, which may be because he doesn’t seem to have any. The Option and Development agreement approved by council in November was supposed to have been finalized between the CBRM, SHIP (originally called Harbor Port Development Partners or HPDP) and the “strategic partners” (plural) that would “form the basis of the commencement of the project.”

Instead, it was finalized between the CBRM and SHIP which consists of Barbusci and Canderel, the Montreal-based real estate developer. The “consortium” doesn’t include a shipper and it doesn’t include a terminal operator, despite the much-ballyhooed participation of Ports America.

Details of that Option and Development agreement have never been made public and according to our economic development manager, John Phalen, they won’t be made public until after the agreement is finalized — unless the lawyers they’re consulting tell them otherwise. And even though we don’t know exactly what’s in this agreement, Nova Scotia Municipal Affairs Minister (and Sydney-Whitney Pier MLA) Derek Mombourquette is busy paving the way for it to be exercised. He’s introduced amendments to the MGA that would permit the CBRM to sell or lease land at prices below market value, provide tax abatements and enter into 99-year leases.

But let’s pause for a quick think: if the CBRM is going to be granted the powers to sell public land at bargain prices and sign leases none of us will be alive to see the end of, shouldn’t it also be required to be more accountable and transparent in exercising these powers?

Why are we not attaching some strings to these new municipal abilities? Why don’t we say the details of any such deals cannot be subject to confidentiality agreements? Why don’t we say that such agreements may not be discussed in hotel rooms down the street from the council chambers but must always be discussed in public? Why don’t we talk about outlawing exorbitant municipal fees for access to information requests? Why don’t we ask for the pro-active release of public information?

Why are we simply handing these new powers over to government without any way of ensuring they are not abused?

 

Featured image: Transparency icon from the Electronic Frontier Foundation.




R-E-S-P-E-C-T: Find Out What It Means To Council

There were ructions at CBRM Council yesterday and I was there to witness some of them.

District 11 Councilor Kendra Coombes leaving in camera session, 12 December 2017.

District 11 Councilor Kendra Coombes leaving in camera session, 12 December 2017.

It all started at a 4:00PM in camera session, held under Section 22 (2) e of the Municipal Government Act (MGA) which allows municipal councils to go behind closed doors to discuss “contract negotiations.”

I know now — because I was able to piece it together from what happened during the public meeting that began at 6:00PM — that there was a contract under discussion. CBRM solicitor Demetri Kachafanas was to present to council on a “land purchase.” (I think it has to be the Nickerson property Council needs to buy or expropriate soon if construction of the second cruise ship berth is to begin on anything like schedule.) I know this because at the end of the regular meeting, Council went into an in camera session to discuss precisely this.

But also on the in camera agenda were a “Point of Privilege” and a “Point of Order,” both raised by Mayor Cecil Clarke, both targeting District 8 Councilor Amanda McDougall. How these qualify as “contract negotiations” is a puzzle — too much of a puzzle for District 11 Councillor Kendra Coombes, District 6 Councilor Ray Paruch, District 2 Councilor Earlene MacMullin and Councilor McDougall herself, who all left the meeting in protest (although they later returned.)

The group succeeded in forcing the item off the in camera agenda and onto the agenda of the public meeting. (We don’t know what the vote was, because it happened in camera, but at least three other Councilors must have supported the motion to move the discussion out of the shadows and into the light.)

Folks, the Spectator got it wrong — the point of privilege and point of order were not on the agenda of the in camera meeting. When District 11 Councilor Kendra Coombes exited the meeting, she was asked outright if these items were on the agenda and she said they were not. The Spectator managed to confuse the discussion about the reprimands with the discussion of the councilors’ decision to leave the meeting for which the Spectator apologizes — this is the Spectator‘s nightmare, in fact, getting things wrong!

Still, the fact remains that whatever was on that in camera agenda Tuesday, four councilors felt it did not fall under Section 22 (2) e of the MGA, which was the reason given for meeting in secret.

The rest of my story still stands.

 

Code of Conduct

Last night’s meeting was long, and by the time the last item on the regular agenda had been approved, I had all but forgotten about the “addendum,” but the Mayor had not. He went ahead with his “Point of Order” and “Point of Privilege.”

