Archive for August, 2016

Fortress Real Developments speaks out

Wednesday, August 31st, 2016

The Collier Centre in Barrie is almost complete

Justin da Rosa

The syndicated mortgage provider currently embroiled in a lawsuit with investors has released a statement on the Collier Centre.

The Mady Collier Centre in Barrie is now 80% complete and occupancy is expected for January 2017, according to a release from Fortress Real Developments.

“The substantial progress in the Collier Centre project is even more significant when you consider where the project was just over a year ago when Fortress stepped in to rescue it during CCAA proceedings,” Jawad Rathore, President and CEO of Fortress, said. “Since then, as has been widely acknowledged in the press, Fortress Collier restarted construction and committed to repay syndicated mortgage lenders.”

Fortress’ release comes less than a week after reports that it, along with Centro Mortgages, FFM Capital, FSCO and a number of other entities and individuals, including Fortress president Jawad Rathore, were named in a suit brought forth by two investors in the Collier Centre project.

The plaintiffs are seeking general damages in the amount of $25 million; exemplary, punitive and aggravated damages of $2.5 million; accounting of all funds paid to the defendants by the plaintiffs, as well as funds paid by the development to the defendants; and that the defendants give up all profits made, among others, according to a statement of claim issued earlier this month.

That suit can be viewed here.

According to Fortress’ release, construction of the non-residential building will be complete this year and residential units are “close to 100% sold.”

“Our commitment to this project since purchasing the Mady Collier assets has never wavered,” Rathore said. “In addition to the amount paid to purchase the Collier Centre, Fortress Collier has invested to-date an additional $5 million into the project. Fortress Collier will only realize profit on the project should the sale price exceed the amount of outstanding principal and interest owed under the mortgage given to the Mady Collier syndicated mortgage lenders.”

Copyright © 2016 Key Media Pty Ltd

Changes coming to BC real estate industry

Tuesday, August 30th, 2016

Mortgage Broker News

British Columbia real estate has been making headlines for the past few years, due mostly to the seemingly endless price growth in its largest city, Vancouver. But it’s another – somewhat related – story that has caught the eyes of mortgage brokers and other industry professionals alike: A report from an independent panel charged with reviewing the province’s real estate industry has led to the end of the industry’s self-regulation.

It’s a move that Premier Christy Clark said is aimed at protecting consumers. Clark has announced that the province will hire a new superintendent of real estate to take over the BC Real Estate Council’s rulemaking authority.

Clark’s announcement was prompted by the report from the independent advisory  group, which was tasked with restoring consumer confidence in the real estate industry. The group made 28 recommendations for doing so, including levying sizable fines for misconduct.

According to Clark, the government plans to implement many of the report’s recommendations, in addition to replacing a majority of the members on the BC Real Estate Council with people from outside of the industry. But how much of a difference will the changes really make?

“I don’t really see any fundamental change, ultimately,” says Dustan Woodhouse, a BC-based mortgage broker. “Whether you’re self-regulated or regulated by an outside party, I think the challenge is the outside party sometimes has a more difficult time putting their finger on issues. On the other side, when you’re self-regulated, the thought is you may not be doing enough. Will a government regulator take more action? Maybe – time will tell.”

According to Woodhouse, self-regulation in other industries has resulted in greater disciplinary measures. He also argues this change will not have any major impact on housing prices, which continue to be one of the major concerns for those in Canada’s westernmost province.
For its part, the British Columbia Real Estate Association says it welcomes the change. “The vast majority of the 20,000 Realtors in BC do the right thing, and we welcome a dedicated superintendent of real estate to improve consumer protection in real estate transactions,” says British Columbia Real Estate Association president Deanna Horn. “Our livelihoods depend on our reputations, and I know that almost every Realtor in the province will be happy to see stronger penalties and enforcement for rule-breakers.” 

That’s an assessment Woodhouse agrees with. “I would also say the overwhelming majority of Realtors are all hard-working honest people who want to do right by their clients,” he says. “Real estate is just like every other industry in our country. There’s a certain proportion of bad apples in every barrel. It’s good they are trying to more aggressively weed them out.”

