Tuesday, October 22, 2013

Downtown Nanaimo Passenger Ferry Proposal

Some 'First' Thoughts about the IFSL Proposal

At the committee of the whole council meeting representative for Island Ferry Services Ltd. made their first 'pitch' before an open council.

If I understood correctly, the company is in a position of needing a commitment from the City for a long term lease for their ferry passenger terminal to enable them to lock in their final financial component. They also need to be able to park 360 cars.

They are proposing an interim terminal on the GADD property and leasing the parking space from CP Rail for at least two years. When space becomes available on the Wellcox property site, which is dependent upon Seaspan vacating, they wish to move their terminal to the space currently used by Seaspan and their tractor trailer yard.

Crunching the Numbers

The proposed partnering agreement would see the city get a $60,000/yr lease from IFSL, they would also receive a $0.25/passenger tax and share in 50% of net parking revenue when parking on city owned land.

To help grow the ferry service the city would agree to forgive $125,000/quarter or $500,000/yr. for the first five years with the proviso the ferry company would bank any difference if revenue of $125,000/quarter did not materialize.

The following is based on the ferry operating from the interim site and using CP Rail land for a parking lot (meaning the city does not share this parking revenue), it also presumes each of the 2190 sailings are full to capacity which is the basis for tax revenue projections.

375 passengers/sailing X 547 trips/quarter X $0.25 = $51,281.25 maximum tax revenue per quarter

$60,000/yr. lease produces $15,000/quarter rental to City

$51,281.25 + $15,000 = $66,281.25/quarter maximum possible revenue per quarter

City guarantees $125,000/quarter less $66,281.25 = $58,719.00  banked/quarter.

This means that during the interim ferry terminal phase the ferry operators would be accumulating $234,876/year to be forgiven in the period following the five year incubation period.

360 Car Parking Lot

Perhaps the first concern with this proposed offer, is the amount of potential space the company would wish to occupy on the site for a parking lot. The Wellcox property consists of some pretty high-end waterfront. Turning that kind of land into a parking lot, is hardly the best use of this property.

It will be interesting to see how this offer dovetails with the work being done by the South Downtown Waterfront Committee as this ferry service is likely the single biggest economic opportunity to come our way, in a long, long time.


1 comment:

  1. Give them whatever they want. We need this service and I am fine with using my tax dollars to assist them during their initial growth period.


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