The gist was that Councilor McDougall should not have put her name to a letter-to-the-editor in the Post in support of funding for New Dawn’s proposed arts center, nor should she have given an interview to CTV Atlantic in which she complained of the secrecy surrounding the Sydney container terminal project.

I find the Mayor’s locutions hard to parse at the best of times, but his explanations for his points of order and privilege were especially challenging. If I understand correctly, he is accusing McDougall of breaching the Code of Conduct for Elected Municipal Officials by suggesting (in the letter) that refusing to fund New Dawn would be “reckless” and “defy logic” and run contrary to council’s mandate. Clarke claimed to have been deeply offended by the remarks on his own behalf and on behalf of her fellow councilors and said they ran contrary to the Code which calls on elected representatives to treat everyone with “dignity, understanding and respect and ensure their work environment is free from discrimination, bullying and harassment.”

He also accused her of breaching…something, I honestly do not know what…by commenting on the secrecy surrounding the port project and claiming to speak for other “unnamed councilors.” I couldn’t find anything in the Code of Conduct about this (and I couldn’t help but note that the Mayor himself had just spoken on behalf of other “unnamed councilors,” taking offense on their behalf).

During the discussion of his points, he basically took the opportunity to refute McDougall’s assertion (during the CTV interview) that the CBRM is not in the business of doing business, that it has hired port marketers for that purpose. He didn’t seem to be suggesting her comment was a breach of anything, just that he didn’t agree with it and wanted to announce that publicly. (Apparently, under the rules that govern CBRM meetings, the Mayor can participate in debates but should put someone else in the chair when he does so. Then again, I don’t even know if this qualified as a “debate.” These are deep procedural waters we’re navigating here.)

 

Point of order?

But it’s not just the content of the complaints that raises questions, it’s the form. The last time the Mayor raised a point of privilege and a point of order during a meeting, he was targeting Councilor Paruch for a joke Paruch had cracked at his expense during a municipal function.

CBRM Mayor Cecil Clarke, 12 December 2017.

CBRM Mayor Cecil Clarke, 12 December 2017.

At the time, I consulted two Professional Registered Parliamentarians (PRPs), people who advise on the finer points of parliamentary procedure and Robert’s Rules for a living, both of whom felt Mayor Clarke was misusing both the point of privilege and the point of order.

The first, Kim Goldsworthy of Robert’s Rules Consulting, listened to Clarke’s complaint against Paruch and said:

Since the speech in question is long past, it is improper to raise a Point of Order many days/weeks later. A Point of Order’s purpose is to make immediate correction of some error. Since the error was speech, and the speech is ended, there is nothing left to raise a Point of Order against.

Calgary-based PRP Robert James went even further:

[I]t is not the role of a chair to raise a Point of Order or to direct members to take certain actions. The assembly could have considered a motion to sanction or direct certain action by a member.

[I]t is very unusual for a chair to raise a matter or make a motion as a Point of Privilege…If conduct of a member should be addressed, a motion can be made to commence the investigation of the matter and if recommended take such further action as may be the will of the assembly.

In fact, the Code of Conduct for Elected Municipal Officials cited by Clarke states:

Persons who have reason to believe that this code has been breached in any way are encouraged to bring their concerns forward. No adverse action shall be taken against any Member or municipal employee who, acting in good faith, brings forward such information.

Any reported violation of the Code will be subject to investigation by the Council. Violation of this Code by a Member may constitute a cause for corrective action. If an investigation finds a Member has breached a provision of the Code, Council may impose corrective action commensurate with the nature and severity of the breach, which may include a formal warning or reprimand to the Member.

The process is a little vague (to whom should concerns be brought forward, exactly?) which may be why in its March 2017 report to Municipal Affairs (thank you for the reference, BigJMcC), the Joint Municipal Accountability and Transparency Committee recommended first, that the MGA be amended to require all municipalities to have a code of conduct, and second, that municipalities:

Develop a formal process for municipal council and staff to report complaints.

What the committee did not recommend was that “Municipal mayors be encouraged to hold in camera sessions to chastise councilors for their behavior.”