The one major change to come out of the independent review was the promise to crack down on dual agency – or the practice of one agent representing both the buyer and the seller in a transaction. In Woodhouse’s view, that’s a positive and necessary change. 

“I say to clients all the time, this is like you walking into a courtroom to do litigious battle with somebody, and you’re going to use their lawyer to represent you,” he says. “I would suggest a skilled buyer’s agent would negotiate either a better price or more favourable conditions or ask questions that the novice buyer will not even know to ask that will far outweigh the half a commission that a dual agency commission might be kicked back to a buyer.”

A dual-agency Realtor is beholden to the seller, he adds. “At the end of the day, that’s who’s paying the bill. The seller is the one who is paying the Realtor. And the Realtor can’t truly negotiate on a buyer’s behalf while simultaneously negotiating for the highest possible price. How can one person wear both those hats? It’s fundamentally not possible.” 

Still, despite the changes, Woodhouse believes agents will still be unfairly shouldered with some of the blame for what’s going on with prices in Vancouver. 

“I think the bigger challenge, right now, is it’s all about optics,” he says. “There seems to be the suggestion that Realtors have played a role in driving house prices up. How? The agents didn’t control the market rising. Real estate agents don’t have some dark magic that allows them to increase the price of homes; the market controls the value of property.”

Copyright © 2016 Key Media Pty Ltd

Shaughnessy Heights Property Owners Association News

Tuesday, August 30th, 2016


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Canada’s housing in ‘extreme bubble’ says ex-Lehman exec

Tuesday, August 30th, 2016

Financial institutins say they are prepared for a price correction

Steve Randall

A former executive of Lehman Brothers says that Canada’s housing market is building to a huge bubble surpassing that in the US when its bubble burst.

Jared Dillian told Mauldin Economics that with average national home prices above $500,000, average income of $40,000 and a debt-to-income ratio of 165 per cent, Canadian households are close to “extreme bubble territory”.

Dillian is not the only economist calling for a bubble but financial institutions have stressed that the quality of their mortgage portfolios is generally of higher quality than those in the US when the bubble burst; and that their finances are well placed to cope if there was a significant correction.

 Copyright © 2016 Key Media Pty Ltd

Record slump in Canadian house price confidence

Monday, August 29th, 2016

Surging Bets on Canadian Home-Price Decline Dent Confidence

Greg Quinn
Mortgage Broker News

Canadians may finally be getting skittish about real estate.

The share of survey respondents who expect a decline in local housing prices jumped by 8.5 percentage points, the most since weekly polling began three years ago for the Bloomberg Nanos Canadian Confidence Index. The increase to 20.5 percent from 12 percent dragged the broader sentiment index down from 2016 highs.

The reading marks a change from almost unbridled consumer optimism in a housing market that has carried the Canadian economy since the 2008 global financial crisis, even as policy makers warn price gains in some cities are unsustainable. Preliminary data this month from the Real Estate Board of Greater Vancouver show recent government measures to cool the market may be taking effect.

Countering the deterioration in housing market sentiment, the share of respondents who say their personal finances improved over the past year jumped 6 percentage points to 25.8 percent, also the largest increase since weekly polling began. The move coincides with government measures to increase monthly payments to lower-income families.

Prime Minister Justin Trudeau implemented the new child benefits as part of a program of deficit spending, with the first payments sent out last month.

“Canadians are cross pressured –- on the one hand taking the newly changed Child Benefit but increasing concern about the value of real estate,” said Nanos Research Group Chairman Nik Nanos.

There’s no comparable increase in views that housing prices would fall since Nanos began gathering weekly data in May 2013. In the quarterly data preceding that, there was a jump of 24 percentage points at the end of 2008, just as the world financial system was melting down. That move was more than reversed two quarters later.

The share of those expecting home prices to rise or stay the same was more stable, while still downbeat. The 41.4 percent who see home prices rising was down from 43.7 percent in the prior week. Those seeing little change fell to 36.3 percent from 41.6 percent.

The shakeup follows British Columbia’s July decision to impose a 15 percent tax on Vancouver homes purchased by foreigners, effective Aug. 2. Average prices for detached homes in the city had surged to about C$1.6 million ($1.2 million), putting them out of reach of many local families.

