Wednesday, November 14, 2012

Wazzup, ferry riders?

A few days ago, Mary Polak's Ministry of Transportation and Infrastructure announced the "B.C. coastal ferries consultation and engagement process". They invited,
"input on considerations to achieve $26 million in savings to 2016 and input on establishing a long-term vision for coastal ferry services in British Columbia that will keep our ferries affordable, efficient and sustainable."
Anyone else wondering if the current roster of flacks and politicos earn by-the-word bonuses?

Of course, had Ms. Polak and friends been regular readers of Northern Insights, this consultation would be entirely unnecessary. They would have captured 94% of the needed sum by reversing the $24.2 million second mortgage BC Ferries gave the Jawl Family when Messrs. Hahn and Corrigan decided ferry executives needed a larger playpen for their shrinking company.

A year ago, Luxurious new offices and enduring gratitude was in Northern Insights:
"In 2008, the company announced plans to move into 90,000 square feet of a building at 800 Yates Street then under construction by Jawl Properties. B.C. Ferries sold its long time head office building, 53,000 sq.ft. at 1112 Fort Street, to the Jawls for $11 million. By sheer good fortune, the new owners quickly found another tenant: Elections BC.

According to Note 12 on the BCF 2011 Audited Financials, the lease of new offices in downtown Victoria is for fifteen years, with four renewal options of five years each. The lease agreement includes payment of building operating costs and property taxes but other terms are undisclosed.

In addition to signing a long term lease before completion, BC Ferries lent the Jawls, developers of the $100 million property, $24.2 for fifteen years, secured by a second mortgage of the property.

What does BC Ferries get out of this? Certainly, it gets substantially more luxurious executive offices, almost twice the size of those in the old building. They also earn enduring gratitude of the influential Jawl family, people who style themselves as the largest private owners of premium offices and industrial space in the capital. Their properties include Cordova Bay Golf Course, Mattick’s Farm, Sayward Hill and Selkirk Waterfront. They are, of course, substantial contributors to the BC Liberal Party."
There is another, perhaps easier way, to find the funds Mary Polak says she needs from BC Ferries. That is to reverse the private company fiction that results in interest rates far higher than the cost of financing that BC taxpayers should be paying.

The long term debt of BCF at March 31, 2012 was $1.3 billion and the average interest rate on this debt was 5.56%. The Municipal Finance Authority 10 year rate in June 2012 was estimated at 3.11% The interest rate difference would be about $32 million a year, which is $127.4 million between now and 2016, five times Mary's goal.

Ferry users and taxpayers are expected to pay for the mistakes of an incompetent board of directors drawn mostly from Liberal Party lists. The current consultation is mere window dressing, lipstick on the pigs that have dined at the public trough.

I suggest you read Thumb in the eye of BC taxpayers. It gives the real story of executive compensation at BC Ferries.

Don't expect to read this version of reality in the mainstream media.
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18 comments:

  1. In the sites of Insights.

    The"Jawl" family? Is that not a typo Norman?

    http://culinaryarts.about.com/od/beefporkothermeats/ss/cutsofpork_8.htm

    Common sense, sound fiscal management, and accountability escape Ms. Polak, the Ministry of Trasportation and Infastructure, and BC Ferries.

    Outrageous! Irresponsible!! Contemptible!!!

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  2. Did you mean $127.4 million over the four years?

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    Replies
    1. Thanks Hugh. The number is now corrected. The night had grown too late when I first posted this article.

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  3. Keep shining the light, Norm. This is one of your strongest posts in some time.

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  4. See what I mean? Do you think that if we'd paid Hahn $2million a year (plus benefits!) he and his cohorts could have doubled the $127.4 million loss? I think its fair to say that we could have taught an above average hamburger flipper to run the Ferry system more intelligently than we did with 'the best that money can buy'. Wow, too bad we don't have courses in Business Management at our Universities. Perhaps then we could send the Hahns of this corrupt government to take some courses.
    I'm aghast, again. Thanks Norm for your erudite lessons on common sense. Trouble is, its apparently not all that common.
    John's Aghast

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  5. To all those are in favour of reducing ferry sailings on routes because some sailings run at far below capacity, would they also be in favour of closing down Highway 1/Port Mann or any other arterial from say mid-night to 5:00 am?

    After all, there is hardly any traffic on those major routes during those stated times?

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    Replies
    1. Having used BC Ferries for more than 50 years, I don't know of any consumers who expect continuous service with empty boats shuttling back and forth. There is room to rationalize service for efficiency but it must be done with sensitivity for the needs of travellers. That will never happen with existing management that is focused on self-interests.

      Overpaid managers sitting in fancy city offices reflect the company accurately. Directors are paid handsomely through retainers and for each meeting. However, in their world, a telephone call might qualify as a "meeting" that warrants an extravagant payment.