 

Secrecy

The only thing I could find in the Code of Conduct that seemed possibly applicable to the situation was this:

Respect for Decision-Making Process

All Members recognize the responsibility of the Mayor to accurately communicate the decisions of Council, even if they disagree with such decisions, such that respect for the decision-making processes of Council is fostered.

But that applies to decisions that have been made, not matters under consideration.

Moreover, I would suggest the best way to foster “respect for the decision-making processes of Council” would be to hold fewer in camera meetings and let the public watch the decision-making process.

McDougall’s criticism of the secrecy surrounding the port project came after the Mayor had returned from a trip to China that he had not announced publicly. A trip for which no itinerary or delegation list is available (I requested both from his spokesperson, Christina Lamey, who did not respond to my email. If she follows her usual pattern, her reply will land in my inbox an hour after I publish this, at which point I will update.) McDougall’s remarks came weeks after council had been presented with yet another port-related contract at the last minute, during an in camera session, and forced to approve it in days.

And look at the context of yesterday’s discussion: the Mayor attempted to raise his points of privilege and order in camera, hiding behind Section 22 (2) e of the MGA which obviously does not cover such matters.

If anyone is failing to respect “the decision-making processes of Council,” I would argue it’s the Mayor himself.

 

Happy ending

I was afraid the discussion would get ugly last night but council surprised me.

CBRM regular council meeting, 12 December 2017

CBRM regular council meeting, 12 December 2017

First, Councilor McDougall defended herself, saying questioning each other was part of their job as councilors — and questioning each other while maintaining good relations was their duty as professionals.

Then Councilors MacMullin, Coombes and Paruch came out strongly in support of McDougall. MacMullin seemed especially struck by the mayor’s decision to frame his complaints in terms of a lack of “respect” for council, pointing out that she had not felt respected during last December’s discussions of the extension of our port promoters’ contract (a subject I’ve actually written about elsewhere this week.)

Other Councilors who spoke dismissed the matter as a distraction. And given that some of them — like District 7 Councilor Ivan Doncaster — had been in meetings since 10:00 that morning, grappling with the seemingly endless stream of bad news about the CBRM’s financial situation, it’s hard not to agree with them.

One after another they announced that they respected each other and needed to work together. District 4 Councilor Steve Gillespie said he had not been offended by McDougall’s remarks and believed she was entitled to her opinion. Councilor Doncaster announced he agreed with Gillespie.

And Councilor Esmond (Blue) Marshall brought it all to a rousing conclusion by announcing they were acting like “babies” and it was time to get to work.

R-E-S-P-E-C-T.

 

 

 

 

 

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SHIP: Cheep No More

Whatever else our port promoters Sydney Harbour Investment Partners (SHIP) have been up to these past few months, they’ve finally cleaned up their internet presence. These quotes, for example, have been removed from their revamped web page:

They’ve also changed their logo. From this:

To this:

I could say more about this (oh, I could say so much more about this) but I won’t. That said, I advise you to stare at it for a bit and see what you see.

For those who are keeping track, since Barbusci and Sheehy launched their company in 2015, they have changed its name once (it started as Harbor Port Development Partners) and its logo three times.

 

Gmail

The outdated media contact information has been replaced by this:

Contact: Albert Barbusci
Chief Executive Officer
Sydney Harbour Investment Partners (S.H.I.P.)
abarbusci@gmail.com

I think the idea that a real mover and shaker in the international shipping world would make do with a gmail account is open to debate, but it’s a functioning gmail address, so I’m going to cut Barbusci some slack on it.

The “wordmark” of the government of Canada, which once appeared on the Novaporte home page, is gone, but its replacement — a maple leaf — seems to broadcast the same (erroneous) message that the Novaporte project is somehow connected to the government of Canada:

Click to enlarge

 

Leadership

Barbusci, SHIP’s CEO/Principal, has invested in a professional, non-blurry headshot and rewritten his bio to note that he is “a born entrepreneur” who is “expansive in his view of business opportunities, especially those of a global nature.” That said, the description of his business success still focuses pretty much exclusively on the advertising agency he founded in Montreal and sold to Japan’s Dentsu in the 1990s.

Barry Sheehy, also a principal, has pretty much the same bio he had before, except that “gamut” is now spelled correctly.

Canderel CEO Jonathan Wener has been added to the leadership team although he has no title other than “Chairman and CEO the Canderel Group.”

