LaSalle Park Marina’s expansion risky business
With declining revenues and perhaps less demand, this plan will need some work
The most controversial report on the last round of Burlington’s committee meetings wasn’t even discussed. Before the meeting, it was deferred, likely until September.
LaSalle Park Marina Association (LPMA), a nonprofit organization created in 1981, operates a marina of 219 slips, and is protected by a floating wave break.
Strong storms in recent years have been causing damage to boats, leading to a decision to construct a permanent wave break. To fund it, LPMA says it needs to expand from 219 to 340 slips.
In May it asked council to send a letter of support for their $14 million project (including 30 per cent contingency) to the federal and provincial governments, hoping for $4 million each in grants from Ottawa and the province, and a $4M Infrastructure loan from Ontario.
At that meeting, LPMA asked for and received a city Joint Venture Loan to replace 60 finger docks. It had already secured a $109,000 federal infrastructure grant toward the cost, and needed $250,000, which they will repay at 2.25 per cent over 10 years — $29,197 annually.
The expansion is contentious. There were objections from Burlington Green and the Trumpeter Swan Coalition over the welfare of wintering endangered swans, water quality impairment, and construction length — about three years, off-season for boating. That means swans could be affected. Boaters worried about storm damage and insurance availability and cost. A boater told me the Burlington side of the bay suffers worse from storms than Hamilton marinas. Is that accurate?
Subsequently a boater wrote that he has been unable to sell his slip, bought years ago, asking where’s the market for the new ones? Relaying that information elicited the most insulting email I have received in my years as a Spec columnist, from Councillor Rick Craven. I offered to reproduce his criticisms verbatim, but he declined.
All councillors except Marianne Meed Ward had voted to send a supportive letter. She wanted assurance from the finance department first that taxpayers would be protected if LPMA were to default. John Taylor supported the letter, saying he would not support expansion if it put taxpayers at risk. Well, it does. LPMA provided a business plan, but when it requested the letter, Finance had not had enough time to assess it. If there’s a department in City Hall that excels on all levels — budget preparation and tracking, accounting, and investing — it’s Finance. Its report for the July 11 meeting was withdrawn. LaSalle questioned it. It will be back later, along with a discussion on overall funding policies.
Based on that report, no responsible councillor could support the expansion. Finance reviewed LPMA’s 2011 to 2015 statements, which show steadily declining revenues, with general/administration cost at about 30 per cent of revenues.
The business plan projects much higher revenues, but omits several key expenses, including life cycle costs. It’s unknown yet whether icing will be a problem in the confined area.
Too many unknowns, with no contingency in the operating budget for any, and debt repayment would cost about 50 per cent of revenues for 25 years.
LPMA apparently does not qualify for an Infrastructure Ontario loan. It is counting on $9.4 million in grants, and would need a city Joint Venture ( JV) loan of $4.6 million. But JV loans require 10 per cent down of the total project cost — $14 million, meaning $1.4 million down — also excluded, and must be repaid in 10 years. They need 25 years. Finance warned that this amount could affect the city’s borrowing capacity.
Another issue is cash flow. Generally senior government grants are paid upon proof of “significant project completion”. That means the city would have to advance cash flow. Finance estimates the cost of lost interest on the $9.4 million for the city to do this at about $140,000 — essentially a “taxpayer contribution”.
Excluded, too, is the cost of detailed design, (about $350,000). LPMA has $356,372 in a fund for a new wave break replacement. Design costs would deplete it.
This will be an interesting discussion when the report comes back.