“If there was to be a bit of a slowdown I don’t think it would be surprising given the strength that we’ve seen in the market over time,” Bank of Montreal Chief Financial Officer Tom Flynn said of the Vancouver market in an Aug. 23 phone interview. “We’re protecting ourselves from a risk perspective by having higher levels of equity down payments on more expensive properties, and we’ve been doing that for a period of time.”

To be sure, there are signs consumer confidence remains healthy. The Nanos Pocketbook measure rose to 62.5, the highest since February 2015. That helped keep the headline confidence measure of 59.3, close to the 2016 high of 59.9 set the week before.

Here are some of the other highlights from the report:*Job prospects brightened, with the sixth straight increase in the share of respondents calling their positions “secure” to 50.4 percent. *The confidence of people aged 40 to 49 rose to the highest since August 2014 at 60.1 percent. *The economy will be little changed in six months according to 44.1 percent of those surveyed, up 2 percentage points from the prior tracking period. That was higher than the 26.5 percent who predicted strengthening and 23.2 percent who said it will be weaker.

The Bloomberg Nanos Canadian Confidence Index is based on a four-week rolling average of telephone polling with 1,000 respondents. It’s considered accurate within 3.1 percentage points, 19 times out of 20. The latest round of polling ended Aug. 26.

Copyright © 2016 Key Media Pty Ltd | Copyright Bloomberg 2016

Next steps for real estate board amalgamation announced

Monday, August 29th, 2016

Justin da Rosa

Further details have been revealed around British Columbia’s forthcoming real estate board unification.

“To provide all BC real estate boards with sufficient time to fully engage members and ensure they have enough information to make an informed decision, the member vote will be held on Tuesday, December 6, 2016,” the British Columbia Real Estate Association said in its latest member bulletin.

“This will be a historic opportunity to have a say about the future of your profession. Voting will take place at each participating real estate board and will be carried out based on their current bylaws.”

The boards that will participate in the vote are BC Northern Real Estate Board, Fraser Valley Real Estate Board, Kamloops and District Real Estate Association, Okanagan Mainline Real Estate Board, Real Estate Board of Greater Vancouver and South Okanagan Real Estate Board.

For amalgamation to move forward, four real estate boards and a total of 15,000 members and BCREA must vote in favour and, in the event of a “yes” vote, transition preparations would commence immediately.

Licencees from boards across B.C. were polled in late July to ascertain general sentiment around the potential amalgamation.

“Key takeaways included that, of Realtors who completed the poll a high majority, 88 per cent, were aware of the initiative and of those individuals, 75 per cent were in strong support of it,” BCREA said. “However, valuable feedback was provided that half of the members polled reported feeling that they didn’t have enough information to make an educated decision on December 6.

“This requirement for better communication and further information will be an imperative priority for the initiative moving forward to inform and engage with members.”

Copyright © 2016 Key Media Pty Ltd

Trump Tower impacted by 15 per cent Vancouver tax

Monday, August 29th, 2016

Foreign buyers of units in Holborn Properties? Trump Tower in Vancouver could pull out as a result of the city?s 15 per cent tax on foreign buyers.

Steve Randall
Mortgage Broker News

The developer says that it has a small percentage of foreign buyers but is concerned that some may not close the deal due to the increased cost. Holborn’s CEO Kim Tiah says that the firm is trying to secure additional financing for some buyers to help them meet the tax burden.

Although the tax has created an issue for Holborn, Tiah told the Globe and Mail that he is not expecting the impact to last: “I don’t think the 15 per cent in general will hurt the market going forward in the long term, but the retroactive nature of it is very unfair. Immigrants come here because they like the certainty, they like order. You can’t change the rules or the goal posts all of a sudden.”

Copyright © 2016 Key Media Pty Ltd

Condo Hotels and Mixed Apartment Hotels: Are They Worth the Investment?

Monday, August 29th, 2016

Tempted by a brand name and great facilities for your unit? Atrina Kouroshnia looks at the realities of owning ? and getting financing for ? a condo in a hotel

Atrina Kouroshnia

With an ongoing debate over what does or doesn’t make a sound real estate investment these days, the discussion over condo hotels seems to have been reignited. Essentially an operating hotel with staff, concierge and the usual amenities, strata hotels also have condo units they sell to private buyers.