 

History

The site includes an article by regular Cape Breton Post contributor Rannie Gillis about the role played by Sydney during two world wars:

The strategic location of Sydney Harbour, at the entrance to the Gulf of St. Lawrence, means that whoever controls this port, which is one of the finest natural harbours in the world, also controls access to the St. Lawrence River, the industrial heartland of central Canada, and the important port-cities of Quebec City and Montreal.

It’s an interesting point to make on the website of a group that wants to give control of the port to the government of the People’s Republic of China. (The China Communications Construction Company is 63.8%-owned by China Communications Construction Group Limited, a state-owned enterprise wholly owned by the State Council of China.)

 

Partners

Engineering giant Bechtel and rail operator Genesee & Wyoming (G&W), both of which used to be listed as “partners” in the Novaporte project, have been dropped. Instead, according to the website:

Strategic partners including Ports America, China Communications Construction Company, Canderel, government partners and many private investors are propelling this project forward.

Further down the page, the authors get more chatty about their partners:

With its operator and design/build partners in place, NOVAPORTE™ has received support from former Prime Minister Jean Chretien who is the project’s international advisor. The project received endorsements from Canadian municipal, provincial and federal government officials, while funding for the construction part of the project is coming from both Canadian and offshore investors.

NOVAPORTE™ is also pleased to partner with a Canadian leader in engineering and environmental services, Stantec, along with ZPMC, the largest producer of cranes and maritime equipment in the world and Dentons, the largest law firm in the world with extensive networks across North America, Europe and Asia. AECOM is also associated with the project for port engineering services.

Most recently, Chiefs of Nova Scotia’s 13 Mi’kmaq communities announced they fully support the project.

ZPMC (Shanghai Zhenhua Heavy Industries Company Limited) is an arm of the China Communications Construction Company (CCCC) and Dentons is Chretien’s law firm. (We know the Port of Sydney has already paid Dentons for services rendered.)

As for Stantec and AECOM, I wrote to both to clarify the nature of their “partnerships” in the Novaporte project. AECOM has yet to respond but Stantec spokesperson Rachel Sa told me in an email:

[A]t this stage, Stantec is still finalizing our role in the project.

 

 

 

 

 

 

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Another SHIP Show at the Civic Centre

Okay, here’s what we’re going to do: you’re going to give me your cell phones and I’m going to lock you in this room and let you read this article. You can take notes, but I’m going to take them away from you when you’re done and burn them because this article is my intellectual property and there are commercial sensitivities involved. There will be a quiz at the end, and if you get anything wrong, I keep your cell phone and I get an option to buy your shoes. Why? Because I say so. Got it? Good. Now hand over the phone.

JUST KIDDING! Who do I think I am, right? The Mayor of the CBRM?

CBRM Council, 22 November 2017. (Spectator photo)

CBRM Council, 22 November 2017. (Spectator photo)

You can take all the time you like to read this article. I apologize right now for its length, but making sense of the latest shenanigans in the Cape Breton Regional Municipality (CBRM) is not for the faint of heart. As I said in the headline, it’s been a real SHIP — as in, Sydney Harbour Investment Partners, our port promoters — show.

 

In camera

It all started with one of those surprise, last minute, in camera Council meetings Mayor Cecil Clarke loves to call. Word went out last Tuesday there would be an in camera session about something related to the Port of Sydney on Thursday at 10 am. At that session, Council was treated almost as badly as I was threatening to treat you at the beginning of this article — they had their cell phones taken away, they had any notes they took as they attempted to come to grips with this something related to the Port destroyed,  they weren’t allowed to tell reporters what they were discussing.

