To the Editor,
Re: Critics float marina worries, Aug. 7.
Responding to your request for opinions, may I therefore present current thoughts on this matter.
Since we only know what has been written in your newspaper, our insights may appear limited, but still relevant.
First: A 30-year lease is inappropriate. It’s a subtle way of selling off an asset, which could be worth more than $500 million, given time, design, engineering and architectural creativity.
The Nanaimo Port Authority locking itself into this box may mean its demise is imminent or desired.
There are lots of hypotheses that seem possible.
A public-private partnership platform has been surreptitiously described by some as symptomatic of corruption. Purveyors of these ideas seem to view the tax base as being for their personal use, and beyond city council decision.
Historically, in Canada, these types of contractual obligations never have worked, but for the advantage of the private individuals.
From the point of view of the port authority, it’s obvious $9 million is nothing to shrug off. Sometimes, though, one’s desperation can become one’s folly. How good is this? Let us see if this perspective gives anything relevant.
There can be a number of assumptions. Nine million dollars spent immediately; or $9 million spent intermittently. What is the net present value to the firm making the investment? My thinking is, $9 million may not be much of an investment.
There might be two ways to look at this –the net present value of the $9 million and the future value of this $9 million.
The range of interest rates considered can be from one to seven per cent. The latter is probably the more real. The Treasury Inflation-Protected charts show that TIP 10-year bonds are seven-per cent interest which implies a robust economy. This is prime rate, real rates may be much higher.
Is this a good deal for the lessor, and why? Is this a good deal for the port authority, and why? Not sure I can answer these questions completely.
We make some modifications, because I do not have access to 30-year records and calculations, so I am using 20-year calculations.
At seven per cent, the $9 million the potential lessor intends to spend is, in fact, $9 million times .258, or $1.32 million.
At seven per cent, the $9 million the potential lessor intends to make is, in fact, $9 million times 3.870, or $37 million.
It depends on which direction the boat basin is to head.
If you look at various marina examples, it’s obvious many are substandard to Nanaimo’s Boat Basin. So what is the rationale for the $9 million investment? P3s are disguised as government and private sector involvement. In reality they turn out to be welfare for the rich, paid for by the tax base.
As it stands now, the deal would propose selling an asset (and that is what the port authority is in reality doing), for a modicum of return.
D. W. (Del) Fontaine
via e-mail