In theory, if the owner has purchased in the hotel’s pool of units, their home is managed and rented out by the hotel. But some buildings have the hotel and strata completely separate, although there is often still an overlap of some services and use of amenities. 

If having someone else manage and maintain your condo sounds too good to be true, then let’s look at a few of the realities of owning – and getting financing for – a condo-hotel suite or simply a condo in a combined hotel and residential strata building.

The Benefits

In Vancouver, luxury hotels like the Fairmont Pacific Rim, Shangri-La, Rosewood Hotel Georgia, Wall Centre and L’Hermitage Vancouver all sell condo units in their respective buildings. Some buildings have the facilities and management completely separated and some use the shared services. 

For prospective owners of any type of hotel unit, the benefits seem fairly obvious: housekeeping services, fitness centres, world class spas and dining, concierge, pool, valet parking, and 24-hour assistance should you need it. Usually these hotels allow you to use the unit for a period of the time in the year and the remaining time your unit would be rotated and rented by management.

The Downsides

Here’s where it can get tricky. The hotel’s rental program is not renting your suite out of the goodness of its heart; this is a business, after all. This means that your gross revenue is shared, often 50:50, although that number could be higher or lower. Your monthly maintenance fee is also generally quite high.

As a post on Wealth Daily points out, as an owner you gain a lot of leverage from the hotel’s name, reputation, and affiliates – not to mention their advertising and management expertise. For people who want to enjoy the benefits of a place and location without the hassles of daily management, it seems like an ideal situation. But does this shared profit mean less ROI for the owner?

There are a few things to factor into the equation. Rents on the units are often lower than anticipated and vulnerable to factors such as bad weather, bad publicity, market trends and other unforeseen circumstances that tend to curtail tourism. Generally speaking, you can expect about 50% of the rental income of your unit.

Securing Financing

If your strata unit is separate from the hotel, you essentially have the flexibility to live in the unit or rent it out as a landlord, no different from any other condo. Now, rental income is only partially considered, as lenders do not want heavy reliance on rental income.

In addition, if you’re thinking about relying on short-term rental rates to qualify for a mortgage, few lenders fund this type of unit for all the reasons mentioned here and more. An interesting (and ironically appropriate) example of how few lenders will get involved in these properties was a few years back when the Trump Tower in Toronto first began trying to sell units. In this particular case, buyers were also able to buy units for a permanent living residence. The high commercial property tax rates meant no lender would come near them, leading one mortgage broker to remark “The only [lender] I could find that was willing to finance was HSBC…some units that had $20,000 annual property taxes for an $800,000…unit, because it was zoned commercial. Lenders wouldn’t touch it.”

My experience so far has been that only B lender, as well as Canadian Western Bank, will finance these units. Higher rates and fees do apply, although only if the owner is living there. Commercial lenders are a possibility, but come with their own obstacles.

So all in all, this type of investment must be carefully thought through to see if the potential buyer will actually reap more than a pile of bills and red tape.

© 2016 Real Estate Weekly

Kings Crossing 7350 Edmonds Street Burnaby 779 homes in 3 buildings by Cressey Development Group

Saturday, August 27th, 2016

Cressey?s Kings Crossing ready to make regal mark

The Vancouver Sun

Project name: Kings Crossing by Cressey

Project location: 7350 Edmonds St., Burnaby

Project size: 779 homes in three concrete construction towers, 28 — 36 storeys

Residence size: 1 — 3 bed, 543 — 1,200 sq ft

Prices: from $412,900

Developer: Cressey Development Group

Architect: IBI Group Inc.

Interior design: INSIGHT Design

Sales centre: 7350 Kingsway (& 19th Ave.), Burnaby

Hours: noon — 5  p.m., Sat — Thurs

Telephone: 604.553.3033


Sales began: Summer 2016

Occupancy: Fall 2018

Forget what you think you know about the Edmonds area of Burnaby, says Jason Turcotte; Cressey’s vice-president of development says the company’s new project at the old Value Village site will reshape your vision of the neighbourhood’s look, feel and future.