After a second, in camera session on Monday November 20, Council came out into the open to vote on what turned out to be a matter related to the development of a container terminal on Sydney harbor. They would pass two motions at that meeting. Here’s the first one, which Council approved by a vote of 12 to 1. (Bless you, District 6 Councilor Ray Paruch, and your stubborn insistence on transparency):

That the Cape Breton Regional Municipality enter into an Option and Development Agreement with Sydney Harbour Investment Partners Inc. and that the Mayor and Clerk be directed and authorized to execute the Option and Development Agreement presented between the Cape Breton Regional Municipality and Sydney Harbour Investment Partners Inc., acting in its capacity as general partner for Sydney Harbour Investment Partners LP, that was presented to Council on November 20, 2017, and that the Mayor and Clerk be authorized to execute the Port Facility Lease and Agreement of Purchase and Sale contained in the Option and Development Agreement in accordance with the terms and conditions set out in the said Option and Development Agreement. That in the event a sale of the Port Site is required as a result of the inability of the Municipality to obtain consent to a 99 year lease agreement; that the lands be conveyed to SHIP by way of an Agreement of Purchase and Sale, which document shall contain all rights, conditions, benefits and protections in favour of the CBRM as exist in the Lease Agreement attached to and forming part of the Option and Development Agreement.

 

Option & Development

Before we attempt to break that down like a five-person tent in a thunderstorm, let’s listen to what the busiest lawyer in Sydney had to say about it. Jim Gogan introduced the agreement to Council by saying it was the product of over a year and a half of negotiation and…I’m afraid I’m going to have to stop him right there.

Negotiation of a development agreement was cited as a reason for granting SHIP (then Harbor Port Development Partners, HPDP) its initial, two-year exclusivity agreement in June 2015. Here’s Gogan himself in an Issue Paper he presented during the 16 June 2015 meeting of council:

The exclusivity agreement also contemplates the Development agreement…The Development agreement would be exercised when the project has fully materialized. The details for this agreement are subject to negotiation between CBRM and HPDP…

That’s two and a half years ago.

And even if actual negotiations began “only” 18 months ago, how does that jibe with the pressure Council was put under last December to extend that exclusivity agreement from two to five years? Pressure brought to bear months before the initial agreement actually expired? Council was told the signing of Ports America as a terminal operator meant the project had momentum, that things were progressing rapidly, that the iron was so exceedingly hot it simply had to be struck right at that very moment.

How do you go from that sort of urgency to, “Well, actually, our port marketers spent the next 11 months hammering out a deal with…the CBRM?”

The Stranger Things fans among you will know what I mean when I say that I left that meeting on Monday feeling like I was leaving the Upside Down.

 

Complex

Which brings me to my next gripe — the agreement was presented to Council on 16 November and they voted on it on 20 November. They had access to the documents they were supposed to be analyzing only at the Civic Centre. They were expected to master an agreement the Mayor himself described as “complex” in five days.

Would this be a good point to remind everyone that said deal took at least 18 months to negotiate?

Is time a luxury we allow only port developers and the Mayor of the CBRM?

 

SHIP LP

Note that SHIP Inc is now “acting in its capacity as general partner for Sydney Harbour Investment Partners LP.”

Sydney Harbour Investment Partners LP is a new entity. How new? Well, it was registered in Quebec on 31 October 2017 and as of today (November 22) it has not been registered in Nova Scotia.

Limited partnerships are a type of corporation often formed to carry out projects on timelines. They consist of a general partner — in this case, Sydney Harbour Investment Partners Inc — but can also have additional “limited” or “silent” partners who, in theory, invest money but have nothing to do with the management of the corporation. According to Quebec’s Registraire des entreprises, the other partners in SHIP are Albert Barbusci and Canderel Maritime Ventures Inc.

For the record, a “Commanditaire” is a limited partner while a “Commandité” is the general partner. As you can see, in this case, there is really no difference between the general partner and the limited partners — the general partner is a company made up of the two limited partners. I asked a Quebec lawyer who told me this is a standard setup intended to limit the individual liability of each partner.

Canderel Maritime Ventures Inc was founded in 2015, is majority owned by Canderel Management Inc and lists Canderel’s VP of finance, David Hawrysh, as its president and secretary.

To jog my memory, I looked up SHIP Inc again and found that its shareholders are Albert Barbusci and Canderel Maritime Ventures Inc. Barry Sheehy is listed as “Secretary” but not a shareholder. Barbusci is president.

The CBRM’s port development deal, then, is with Barbusci and Canderel.

Good to know, right?

 

Logistics

So, let’s look at that deal (or as much of it as we’re permitted to see).

