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Foot ferry inks land deal with City of Nanaimo

NANAIMO – City is moving forward with a 20-year land lease agreement after rejecting partnership deal.

Nanaimo city council rejected a financial partnership with a new passenger ferry service in favour of a straightforward land lease, according to Mayor John Ruttan.

The City of Nanaimo announced this week it agreed in principle to ink a 20-year land lease agreement with Island Ferries. The agreement would allow the company to dock its two catamarans at the city-owned Gadd Marine site on the south industrial waterfront for $60,000 a year, while the municipality would be required to service the property to the tune of $125,000.

It’s not the original proposal Island Ferries once pitched to launch its $63-million venture, but both parties say they are pleased with the result.

David Marshall, director of marine operations for Island Ferries, said his company won the long-term commitment and lease it wanted and doesn’t have to share profits with the municipality as it originally offered to do.

As part of the partnership proposal Island Ferries sought last year, the company wanted a 20-year lease, site servicing and a revenue-sharing arrangement that would eventually see Nanaimo pull in $700,000 annually from passenger and parking fees. In the first five years of the company’s start up, the city would get slightly less than one-third of the revenue to allow Island Ferries to incubate.

Ruttan said Nanaimo city council considered profit-sharing, but it became cumbersome with some suggestions the city could underwrite a portion of the expenses. Council members were also concerned about liability.

The preference was to be a landlord, he said, adding the city could still support what’s believed to be a “huge economic generator” for the Harbour City and collect income on a property that currently generates nothing.

“It’d be nice to have profit sharing, but you are not going to enter into an agreement to take part of the profit unless you are willing to take part of the risk and council chose not to get involved in the risk factor,” Ruttan said.

“I think it’s a lot cleaner, a lot more straight forward as simply a rent situation.”

While the details of the deal have not been finalized, Island Ferries calls the agreement in principle and its framework a key part of allowing the venture to weigh anchor.

It proposes a long-term commitment, with two renewable 20-year terms, and allows the company to keep its revenue.

The whole of the deal has changed “with some things coming in and some things coming out,” Marshall said.

While the company’s initial  proposal seemed like the right way to go at the time, “we’ve landed in a better place,” he said.  “We know we have a long-term lease, we know we have a home from which to operate [and] the length of the tenure will be, if not attractive, it will certainly to investors eliminate any concerns they might have had.”

Ruttan said he also feels “pretty good” about the arrangement, which seems like an expedient way to move the ferry business ahead and won’t put the city out “all that much” if something does happen to the service.

Island Ferries, a company that plans to shuttle  passengers between downtown Nanaimo and downtown Vancouver, is now working on final investment and securing a licence with Translink for the Seabus Terminal near Canada Place. Service can start up six months after investment contracts are signed and while the company is still working on  final arrangements, the plan is to start in fall 2014.