“I first got to know the area about a decade ago, when we were in the process of developing Park 360 (about four blocks away), and I remembered thinking about how great it was,” he says. “City policy kept evolving when it came to density, which allowed this location at a prime intersection to become available.”

The old site had one large business with a sizable parking lot and a small adjacent secondary property. When Kings Crossing is complete, it will comprise a variety of retail options, office space — and of course, 779 homes. A coffee shop, bank, and supermarket are already planned for the ground level.

 Turcotte says he expects the project to act as a catalyst for the region, by opening eyes around all of its advantages as a home base. For instance, he points out the excellent transit access afforded by the proximity to Edmonds SkyTrain station, and says there are a number of different route options for drivers.

 “Cressey picks ‘A’ locations, and the size and the scale of this development will give people confidence in the region. What many people may not realize is that this area has proximity to everything. For instance, if there’s a divided commute in a household — say, one person has to get to downtown Vancouver, and the other works in Surrey — this is a perfect spot,” Turcotte explains.

 As it does with all of its developments, Cressey focused on the kitchen as the heart of the home. The design team considered two different kitchen layouts, and after making sure they both had the same footprint, decided to illustrate both layout options in two separate show suites. (This also granted them the opportunity of letting potential buyers see both colour schemes.)

 The classic CresseyKitchen (a term the company has trademarked) features a refrigerator, oven and microwave hidden behind millwork, and clustered on a chef’s appliance wall along with ample storage. There is more cabinetry on the other side of the kitchen, along with a long L-shaped counter. The gas cooktop sits beside the kitchen sink, for easy workflow when preparing and cooking meals. A pull-out hood fan tucks away when not needed for ventilation.

 The feature kitchen option has a wall of pantry storage across from the chef’s appliance wall. The gas cooktop with corresponding under-counter oven is across from a sink in the kitchen island, which creates distinct and separate work zones for more than one cook to work at the same time. A chimney hood fan is ranged along a full height backsplash, which serves a secondary function as a feature wall.

 So far, the layouts appear to be running neck and neck in popularity. Turcotte also mentions that there are a few upgrades available, including a wine fridge, home A/V system upgrade and optional bar area.

 Quartz countertops are durable and low maintenance, as are floating bathroom vanities, and porcelain tile and wide-plank laminate flooring. Turcotte says every effort has been made to make every square inch of the homes function as usable space.

 Tremendous thought has also been put into the amenities for the buildings. If residents want access to a little more outdoor space than what they have on their balconies, they can head up to the rooftops to access individual garden plots, a children’s play area, an outdoor fire pit or bocce court. Leisure time can take place in the lounge, games room or meeting room. The outdoor amphitheatre has tiered seating so that everyone has a good view of the movie or big game. An indoor sports court — with plenty of natural light — can house a basketball, volleyball, or hockey match with ease. There is also a dedicated yoga and Pilates space and a fitness centre for those who want to work out in a different way.

 Penthouses — a dozen in all — have just been released for sale, each with a massive outdoor deck. Since the three towers at Kings Crossing are pretty much the tallest in the immediate area, residents at these levels will truly enjoy 360 degree views of mountains, water and cityscape.

 Price point is also proving to be a motivation in the high level of interest purchasers are paying to Kings Crossing, Turcotte says. The amenities of Metrotown are accessible with a very short drive, without having to pay the corresponding price tag for that area. The Edmonds neighbourhood may also appeal to those seeking slightly quieter living conditions, as opposed to the hubbub of activity to be found around Metrotown.

 Trails and strolls along Byrne Creek or the Fraser River are easily accessible to the south, while Deer Lake Park and Burnaby Lake are to the north. The Edmonds community centre is essentially across the street from Kings Crossing, as is a public library. Elementary and secondary school options are within a small radius, and Douglas College is a brief hop away.

 “We’ve really seen quite a wide range of people interested in these homes — they’re from all over the Lower Mainland, including some in the immediate area, they’re ethnically diverse, and from a wide range of age groups,” Turcotte says. “Having so many different sizes of homes opens up the range of possibilities from first-time homebuyers to young families to downsizers and quite a few investors, as well.”