The only detail provided to the public came from a letter from Richard Deslauriers of Pricewaterhouse Coopers (PwC). Deslauriers, a partner in PwC’s Montreal office, was retained by the CBRM to provide “independent” verification of the terms of the development agreement, because nobody is more independent than a paid consultant. (Added bonus: EVERYTHING about this deal is based in Montreal — SHIP, Barbusci, Canderel, Deslauriers…)

According to Deslauriers’ letter, which Gogan read aloud during the public portion of Monday’s meeting:

To facilitate SHIP’s development of the project, CBRM and SHIP negotiated an Option and Development Agreement, whereby CBRM grants SHIP certain, specific items. These include:

The option to lease lands comprising an area of approximately 431 acres located in Edwardsville for the purpose of developing a wharf and a container terminal. This is referred to as the PORT SITE.

The option to purchase the freehold title to lands comprising an area of approximately 1,000 acres for the purpose of developing a multi-tenant logistics site. This is the LOGISTICS SITE.

Let’s compare what Deslauriers says is in this development agreement with what Gogan told Council would have to be in it in an Issue Paper he presented to them in December 2016. He was pushing Council to extend HPDP’s exclusivity agreement (which he wrongly dated to 2014 in his document) by five years. Among other things, he argued the extension was needed to give HPDP time to “develop a final consortium agreement as well as a final sale/lease and development agreement with the CBRM.” (In other words, the same argument he’d made for the initial exclusivity agreement a year earlier.)

In that final sale/lease and development agreement, he told Council, it would be “key” that:

HPDP be given the option to lease the properties known as the Sydport Greenfield Site and the backlands for a period of 99 Years or to purchase the property for $10 million which is equivalent to the purchase and other associated costs in the acquisition of these properties.

What is the difference? Well, as far as I can see, it’s that now, even if by some miracle of the Lord Jesus the province gives the CBRM a charter and it can enter into a 99-year lease, when the deal is executed, SHIP will be given the option to buy the 1,000 acres designated as the LOGISTICS SITE. I think this is what Councilor Paruch was getting at when he said they’d locked themselves into a deal where they would lose control of a public asset.

I understand, of course, that signing a 99-year lease for a public asset is almost the same as selling it outright but it’s not quite the same and the distinction clearly mattered enough to someone that the “buy” option was built into the agreement.

And let’s remember — the 1,000 acre logistics park (I still can’t bring myself to say “Novazone”) is Canderel’s baby. Their role in this deal is to develop the park. And Deslauriers’ letter says something odd about the park. After noting that the “proposed transaction” will allow the CBRM to recoup its investment in the greenfield site and collect taxes for services it provides the Port Site and the Logistics Site (seriously? It took 18 months of negotiation to make sure the CBRM broke even on the deal and got paid for providing municipal services? I wonder what SHIP’s opening offer was?) he adds that it will:

Incite SHIP to develop the Project quickly, in particular the Logistics Site where most jobs are likely to be created, without taking on any risk by making investments itself.

How is SHIP being “incited” to develop the project quickly and why the focus on the Logistics Site? And then there’s this:

The Proposed Transaction also recognizes the need to create a competitive environment that will contribute to SHIP’s ability to successfully develop the Project.

What do you suppose that means?

 

Motion Two

The second motion passed by Council (by the same 12-1 vote on Monday) provides a little more information:

Lump Sum Payment:

When the option agreement is exercised with Sydney Harbour Investment Partners Inc. in relation to the Port Site, the payment of $10,000,000 will be held in reserve and will be used in lieu of borrowing for capital purposes until the reserve is depleted. The equivalent borrowing amount shall not be increased as a result of this reserve which will result in an accelerated debt repayment and resulting in increased available operating funds.

CBRM CAO Marie Walsh told me that while the motion only mentions the Port Site, that $10 million price applies to the “overall agreement,” meaning the Port Site and the Logistics Site.

It will be paid up front regardless if it is a lease or sale. We will use it in lieu of borrowing which will accelerate the debt repayment and thereby increase available operating [funds]. We would have put it directly on the debt however we would be penalized heavily from Municipal Finance for early payment.

