City of Powell River officials are negotiating a land licence agreement with the major user of the barge terminal facility, City Transfer Inc. The agreement involves the city paying $7,000 a month for the rental of ramp facilities, which City Transfer constructed on property leased by the city from Catalyst Paper Corporation.
City council received a report about the lease agreement at the May 19 meeting. Discussions had been taking place at in-camera meetings, but council decided the agreement was near to completion and details could be brought to an open meeting.
Councillor Dave Formosa read the report, then answered a number of questions during question period. He explained that the barge facility had to be relocated from Westview because of the south harbour reconfiguration project. In the agreement-in-principle the city negotiated with Catalyst, it identified a piece of property that could be used for the barge facility. “The problem was the property was landlocked,” Formosa said. “Mr. [John] Spick had the best property.”
Spick is a principle in JRK Holdings Ltd., which had leased property, with access to Marine Avenue, from Catalyst. Also, Formosa said, the best location for the ramp itself is where the PEKO crane is located, also on Spick’s property. Catalyst has submitted a six-lot subdivision application to the city. One of the proposed lots contains the Spick property and the city’s property. The city is negotiating with Spick to see if a partnership can be formed, Formosa said.
Meanwhile, the city was talking to Catalyst about using its ramp, but in the end the company determined the structure needed repairs. The city turned to City Transfer to build a temporary ramp. The city negotiated a three-month lease, with a three-month extension, with Catalyst for the land where the temporary ramp was built. “City Transfer agreed to build the ramp and lease it to us,” Formosa said. “In order for that to be facilitated, we leased them our licence. They placed their assets on there and then we leased it back. For their assets, this thing that they built, we’re paying them $7,000 a month to rent it.”
Formosa said it cost City Transfer $508,000 to build the temporary ramp. The city received a spreadsheet with the costs City Transfer incurred, but not the invoices. Formosa said the city didn’t accept the costing because the agreement had always been that it would lease the temporary ramp from City Transfer while it built the new one. City Transfer gave the accounting of its costs to the city because it felt it was in the city’s best interests not to build another ramp, but to use the one it had just built. “We’re still talking and trying to determine that,” Formosa said.
City Transfer has had an agreement with the city to operate the barge terminal since 2002. Formosa said that same operating agreement is contained within the licence agreement. “We have one document that is a licence to lease back and operate,” he said. “That document has not been signed.” Formosa said he expects it will be signed this week.
Although City Transfer owns the ramp and is leasing it to the city, it will still pay to use it, Formosa said. “City Transfer pays about $8,000 a month for their usage,” he said.
Any other company that uses the facility will also pay the same rates that are in the operating agreement. “City Transfer gets a portion of the revenues for operating. Once we hit a certain amount of money, we split the revenues 50-50.”
One issue the city has to deal with is access. Only City Transfer trucks have permission to travel through the mill site. Other trucks, which have gravel or asphalt in them, can’t cross Catalyst’s property. They have to go through Spick’s property instead and out through the employee access road that goes up to the Townsite viewpoint.
As part of the subdivision application, which has not yet been approved, the ministry of transportation and infrastructure is requiring a traffic study and an upgrade to the access road to improve safety.
Another issue that the city isn’t happy about is that the rates haven’t gone up in 10 years, Formosa added. “Once we get to our permanent agreement, then we’re going to review the rates and get them up to 2011.”
