Tuesday, May 22, 2012

Shipyard needs to weather strong winds.

The last couple of weeks had me working on another transportation project, so I left the blog alone for a spell.

That latest back and forth on Facebook though, on the Point Hope shipyard issue lately inflaming debate at city hall and out in the public realm, needed more than just a twitter length rejoinder.

Two questions were raised in particular than need further exploration.  One was the notion that the shipyard wasn’t under threat so there is no need to rush to decide on land ownership or management issues.  The other was around Dockside Green and the city’s haste in approving a residential development so close to a busy industrial site.

First to the issues around the shipyard and land ownership.  Ironically, Councillors Isitt and Gudgeon have done a good job of demonstrating exactly why ownership is a better option for Point Hope than a long term lease arrangement.  Their efforts to politicize the decision already poses a threat to a good business plan and 200 plus new jobs.

Here’s a shipyard that’s been on the same site for 130 years and working on a strategy to take it through the next several decades.  With the potential of significant growth in contract work and the jobs that come with it, a measure of security and some freedom to manage the property to meet their needs is now more immediate than it perhaps has ever been. 

That addresses somewhat the question of why now.  For the past several years Pont Hope has been working with the city to gain approvals for new and different buildings on their site, initially to enclose painting operations (something which speaks to the neighbourhood issues as well), but also to expand their marine railway operations to allow more vessels in the yard at any given time.  Federal shipbuilding contracts that Point Hope will get a piece of in the near term, and the ongoing maintenance and repairs that will follow, are a game changer.  That new work, and the extent to which it provides an opportunity for a much more diverse and robust marine industrial operation wasn’t there when the last council took office, and discussions on the nature of the relationship between the city and the shipyard go back easily that far and probably a lot longer.

The city’s willingness to consider a right of first refusal, which is basically as far as the process has advanced, is now cause for political gamesmanship which turns the shipyard into a political football more so than a cornerstone of a vibrant local economy.  For their business, the very real threat of a city captured by politicians with a different agenda in play, and perhaps changing every three years for the next several decades, is not a strong foundation for long term planning.  For the banks they need to borrow from, that uncertainty elevates the risk of any investment.

One of the important questions raised at the recent public form asked “is this property surplus to the city’s needs”.  I suppose one could imagine that a piece of land, created with fill over the city’s history, and saturated with all sorts of contaminants, and operating for more than a century as a shipyard (and operators will tell you that no other location in the region is so uniquely suited to support the kind of shipyard we have here), might have another use 35 or 40 years down the road, or next week or next month, depending on the flavour of the day.  Most anyone with a practical appreciation of the history of the shipyard, the city’s marine economy, and a better understanding of the role of cities in community building and economic development would, I think, find no better fit for the shipyard properties, at the very least.

Alternate uses proposed at the forum were not particularly helpful in understanding either the potential of the lands, or the needs of the city. 

Housing is not a feasible land use where potential clean-up costs could run into the millions.  The city, especially if it were to lose the significant tax revenue associated with the shipyard, is in no position to finance those costs, let alone carry the possible tax free status that would be assumed for an affordable housing development on the site.  There are better models, and the city has pursued some of those already.

Health issues prevent the use of contaminated land for housing, at least at ground floor levels, and the prospect of further economically viable uses at the site are wishful thinking at best.  Dockside Green, with plenty of commercial space planned, is far from building out, and nearby at Bayside and the Roundhouse, the other, more sympathetic ground floor commercial uses that may be attached to those developments are also some years away from realization.

Parks, greenspace and pathways were also suggested, and similar to the other issues associated with housing etc., the land in question is zoned for industrial use and is protected by a number of city plans, backed up by democratic process too, that are now under attack by new councillors with a sudden interest in other ideas.  So much for the sound planning foundation so important to some critics of the proposed sale. 

Parks, by the way, will already see a significant increase in inventory where the “S” curve approaching the old bridge is set to disappear.  It responded to community desires, protects a more sympathetic piece of property along the waterfront, but it too needs to be balanced against the city’s other needs, and one of those is a robust and diverse economy to support the city’s services, operations and other assets.  Victoria is not, and cannot afford to become a resort community.  We should be doing what we can to help make sure we protect the shipyard and the jobs it brings to the city.

Leasing the property, as proposed by some, suggests a management regime that is clearly very problematic for the shipyard owners.  Councillors using the issue for political purposes would love nothing more than to hold onto the property, for ideological reasons, and thus perhaps ensure that city ownership could be used as leverage over any current or potential tenant to advance a more political agenda – hardly a solid foundation on which to build a long term business plan.

The city has not, by the way, sold anything yet.  It has negotiated an option for the shipyard to purchase (a public process) and make a more sensible arrangement to support a business that has been on the same site for more than a century.  It relieves the city of any risk associated with contaminated site clean-up costs and the conflict of being both regulator and landlord.  For the shipyard and any of the banks they need support from to fund the $60 million graving dock expansion, financing will likely be more difficult for four parcels of leasehold property subject to changing political whims than one parcel of fee simple land (and already zoned for the proposed use).

I think the way forward should be pretty clear.  The city is not in the land speculation business – it is in the community building and development business.  It uses its assets and resources to support a vibrant, local economy among many other responsibilities.  The timing is right, the exchange will happen at market values, the use is the right fit and for those that believe history only began after the last election, the property is already governed by the community plans, harbour plans, and economic development plans endorsed by successive generations of community leaders and council.

I’ll encourage my council to support the more sensible and practical approach a majority have already voted for.  It’s not just an academic discussion but a very real challenge to the more than 200 new jobs that a working, and growing, shipyard business can bring to the city.

Next blog:  Dockside Green.


  1. The Point Hope land issue is even more complicated than whether or not the city should sell or lease the land. My understanding is that the city has decided to use some of the land that it leased to Point Hope as a lay down area for the construction of the Johnson Street Bridge. As a result, this is affecting any plans for Point Hope to expand.

  2. City use of the land is temporary and it is an issue. As long as the bridge project proceeds apace, (and schedules resist more stalls at council), then shipyard planning can proceed. Given the long term outlook encompassed in the acquisition and business plan, it should be manageable.

  3. What I heard was that if a solution isn't found soon, the expansion of Point Hope will be delayed for up to two years and there may be some lay offs. There is much consternation in the ship yard.

  4. Sure hope it gets sorted out as soon as possible. It's a challenging situation where so many competing priorities need to be sorted out in a collaborative partnership with many stakeholders and with so many projects to be sorted out.