      BC Ferries was a useful political football for Gordon Campbell and Liberal hangers-on. The real overhaul it needs won't happen until a new government takes over and empties the board room and the executive suites.

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  6. Norm,

    Thanks for the eye-opener on solutions to the BC Ferries need for more money.

    That home reno must have been good for you as well as for us readers. Since you came back from the reno you have been ON FIRE.

    You have exceeded the high standard of reporting and opinion that you set before the reno.

    Your work is appreciated.

    Persey

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    1. Oh, if only the renos were complete. We have a wonderful kitchen now after gutting the old one but the second story addition, another building permit, is still to come. That is a long story involving a change in structural engineers, a delay so that we could obtain (and pay for) a geotechnical assessment of the municipal land behind our property, even though the District did their own assessment of the same area two years ago. Because we're near the Seymour River, on the forest interface, special rules apply that are aimed at protecting against natural hazards. That means more hoops than the average urban dweller has to contend with.

      Our new 97% efficient furnace is being installed so we are relying on electric space heaters to warm the house. That works until the outside temperature drops to near freezing. Next week, the roof comes off the garage and family room, then foundation work begins and the framing of a second floor addition. Ever try to clear out a garage that stores the debris of decades?

      We're hoping by Christmas the house will be weather tight. I'm wondering if the whole project will be complete in my lifetime.

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    2. Silly you....all you needed was your own IPP on the Seymour River....really smooths out any hinderances due to geotechnicals. Heck, you might even qualify for a Federal ecoEnergy Grant to help offset the cost of sidestepping the red tape meant to protect the mountainside.

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  7. Sell the billboard for the olympics that sits tied to the dock in departure bay 90%of the time that would help a little too

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  8. If ferries are running empty, or almost so, there isn't much use in running them at that time. It is a waste of gas. If the volume isn't there then its o.k. with me. What I object to are the high ferry rates. A car & driver is around $75, one way. I just used the ferry to come to Vancouver & I resent having to pay this much. A few yrs. ago I was making the trip for $35. What changed? Well they got a lot of high priced help & ran up a lot of debts. \

    Washington State Ferries pays their CEO much less than B.C. Ferries pays theirs. Maybe we should check & see if the Washington State CEO will come & work here for $100K more. It still would be less than what we pay the current B.C. Ferries CEO.\

    If the lieberals are such "good business people" how the hell did they manage to run up such a deficit at B.C. Ferries, reduce service, & increase fares.

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    Replies
    1. Totally agree with you. They management chose to go with higher and higher rates and ignored the repercussions of this decision. They have passed the threshold of affordability and now pretend that the only option is to cut service.

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  9. What you call incompetence and greed I call a charade, the antics of a frankenstein entity (BC Ferries Inc., "privatized" yet still 100% public-owned) fronting for neo-right ideologists clandestinely beggaring the public transportation service because revenues flowing to public instead of private coffers just ain't right, nor nearly right enough for them.
    Worse, they complain, the discount the public seeks by owning its own ferry service is far below the barely-bearable tariffs they would seek for themselves.

    And so the cold, clammy mitts, stitched on at the wrists, grasp at "fair market price" when, in reality, BC Ferries is being intentionally bankrupted; below lidded, dead eyes, the steam-shovel jaw gnashes a pean of "free market competition" while slavering over the wounded public monopoly. By the end of this darkness, the monster will testify in the jury's flickering torchlight: me know nothing but lust, it's my nature, Your Honour.

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  10. BC Liberals are not good but voting in NDP would be so much worse. Don't remember what they did the last time? Accordingly, I will vote for the Liberals again.

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    Replies
    1. Happily, three out of four citizens have not closed their minds to reality.

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  11. Norm, maybe you could loan us your expertise and help explain something that I've seen suggested a lot: that the province return the company to Crown status. I've been trying to figure out how that would affect the provincial debt, and if that might be playing a role in NDP thinking about what to do with BCFerries post-election, if the party wins.... I appreciate that financing of new ferries going forward would be cheaper, but what about the huge, honking debt that's been built up? I believe the govt cleared the debt before it offloaded the company in 2003, but the intricacies of this kind of accounting escape me. It would make a great post if you could put some thoughts together in between rounds of shrink-wrapping your house for winter.

    Thanks so much for whatever light you can shed...

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  12. Sorry Norm, what I was thinking of specifically is what happens when you reload the provincial debt with BCFS debt -- does that affect credit raters' thinking? does that figure mean a small/moderate/big weight on existing debt? That's the kind of thing I am wondering. Dix did promise to re-Crown, I believe, but has been fairy quiet lately. I'm wondering what kind of fiscal reality for an indebted province that such a move would mean -- as in, what options does a new govt actually have, and at what price?

    thanks again for all this, and all the rest of your work
    Chris

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