SAINT JOHN - For Colin Whitcomb, the cancellation of the second oil refinery project is a mixed blessing.
As the executive vice-president of Hardman Group, the big property firm that signed an agreement four years ago with the city to redevelop the Coast Guard site, he would have been happy to market waterfront condominiums to people employed either directly or indirectly by the estimated $8-billion megaproject.
The new refinery would have created more than 1,000 permanent new jobs, many of them for highly trained and well-paid employees.
But he said the project's mothballing wouldn't stop the Coast Guard redevelopment from going ahead. The first phase of the Hardman scheme includes 40 to 60 high-end condominiums.
"It certainly doesn't kill it," Whitcomb insisted this week. "Maybe it means we have to revisit the whole question on the size of units and pricing, et cetera. But we were very cautious from the beginning and had a lot of discussions with the waterfront development people on the timing and coming to market. It would have been disappointing if we'd come to market, say, in May or June of this year, started marketing the condominiums on the assumption the second refinery was coming and then finding out that 'aw gee, it's not coming,' and you're out there with a project and a pricing and a whole plan predicated on a large project in the community that doesn't happen, and it takes the winds out of your sails. Now we don't have to worry about that."
The second oil refinery hadn't even been announced when Hardman was selected in a competition as the winning firm.
"We still view Saint John as a fairly stable market. When we first envisioned the project back in 2005 the second refinery wasn't really a component of all of our planning, acquiring the site and our thinking."
For people who are impatient for the prime waterfront site to become something more than a fenced-off government property, Whitcomb said it was no different for him.
"If someone said in 2005 that in 2009 we'd still be working at this, yeah, I'd be surprised. But when I look back in hindsight, I can understand why it's taken this long. My sense is, talking to people with the city and the federal government, that they are close to getting the deal done. We are still optimistic about the project and we're still committed. I just cross my fingers that it's over the finish line before the end of this year."
Michael Baldwin, outgoing general manager of Saint John Waterfront Development (formerly the Saint John Development Corporation), said the city's negotiations with the federal government are nearing an end and an announcement would be made shortly.
"I'd like to give a specific date but it's a complicated task," Baldwin said. "It's a Coast Guard base, it's been operating for many years and there's a lot of different pieces to it. The good news is we certainly are the closest we've ever been and we're working on the final due diligence pieces. Ideally, you'd like to have all the i's dotted and whatnot by the end of 2009. Could that go out into 2010? Sure. But that's sort of the time frame we're looking at to get any outstanding items finalized."
Asked if the Coast Guard redevelopment could be further delayed for political considerations - politicians sometimes wait until election time to make announcements and generate publicity - Baldwin staved off the question.
"I can't even speak to that. What we're focused on right now is the nuts and bolts of getting it done," added Baldwin, who announced this week that he will be leaving his job for a different career opportunity in Fredericton at the end of September.
The deal has taken a long time because the three parties involved - the city, the federal government and Hardman - are trying to sort out how much the property is worth. The city also hired Colliers, the international real estate firm, to help evaluate the site.
"With that work done, a baseline price has been established," Whitcomb said. "The city and the development corporation know what they're going to get when they buy it. I believe a price has been established and my understanding is they are working out a purchase and sale agreement on the property right now."
Hardman, which also runs Market Square just across Market Slip from the site, has already done environmental testing for hydrocarbon contamination and geo-technical testing on bedrock to get a better idea of development costs. The city has studied the state of the seawall, close to where underground parking would go. According to Hardman, it needs substantial work.
These are just some of the considerations that will affect the sale price. The city set aside more than $3 million to purchase the property from Ottawa, which it will eventually sell to Hardman. The plan right now, Whitcomb said, was for Ottawa to sell the city the land in phases.
"We anticipate the city will sell it to us as part of a freehold sale. Hardman will buy it, develop it, and then sell it to a condo corporation. We won't be the permanent, long-term holder. We'll buy it and sell it and eventually the condominium corporation has title to the whole thing."
The first phase, which could be announced in the coming months, would include the construction of a 130-room hotel on the northern part of the property. A hotel partner is lined up, but Whitcomb won't disclose who it is.
The piece of real estate is where the Coast Guard still lands its helicopter from time to time, stores buoys and has a workshop for maintenance of the buoys. All these objects would be cleared out. For the most part, the pad is a large empty apron.
The rest of the land would be transferred to Hardman at a later date. The Coast Guard still uses two buildings for administrative work, and Whitcomb said the intention is to keep those people working at the location. Hardman would lease the buildings back to Ottawa so they wouldn't be displaced.
Whitcomb said ideally, Hardman would take a year to sell the condos, setting up a marketing centre on-site similar to the one developer John Rocca built at the foot of Water Street. (Rocca intends on announcing the construction start date of Harbourfront at Three Sisters condominiums within a month.)
Once enough condos are sold, the first phase would be built in 2011 by the earliest - three years behind the original schedule.
"The first phase won't change dramatically, but there will be changes as the next phases go ahead, not major ones, but changes, because of market conditions and efficiencies of layout," said Whitcomb, who also added that 200 condos would be built through the four phases.
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