CBRM grants independence to its port operator, hoping to spark economic development

The Cape Breton Regional Municipality has granted independence to its Port of Sydney Development Corporation, which CBRM and port officials say will unlock funding to help the marine terminal operator pay off old debts and invest in new business.

Port CEO Lorna Campbell told council on Tuesday that a new governance structure and financial arrangement with the municipality is the key to the port’s future.

“Under the long-term lease agreement, we will have the ability or the independence now to go out for financing on our own,” she said in an interview after the council meeting. “It just gives us the autonomy that we need to operate more like a business.”

Council approved the new governance model, which removes CBRM as the lone shareholder of the port corporation and changes the relationship to one where the port operator is now a tenant with the right to invest in the municipality’s assets, which include the marine terminal and docks.

Until now, CBRM has appointed the board of directors, but under the new deal, the port board will elect its own directors and CBRM will appoint one senior municipal staff member and one councillor to provide a link back to the municipality.

Campbell said that will allow the corporation to borrow money for capital improvements and invest in new business ventures that will increase the commercial value of the assets, something it has struggled with in the past.

The port is anticipating a record cruise-ship season this year and its revenues are bouncing back after the pandemic, she said.

Over the next three years, the corporation expects to be able to finally pay off the long-term debt for the marine terminal, which has been whittled down from $1.5 million to about $500,000, and to pay an additional $200,000 a year under the new long-term lease agreement, Campbell said.

‘We’re confident in our business model’

But first, the crumbling south dock needs repairs and then the port operator plans to create an urban market and a boardwalk with shops along the cove between the terminal and the former Royal Cape Breton Yacht Club marina.

“Our cash flow for the next five years indicates that we need support in getting our capital works done, but we’re confident in our business model,” Campbell said.

The port corporation has gone through several governance changes over the years, but Mayor Amanda McDougall said under the new model, the community will continue to own the assets, which will increase over time and the lease fee will rise to match the rise in commercial assessment.

“Not only in three years will we see that old debt completely done, written off, paid off, but also for the very first time ever, revenue coming into the CBRM,” she said.

That will free up municipal funds for other community projects, the mayor said.

The port board first began seeking more autonomy in 2019, but it also wanted to expand its scope beyond Sydney Harbour to include other port operations around CBRM.

Council voted that down and the port board subsequently quit en masse, calling it a vote of non-confidence.

Millions of dollars in repairs needed

In January 2023, the new board again raised the need for more autonomy, saying it was having difficulty getting funding for large projects, such as the south dock repairs, because the facility is a CBRM asset that the corporation had no control over.

The CEO at the time, Marlene Usher, said the port needed to spend at least $10 million on capital projects, but council refused to put any money into port infrastructure in its 2023 budget.

Repairs to the south dock alone were estimated at the time to cost $2.5 million, but this year that estimate is now more than double at $5.5 million, according to CBRM budget documents.

Since last year, CBRM and the port corporation have been negotiating a new deal, which ended with a closed-door session on Tuesday ahead of the council meeting.

McDougall said the port operator will now focus solely on the assets in Sydney Harbour and the new governance structure and lease are what’s best for the municipality as a whole.

“A lot of the conversation on behalf of council was how do we make sure that this asset is benefiting the entire community and that’s what you see there,” she said.

“You do see additional revenue streams coming into the CBRM, you see loans being paid off and you see investment in our public asset, and that all goes back to the community.”

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