Monday, May 12, 2014

BC Ferries still owed $25 million 2nd mortgage

Under leadership of CEO David Hahn and Board Chairs Elizabeth Harrison and Don Hay, in a deal negotiated before completion of construction, BC Ferries lent a real estate developer almost $25 million for The Atrium, a Victoria commercial development. The loan was secured by a second mortgage, even though, when it negotiated the deal, BC Ferries did not know the final terms of first mortgage financing that would rank ahead of its own security.

Two and a half years ago, I wrote this at Northern Insight:
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. By sheer good fortune, the new owners quickly found another tenant: Elections BC.
The deal was made when David Hahn was riding high, enjoying uncritical coverage, particularly from the Legislative Press Gallery, some members of which he courted with studied generosity. Subordinates in Hahn's executive coterie were also treated well and the new head office was to provide luxurious quarters, far superior to the 35-year-old Fort Street head office owned by BC Ferries until they sold it to Jawl. After Hahn was pushed out the door by the Clark government, ferry executive ranks were trimmed but I have no word on whether space sits idle or has been sub-let.

Hahn ensured complete mortgage and lease details were confidential and BC Ferries declined to provide the rate of return earned since money was first lent to Jawl Properties. Pre-completion construction financing is usually among the most costly business financing.

Deborah Marshall, Executive Director, Public Affairs, did report the rate of interest BC Ferries earned during fiscal year 2012-13 was 3.4%. More than three years after the loan was advanced, the $24.5 million principal remains outstanding. When it lent this money, the publicly owned company was paying its own long term lenders almost double the rate of interest it receives from Jawl Properties.


The questions remain:
  • Since the provincial government has numerous departments and agencies renting space from Jawl, did and does that developer have a special relationship with BC Liberals ?
  • Should BC Ferries, which is supposedly under financial pressure, be a low interest lender to a private company not at arms length?
  • Should BC Ferries, a public company, engage in secret deals with one private landlord for a deal worth in excess of $100 million over the rental term and renewals?
  • What are the complete terms of the mortgage and the BC Ferries head office lease?
  • What are the terms of the Jawl / Elections BC lease of the former BC Ferries Fort Street property?
  • What are the terms of all business arrangement between Jawl Properties and publicly funded agencies and government operations?

Recommend this post

8 comments:

  1. To this day, I still can not believe how a Crown corporation funded with BC tax dollars can provide loans to a private developer. Why has this not been investigated by the media or NDP ? Does this mean that any Crown corporation can make such loans ?
    Remember when a certain Premier was accused of receiving favours for receiving a deal on a backyard deck ?

    We're not talking about a few thousand dollars here.

    And with respect to your question Norm about " Since the provincial government has numerous departments and agencies renting space from Jawl, did and does that developer have a special relationship with BC Liberals ? " The answer could lie in the fact that despite numerous empty office space in Victoria, it's interesting that after this developer bought the BC Ferry building on Fort street, no sooner than remodeling had taken place, a government contract was signed to lease that space. Can you imagine the outcry if this was done under an NDP government ? Go figure.

    Guy in Victoria

    ReplyDelete
    Replies
    1. Guy in Victoria, you make excellent points. This is from a publication by Colliers International:

      "Office market conditions in Greater Victoria have remained relatively unchanged during 2013 with a minor increase in overall vacancy to 9.2% at year-end, up from 8.8% at Q4 2012.

      "The amount of vacant space at 793,000 SF, is an all-time high...

      "The Victoria office market is over-supplied with limited demand pushing the vacancy rate to a 16-year high..."

      Delete
  2. Got to give Liberal fraudsters and spinmasters credit for being good at what they do.

    ReplyDelete
  3. Is it not time that the RCMP Commercial Crimes Unit be made aware of this all too comfortable agreement?

    It seems where Gordon Campbell meddled with things, it leaves or left a massive stench. Wee Missy photo-op, who seems to be stuck in Natural Gas mode, seems to be afraid of BC Ferries and its opulent crew and one wonders why?

    Scams, dishonesty and a wonton disrespect for the BC public has set BC Ferries apart from other ferry systems, yet nothing is done. Has BC entered a political ice age, where everything is frozen solid and nothing moves; nothing changes?

    ReplyDelete
  4. It never ends. The depth and breadth of apparent corruption is mind-boggling. How ignorant we might be were it not for the efforts and savvy shown by you and a few others of similar persuasion. Thank you.

    ReplyDelete
  5. Its easy for the lieberals to get away with all of this, when the only one reporting on this is Norm. Its not like the MSM is going to do an exposee on this. If each of us wrote a letter to the editor about this, to our local papers, and the Vancouver Sun and Province, how many do you think would get printed? It would be a good day if 6 were.

    They have all this money for a private corporation but want to claw back monies from children because the minister responsible says they need the $17 Million from children living at 50% of the poverty level.

    Its a sick, sick province. Wonder if the non lieberal M.L.A.S tried bringing this up in the press or in the leg?

    ReplyDelete
  6. scotty on denmanMay 14, 2014 at 12:02 AM

    I remember a buddy of mine told me about the first time he saw this building---went down representing the union for some talks---man! I almost couldn't believe what he was describing, like a cross between Franz Kafka and Robert Heinlein. Then I saw it myself. Man! Unreal!

    ReplyDelete
  7. Further to your story regarding BC Ferries $24.5 million favourable loan to Jawl Properties for the construction of The Atrium in Victoria, which houses BC Ferries Head Office, it might interest your readers to know that the Jawl Family - Robert (Bob), Michael, Joginder, Karnel, Kathleen, Mohan, Ramadevi (Devi) and through their corporate holdings such as Cordova Bay Golf Course, 947 Properties, Jawl Industries, Jawl Properties and Selkirk Waterfront Properties collectively donated $24,750 dollars to the BC Liberal Party from 2006 through 2011 according to Elections BC. Donations for 2012 and 2013 are not yet reported.

    It might also be interest your readers to know that Jawl Properties recently concluded a property purchase of some 2.3 hectares of provincial government properties behind the provincial legislature buildings in James Bay for a new mega project development within which the provincial government has committed to lease some 180,000 square feet of office space on a 20 year lease beginning in 2017.

    If the Jawl family's and their associated holdings $4,125 average annual political donations to the BC Liberal Party (2006 - 2011) has played any role in either obtaining the apparently favourable loan from BC Ferries to build The Atrium or in acquiring the government properties to build the James Bay mega project, those political donations would appear to have been a very lucrative private business investment, more akin to chump change in the scheme of things.

    ReplyDelete

COMMENTING

This is an archive only of items published before April 22, 2016. These and newer articles are available at:

https://in-sights.ca/

If you read an article at this blogger site, you can comment on it at the new site.

Note: Only a member of this blog may post a comment.