City land and the shipyards

Point Hope Shipyards has been anchored alongside Victoria’s Johnson St. Bridge for 130 years.  It’s not going anywhere else.  The current owner is pretty firm on that – he knows that the site is perfect for his business and the most sensible for the ship repair industry that has been part of the city’s maritime economy for much of its history.

The property itself is under city ownership, and leased to shipyard owners and operators, an arrangement that has the comfort of the familiar, even if a new proposal to sell the property outright makes more sense for both the shipyard and the city.

For the shipyard, ownership provides security of tenure and options to develop the site most effectively to support a growing business.  It would give them clear title on which to build the improvements they plan to sustain the next half century of operations.  They’ve been good stewards of the property and have earned the experience necessary to managing a piece of property that the city would do well to dispose of.  They’re well versed in managing the industrial impacts of their operations and in containing, if not remediating the accumulated contamination on site.

For the city, and understand that cities are in the development business, not the real estate business, it would transfer an asset into capable hands and excuse city hall and our citizens of the responsibility of managing the liabilities associated with a parcel of industrial property that for all intents and purposes has no other viable use.  Victoria values its working harbour and city planning documents are consistent in wanting to protect the shipyard and a shrinking marine industrial land base that has still helped to keep the local economy afloat.  It brings good jobs to a city well suited to the business of ship building, maintenance and repair.

The prospects for that model are very good.  Point Hope is planning a graving dock that will allow larger vessels and more complex projects to add value to their business.  New federal shipbuilding contracts are taking shape and the facility needs to be ready to take advantage of not just the capital projects, but more so the ongoing repairs and maintenance a new fleet will require.  The impact will be well beyond the 200 plus new jobs the shipyard expects to create. 

As a property owner, Victoria has been in the unusual, if not problematic role of being both landlord and regulator that creates enough headaches on its own.   The city has more than enough to do managing aging infrastructure, growing program responsibilities and increasingly diverse services along with the complex business of city building.  It’s just not part of our core business to act as superintendent of an industrial property that has no foreseeable future as anything but a shipyard – and we should be celebrating that, not chasing the illusion of a more profitable use or windfall profits if we just wait long enough.

To be sure the city needs to, secure a good return for the sale of the property.  The proceeds will come in current dollars and though some may imagine winning the lottery associated with another 30 years or so of speculation, that scenario would sell the city short.   A contaminated site is not going to be well used as a park or converted to another luxury condo development for absentee owners.  That would require costly and risky remediation that is better left to those with the experience, or a better strategy to contain the site and keep it operating as intended. 

Better value and better returns are there to be had as the shipyard takes advantage of the security of ownership and invests in improvements that will not only generate a desirable and sustainable marine industrial economy, but also significant increases in assessed values and tax returns for a city that needs new revenue sources, not more strategies for nickel and dime cuts to jobs and services.

Victoria needs to be careful managers of property portfolios and hang on to those pieces that are essential to our core business.  But even with some of our new responsibilities, like housing, Victoria has been quick to transfer ownership and management of properties purchased to agencies that are in the housing business.  The same needs to be done with the shipyard, where the ideology of ownership is like an anchor in the sand just when we need to set sail on a new course to a more sensible and sustainable economic future.