In that 2015 presentation to Council, Gogan said the development agreement “contemplates three areas of compensation for CBRM.” He then listed them as:

A) A lump sum payment to CBRM
B) An annual lease payment payable to CBRM
C) A royalty based annual revenue [sic] stream based on traffic at the Port

I asked Walsh who told me that the $10 million will either be the sale price of the land or the 99-year lease price (that works out to about $100,000 a year for the 1,500 acres). As for the royalty, she said:

[T]here have been additional amounts negotiated which will reflect the Project’s success.

Those “additional amounts” were not discussed during the public portion of the meeting and as we are not allowed to see the contract, we have no idea what they are.

 

Execute…when?

So when does this Option and Development Agreement kick in?

That is spelled out in the “HPDP’s duties” section of the exclusivity agreement signed in 2015:

 

The first thing that strikes me is that this development agreement was to have been finalized between the CBRM, HPDP and the “strategic partners” (plural) that would “form the basis of the commencement of the project.” It says at the outset HPDP was to assemble a “consortium of equity investors, and other necessary entities which would be required to initiate the construction of a container terminal, leading to the eventual operation of the container terminal.”

But this development agreement is between the CBRM and Sydney Harbor Investment Partners LP which is made up of Barbusci and Canderel. SHIP assembled a consortium of two, neither of which is a port operator or a shipping line. One of which (Canderel) came on board specifically to build the logistics park. There is no entity in this consortium charged with building a container terminal.

And if Ports America is on board to operate the terminal, why was Ports America not mentioned in the agreement? Back in 2016, when Gogan was telling council what would have to be in the development agreement, item two was:

Ports America will obtain reasonable tax concessions, tax abatements or incentives to make the Port of Sydney a viable port in the international market. These concessions may come in part from all three levels of government. The CBRM’s ability to provide tax concessions or abatements will need to come from the provincial government.

Gogan adds:

CBRM have drafted these powers in the initial draft of a CBRM charter.

Sydney-Whitney Pier MLA and Minister of Municipal Affairs Derek Mombourquette and Glace Bay MLA and Minister of Business Geoff MacLellan attended Monday’s in camera meeting. Mombourquette remained to address the open session. Remarks by various Councilors made it clear the two ministers spoke, in secret, to Council only, about the CBRM Charter.

Why this would be a subject for an in camera meeting puzzles me. Surely any discussion of a municipal charter between our elected municipal representatives and our elected provincial representatives should be a matter of public record? And yet, it was not.

No concessions for Ports America were discussed during the meeting, nor were they mentioned in Deslauriers’ letter (unless that’s what the rather cryptic line, “The Proposed Transaction also recognizes the need to create a competitive environment that will contribute to SHIP’s ability to successfully develop the Project,” refers to.)

In fact, Ports America wasn’t mentioned at all.

 

Christmas surprise?

The second thing that strikes me about those conditions that will trigger the Option and Development Agreement is that “identifying a viable scheme for the operation of an international container terminal” doesn’t sound like “securing a terminal operator and shipping line” to me, but surely that is what it must mean, right?

Delivering construction costs shouldn’t be that difficult — wasn’t the Chinese Communications Construction Company working on that? (Whatever happened to those guys? Did anyone ever see their report?)

And the last piece, agreeing the financial return of the CBRM, seems to be what they’ve been working on for the past 18 months.

Are they about to announce SHIP has met all the conditions necessary to trigger the Option and Development Agreement? The Mayor hinted that there could be an announcement by Christmas — but he also admitted, at the end of the meeting, that no shipping line has been secured. Can he possibly be suggesting a group that took 18 months to negotiate a deal with the CBRM is going to lock down an international shipping line in a matter of weeks? Or is he hinting that he’s ready to pretend SHIP has done what it promised to do and take their $10 million? What if the conditions necessary to trigger execution of the deal have changed? They could have, we wouldn’t know, we aren’t allowed to see the agreement.

 

Taxpayer vs Citizen

CAO Walsh made a point of stating during the meeting that protecting the interests of CBRM taxpayers had been their main goal during the negotiations with SHIP.

In the process, however, they trampled all over the rights of citizens.

Jim Gogan actually stood before Council on Monday and extolled the virtues of the “process” by which they had chosen an “independent third party” to “verify” the Option & Development deal for council’s benefit — meaning, they called for bids from consultants, they read them, they chose a winner.

