When it comes to marine industrial properties, the City of Victoria makes a good regulator, but is less well-suited to being a landlord, says Ian Maxwell, president and CEO of Ralmax Group of Companies.
“They don’t have the ability to accept any risk as a landlord,” he said. “That’s why the properties don’t get the investment they would if they were privately owned.”
It’s for this reason he proposed buying the industrial land that he currently leases from the city along Harbour Road in Vic West. As Maxwell moves forward with a $60-million expansion of his business, he’s looking for greater certainty and control over his investment.
For instance, if he discovers contaminated soil during construction, the city, as landlord, would be on the hook for any environmental remediation, he said. If the city doesn’t have the money in its budget, the project could stall.
“By purchasing land … we can manage the risk,” he said.
It’s been nine years since Maxwell bought the bankrupt Point Hope Shipyards and signed a lease for the city’s three lots that expires in 2045.
He’s since added United Engineering and other companies and grown it into a business employing 175 people. His goal is to double that number, but moving forward first requires a resolution with the city over one final piece of property: 203 Harbour Road, adjacent to the Johnson Street Bridge.
In February 2012, Maxwell exercised an option to lease the lot from the city after several years of negotiations and one year of planning at an expense of $1 million. Existing tenants on the lot began relocating last year as their leases expired: Carmanah Technologies moved to Bay Street in September, and the Sail and Life Training Society plans to move out this summer.
Maxwell’s development, however, has hit a bump.
As the city refined its plans to replace the Johnson Street bridge, it realized it needed some of the land included in the lease option during the bridge’s construction. The discovery reopened the discussions over property boundaries.
The city needs more land to build a proper, landscaped slope and to maintain adequate sightlines from the intersection at Harbour Road, said Dwayne Kalynchuk, Victoria’s director of engineering and public works.
Contaminated soil found during construction is another factor. To keep the costs of the project reasonable, the city needs to store contaminated soil onsite rather than haul it away.
“It’s quite a cost to take that material over to the mainland to be treated,” Kalynchuk said.
The city is now working to see how it can lessen its encroachment into Lot 203 by building retaining walls or other design alterations.
“We should have the answer to that in probably the next week or two,” Kalynchuk said.
Maxwell hasn’t agreed to all of the requested boundary adjustments, but is determined to work co-operatively with the city to find solutions.
“Ralmax agreed to back off because the complexities of two major projects going on at the same time … almost guaranteed to create construction conflict,” said Maxwell.
The changes required him to rejig his plans. For instance, a building planned for the southern lot may now end up on the north end of the property or be relocated offsite.
Extensions to the graving docks are on hold for now.
“We’re going to wait till they finish building the bridge and then we’ll relook at it and (ask) ‘is the economic justification still there?'” he said. “I suspect it will be.”
Last week city council agreed to consider Maxwell’s offer to purchase the land.
“I am in favour of entertaining an offer,” said Coun. Lisa Helps, liaison for the Vic West neighbourhood. “The city has spent an amazing amount of time, and therefore money, being a landlord to Point Hope.”
It’s an important industry to support, she added.
“We want family sustaining jobs and we want and need key stakeholders in the local economy that have assurance of long-term stability of their operations.”
Not everyone on council, however, agrees and the issue has sparked public debate about city policies surrounding divestiture of public land.
Once Maxwell submits an offer, both council and the public will have an opportunity to debate its merits, before accepting or rejecting it. Regardless of the outcome, Maxwell plans to continue with his expansion.
“This isn’t a take it or leave it kind of thing,” he said. “This is (about finding a way to avoid) nine more years of negotiating on whether or not we can build this or that.”