 He says the brisk pace of sales since marketing of Kings Crossing began earlier this year has been a pleasant surprise; although Cressey does not currently have any other active plans underway in the area, it remains eager to further explore the possibilities of the Edmonds area.

© 2016 Postmedia Network Inc.

Churchill shutdown a blow to Canada?s north

Saturday, August 27th, 2016

Shutdown of port sparks fears for North

The Vancouver Sun

Bobby de Meulles sits at his usual perch, next to a window at the Reef coffee shop, keeping an eye on Churchill’s main drag, and beyond that, the old train station and the tracks.

This time of year, railway cars filled with Prairie wheat should be rolling past the station for the Port of Churchill, 500 metres down the line on Hudson Bay. There are no grain cars today.

There haven’t been any all summer, because Canada’s only deepwater Arctic port — the only port of consequence along 162,000 kilometres of northern coastline — has suspended grain shipments, a decision made by its Denverbased owner, Omni TRAX Inc.

DeMeulles figured something was up, long before the company announced last month it was halting port operations, save for moving local freight to small communities along the Hudson Bay coastline, mostly in Nunavut.

A private transportation company with most of its holdings in American short-line railways, Omni TRAX claims none of its regular grain suppliers wanted to do business at Churchill this year. “The grain season for 2016 has passed the solutions stage,” it says. Townsfolk wonder if it ever really tried to salvage the season.

DeMeulles understands how things are done in Churchill. He spent 60 years working at the port, retiring just four years ago when he turned 75. “I worked until I couldn’t work no more,” he says. “I was well looked after.”

But things looked bleak, well before Omni TRAX pulled the plug.

“We’d always know how many ships were nominated (coming to the port) well ahead of summer,” de Meulles explains. “We’d first start to hear about the nominations in March. Grain would starting coming up in railcars around the June 15. If you don’t hear nothing, and you don’t see nothing, and there’s no grain coming, you know something’s wrong.”

He shakes his head. “It’s a terrible thing, for a small town.”

For the rest of Canada, too, says Michael Byers, professor of political science at the University of British Columbia and an Arctic expert. The port’s sudden closure won’t impact national sovereignty, as some alarmists have claimed.

“What is important, though, is the economic development of Canada’s north,” he says. “That port is on our Arctic coastline, on salt water. Any plans for our northern development — mining, shipping, tourism — have to include it.”

The way the port looks now, that seems hard to fathom. From the centre of Churchill, it’s a five-minute walk to the docks. “No Trespassing” signs and a chain-link fence warn away the curious, but the front gate is wide open and there’s no one inside the adjacent security hut. In a normal season, Churchill would see 16 to 18 bulk carriers claiming orders of high-grade Saskatchewan wheat, canola and other grains, destined for Libya, Russia, Bangladesh and other distant places. A couple of ships would be tied to the wharf; five or six more would be anchored in the harbour.

Dozens of foreign seamen would have been ashore, walking into places such as the Reef, mingling with locals and tourists. This little town on the Manitoba muskeg, with a steady population of about 800, would, for a short while at least, look and feel like a cosmopolitan trading zone.

That is what it was, how things were, year after year during Churchill’s brief shipping season, from August to early November, or until things would freeze solid.

“It’s a short season, and the elevator can only handle so much,” says de Meulles. “But we do our share here. Or we did, anyways.”


It was late in July, on a Monday afternoon. Some of the 73 seasonal employees were back at the port, oiling machinery, replacing broken windows, sweeping away the dust, the bird poop. Getting the place ready for ships that hadn’t yet been nominated. There was still time to arrange a few shipments, so people had hope. People were working.

A port manager called the crew into the lunchroom. He was blunt: the season was cancelled.

Only 15 seasonal workers would be kept on for the summer, along with two fulltime staff. Half the railway’s 126 workers were also pinkslipped. Everyone in the room was in shock.

“Why bring us back, if you’re just going to turn around a couple of weeks later and shut everything down?” asked Dawne Palmer, 39. There was no explanation.

Palmer spent the last eight seasons at the port. She has two kids. Her husband has a job outside the port, and they own their house, but they don’t know how they’re going to make ends meet this winter, without her port pay.

She considers herself lucky. Joe Stover, 34, is among the majority who wasn’t called back at all this summer. Like most port workers, he won’t receive any termination pay or benefits.