Most people would not find that process so very wonderful, but you have to view it in the context of Sydney’s port development. Remember, we tapped a federal bureaucrat with no relevant experience to head our Port at a salary of $200,000 a year. We hired an amateur historian and a former advertising executive to market our port because one of them approached the Mayor at a budget consultation session and gave him a pitch about the Great Circle Route. We hired a young man with a three-week “Port Executive Certification” course under his belt to head business development. We appointed an interim board made up of elected officials and let them preside over the port corporation for two years.

Really, it is starting to seem rather wonderful that in this one, small port-related thing the CBRM did follow something resembling a “process.”

But it doesn’t make up for forcing a complicated financial deal through Council in too short a time, hiding the details from the public, privileging “commercial sensitivities” over the citizens’ right to know, meeting in secret, allowing Jim Gogan to represent both the CBRM and SHIP (which, let’s face it, is what he’s doing — otherwise, wouldn’t SHIP have wanted a representative at those meetings?) and inviting provincial ministers (who happen to be local MLAs) to address you in secret about public matters (the CBRM charter).

Our Mayor has most of our Councilors so cowed, they seem to be suffering from some form of Stockholm Syndrome: “Yes, he locked me in a room and took my cell phone away and tried to make me vote on a deal I’d barely had time to read but he let me ask questions of the CBRM staff and they were so nice about answering them.”

What kind of municipal leader treats his fellow elected representatives and staff like that? On what planet does it make sense to spend 18 months negotiating a deal and then allow an elected body only five days to read it, digest it and vote on it?

Planet CBRM, apparently, where, with the exception of Councilor Paruch, everyone accepted this behavior.

And for their pains, they were thanked, by the Mayor, in open session, for their “blind faith” in him.

You couldn’t make this stuff up.

Watch that 1,500-acre space.

 

 

 

 

 

 

 

 

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Shanghai to New York via Northwest Passage?

Xinhua, the official Chinese state news agency, says a recently completed voyage through the Northwest Passage by a Chinese scientific icebreaker was actually a fact-gathering mission on behalf of its commercial shipping industry.

As reported in the Globe and Mail, the news agency said the Xuelong (or Snow Dragon), which completed its 85-day voyage on September 6, “accumulated a wealth of experience for Chinese ships going through the Northwest Passage in the future.”

The Chinese icebreaker Xuelong (Snow Dragon), in Shanghai after an 85-day scientific quest across the Arctic ocean. (Source: Xinhua News Agency)

The Chinese icebreaker Xuelong (Snow Dragon), in Shanghai after an 85-day scientific quest across the Arctic ocean. (Source: Xinhua News Agency)

The story caught my eye because the Northwest Passage has figured in the dreams of our own port “developers,” Albert Barbusci and Barry Sheehy, also known as Sydney Harbour Investment Partners (SHIP).

Here’s Sheehy in the Chronicle Herald in 2014:

Sydney has one of the finest, most strategically located harbours in the world. It is close to the St. Lawrence Seaway, the developing Northwest Passage and is the first stop on the great circle route from Europe or Suez.

Not only did Barbusci and Sheehy tout our proximity to the “developing Northwest Passage,” they also made much of China’s interest in our port. In fact, the Chinese Communications Construction Company (CCCC) was going to build an ultra-modern mega container terminal in our port, although lately it seems like they haven’t been returning our calls.

What a shock it must have been to Sheehy and Barbusci to read the Chinese news agency’s triumphant report on the voyage of the Snow Dragon (which sounds like a CS Lewis novel):

It opened up a new sea lane for China. From Shanghai to New York, the traditional route that passes through the Panama Canal is 10,500 nautical miles, while the route that passes through the Northwest Passage is 8,600 nautical miles, which saves 7 days of time.

Shanghai to New York? And presumably, on the return trip, New York to Shanghai? But…what about Sydney?

The G&M story focuses more on questions of Arctic sovereignty and the environmental dilemma presented by the prospect of monster container ships plying the Northwest Passage — as well it should.

But it also adds one more little inconvenient truth to the growing pile suggesting the dream of Sydney as an international mega container ship hub may be just that.

Featured image: The icebreaker Snow Dragon was the first Chinese vessel to sail the Northern Sea Route. (Photo: Sinoshipnews.com)

 

 

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