Island Ferries says its has to renegotiate its lease with the City of Nanaimo, as the company is no longer able to meet its March startup deadline.
Island Ferries' passenger service will sail past a March 31 deadline laid out in its lease agreement with the City of Nanaimo, according to David Marshall, director of marine operations, who says it’s taking longer than anticipated to get federal dollars.
Island Ferries signed a 20-year lease with the City of Nanaimo last July to dock two catamarans at the south industrial waterfront. The agreement was considered a big piece of the puzzle for a new $63-million passenger ferry service, allowing the company to focus virtually exclusively on getting money needed for the venture. It's been searching for final investment since October 2013 and applied for the federal New Building Canada Fund last year.
“At the time that we signed [the lease] we had reasonable expectation I think that we would close. It’s just taking us longer to do that,” said Marshall. “I don’t think it’s going to be any surprise to the city at all that we need to go back and look at the lease.”
Nanaimo Mayor Bill McKay said he's surprised it's taking so long to go through the New Canada Building Fund process and says the city doesn't want the company to default on its lease.
“We want to work with them, not against them,” he said, adding he is in talks with Island Ferries about traveling to Ottawa to explain the project to federal government. Even without the grant dollars, the mayor said the city will stand side-by-side with the company in its quest for investment.
“We'd really like to see this project go. We believe it's a huge economic driver,” McKay said.
Marshall would not comment on what a realistic change to the start-up deadline would be, pointing out that timing depends on government, but said they will look at the lease and see what's in the best interest of both parties.
He also pointed out that the company has continuously stated it'll be ready to begin its ferry service six months after a financial close, which hasn't happened.
“The situation that we have is we are trying to raise significant amount of private sector equity, so money that's going to be at risk to go up against, among others, a government-owned monopoly. That is a challenging undertaking at the best of times,” Marshall said.