This would have been his 10th season at the port.

“I really liked it,” he says. “I was proud of working there, with ships coming from all over the world. We were like, ‘ We’re here in Manitoba, and this is our ocean.’ We’re so much more than an old, decrepit bunch of buildings. I thought the only thing that could stop us was the weather.”

Churchill’s mayor, Mike Spence, learned about the shutdown minutes after workers were laid off. He dialed Omni TRAX’s Canadian subsidiary headquarters in Winnipeg. Three times he called, leaving messages. No one ever replied, so he quit trying.

Meanwhile, in Winnipeg, newly elected Manitoba Premier Brian Pallister suggested Omni TRAX was playing a cynical game of chicken with his government, closing the port while trying to extract financial concessions, more treasury dollars.

“I don’ t respond to threats,” he said.

For the next few weeks, Omni TRAX ignored local inquiries from media. Finally, Kevin Shuba, its Denverbased CEO, gave a brief interview to Winnipeg Free Press business columnist Dan Lett. His remarks only caused more confusion, and anger.

“For two years we have been talking (to the federal and provincial governments) with no response,” Shuba said. “I’ll tell you why they don’t want to talk to us. Once they reach out and talk to us, they have to become accountable, and they have to be part of the solution. They also have to acknowledge the truth and the facts. And last, once they reach out and engage us, guess what, they have to make some decisions.”

Through an administrative co-ordinator based in Winnipeg, Omni TRAX turned down an interview request from the National Post. Executives were “travelling” and could not be reached. But the company did review questions put via email, and a response came back a few days later “from the desk of Mr. Kevin Shuba.”

What had he meant by his comments?

“I was referring to the fact that for two years we made numerous attempts to work directly with governments for long-term solutions as the dynamics of the grain market had shifted,” the response reads. “There was little interest by governments to pursue talks about the changed landscape.”

The company says it tried, but failed to sign any contracts with grain suppliers for the 2016 season. The Canadian Wheat Board, once Churchill’s largest and most reliable client, was long gone, dismantled four years ago by the Harper government, and Canada’s largest private grain suppliers were moving their products through their own larger terminals, in Montreal, Thunder Bay, Ont., and Vancouver.

There was nothing to move to Churchill by rail, nothing to pour into the big ships, Omni TRAX claims, only local freight that will continue to be hauled to communities in Nunavut.

“The Port of Churchill is not closed for business,” Omni TRAX said in its response to the Post.

If that’s the case, someone needs to let the town know.


It has always seemed a good idea, that port. A strategic asset, in the national interest. As Byers says, it has a role to play in the north’s development. As a commercial enterprise, though, it’s been mostly a flop, always tied to the public purse, at the mercy of governments.

More than a century ago, Ottawa decided it should connect the country’s central grain belt to markets overseas, using the shortest ocean route available and bypassing traditional ports in the Maritimes and in Quebec. A port on Hudson Bay would “bring the grain growing provinces of Western Canada 1,000 miles nearer their markets in the Old World,” according to promotional efforts.

Construction of a federally funded railway began in 1910, from The Pas, in northwestern Manitoba, to Port Nelson, an old trading site on the west coast of Hudson Bay. The effort was abandoned in 1918, because of wartime shortages and requirements. Work resumed in 1926, only this time, the railway was directed to Churchill, where a port and grain elevator would open in another two years. The first steamships arrived that summer.

The entire effort cost Canadian taxpayers about $12.5 million, enough to earn scorn in certain newspapers. The Montreal Star was particularly upset, forecasting the port’s legacy in one editorial cartoon as “rotting wharfs and grain elevators, and millions of the peoples’ money, gone to the bow-wows.”

Decades passed. The port managed to survive. And Churchill itself sometimes thrived. A Second World War-era military base, built by the U.S. Army Air Corps, was populated by Canadian and U.S. forces until it closed in the late 1960s. More recently, the town has benefitted from tourism. Visits have increased exponentially since the early 1990s, thanks to the increasing popularity of adventure travel, and an abundance of polar bears and beluga whales in the area.

This summer looks like one of the town’s busiest tourist seasons ever, says Spence, Churchill’s mayor for the past 21 years. He owns a hotel and a lodge. But the cancellation of the shipping season has overshadowed any of the success stories. “This is the biggest challenge we’ve ever faced,” he says.

While he won’t blame Omni TRAX directly, he says it could have been more visible in the community at large. At the very least, it could have prepared people for the bad news.

And in hindsight, handing “a piece of huge infrastructure, smack in the middle of Canada,” to a foreign company was probably a mistake. “How was this allowed to happen?” he asks. “You don’t sell your assets.”

Blame Lloyd Axworthy, some townsfolk say. That’s not really fair, but as a cabinet minister in the governments of Pierre Trudeau and Jean Chrétien, and Manitoba’s most influential government member through most of that time, Axworthy was at least peripherally involved with port of Churchill politics.

He was around when the Chrétien government passed legislation paving the way for the divestiture of federally controlled ports.

“There’s disdain now for the (port’s) private owner, but Omni TRAX had the only serious interest (in acquiring the port) at the time,” Axworthy says. “There was a small group of shippers, as well, but they had no capital. There was no one else, really.”

Omni TRAX took over in 1997, paying just $1 for the entire operation. The real prize was the 820-kilometre rail line connecting Churchill to The Pas, and from there, to the rest of the world. It remains the only land route into Churchill. The company agreed to spend $45 million on track upgrades and keep the seaport open for at least 10 years.

Since then, according to a 2013 federal- provincial Task Force on the Future of Churchill, Ottawa and the Manitoba government have spent or committed $197 million until 2018 on Churchill.

That includes $50.5 million in direct transfers to Omni TRAX, $48 million in rail line and port upgrades, and $25 million in “grain shipping incentives.”

Omni TRAX now says it’s owed even more. Manitoba has failed to live up to additional financial commitments it has made, the company told the Post in an email exchange.

“Currently, the provincial government has provided $800,000 for capital improvements in 2015,” it claims. “There was a contractual agreement between the provincial government and Omni TRAX for 2015 which requires a further payment of $1.74 million which is currently outstanding.”

Manitoba’s new government doesn’t see things that way. “Omni TRAX is incorrect,” says Cliff Cullen, minister of growth, enterprise and trade.

“The process around the 2015 agreement signed by the previous NDP government is ongoing. Omni-TRAX’s claims invite a number of questions and are currently being reviewed by auditors as part of the process …. We are not interested in continuing to subsidize the operations of Omni TRAX with money taken from Manitoba taxpayers.”

One way or another, however, it will have to resolve matters with the company.

Spence has met provincial and federal bureaucrats and politicians, and is urging Ottawa to consider “re-nationalizing” the port. It’s an idea federal Employment Minister Mary Ann Mihychuk reportedly said her government would consider, but she’s been silent on the matter since speaking out last month; some claim she’s been told to keep quiet.

The official line from Ottawa: the government is concerned and is “monitoring the situation.”

The port isn’t going anywhere. Neither, it seems, is Omni TRAX, although it’s been trying to unload its Manitoba assets for months now. A deal to sell the port and railway to a consortium of First Nations looked imminent, at least until April, when Omni TRAX filed a civil claim in Manitoba’s Court of Queen’s Bench.

The lawsuit alleges Manitoba — and Pallister’s predecessor as premier, Greg Selinger — “unlawfully” shared “confidential and proprietary financial information” and business plans to a third party. This alleged indiscretion compromised its negotiations with the First Nations.

It’s also negotiating with the Mathias Colomb Cree Nation over selling its Manitoba assets. The band did not respond to a request for comment, but few outsiders believe the First Nation, comprised of two thinly populated reserves north of The Pas, could buy and successfully operate the Bay Line and port of Churchill without financial assistance from government and a group from outside to run things.

Omni TRAX has reportedly agreed to manage the port and railway, presumably for a fee. So Churchill may not have seen the last of the company, after all. Could locals accept such a compromise? Would port workers return for another season?

Stover doesn’t hesitate. He was raised in Churchill, did all his schooling in town, wears its heart on his sleeve.

“I would go back, for sure,” he says. “But I’m sure a lot of people wouldn’t.”

© 2016 Postmedia Network Inc