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CITY OF VANCOUVER ADMINISTRATIVE REPORT |
Date: |
December 21, 2004 | |
Author: |
M. Harris | |
Phone No.: |
(604) 871-6185 | |
RTS No.: |
04551 | |
CC File No.: |
1203 | |
Meeting Date: |
January 20, 2004 |
TO: |
Standing Committee on City Services and Budgets |
FROM: |
General Manager of Engineering in consultation with the Director of Legal Services |
SUBJECT: |
False Creek Ferry Dock Licence Agreement |
RECOMMENDATIONS
A. THAT Council authorize the Director of Legal Services, in consultation with the General Manager of Engineering Services, to negotiate and execute a Licence Agreement with Granville Island Ferries Ltd. and Aquabus Ferry Ltd. granting a non-exclusive licence to both companies to use certain docks located in False Creek for the purpose of boarding and disembarking passengers, generally on the terms and conditions set out in this Report.
B. THAT the Park Board 2005 net revenue operating budget of $8,000 received from these ferry companies for use of the Aquatic Centre dock and the Stamps Landing dock, and all other revenues from and expenditures on all City owned, leased, or managed docks in False Creek be consolidated under Engineering Greenways which will result in the Park Board Global budget being increased by $8000.
C. THAT Council authorize increases in the total annual fees payable by Granville Island Ferries Ltd. and Aquabus Ferry Ltd. for use of the seven City owned, managed or leased ferry docks in False Creek from $35,048 to $41,900 totalling an increase of $6852.
D. THAT no legal rights or obligations shall arise hereby and none shall arise or be granted hereafter unless and until all contemplated legal documentation has been executed and delivered by all parties.
GENERAL MANAGER'S COMMENTS
The General Manager of Engineering Services RECOMMENDS approval of A, B, C and D above.
COUNCIL POLICY
On July 25, 2002, Council approved the principle that privately owned but City-managed ferry docks are to be operated on a cost-recovery basis. The owners are entitled to charge lease rates that recover on-going ferry dock operating and maintenance costs.
On January 17, 1991, Council resolved that every department/board review services for which fees are now charged to ensure full cost recovery or that fees are equivalent to competitive charges where the fee is of a market nature.
SUMMARY
The docks in False Creek are currently being managed under varying, and in some cases no, legal agreements with the two ferry companies servicing False Creek. The existing situation is a patchwork of agreements that have arisen over time, and results in inconsistent levels of maintenance, insurance, liability, fee structures and shorter term agreements. A master licence agreement has been developed in consultation with the two ferry companies presently operating in False Creek which grants a non-exclusive licence to use seven City-owned, leased or managed docks and includes standardized delineation of indemnification and liability, insurance requirements, and maintenance/repair responsibilities. The agreement is based on the principle of cost-recovery, and ensures that dock maintenance, leases and future capital replacement programs are contributed to appropriately by the ferry companies. The term is for six years which gives the ferry companies some level of security with respect to future business operations. The two private docks in False Creek, Quayside and Plaza of Nations, are also included in this agreement and the fees applicable to those docks are also based on the principle of cost-recovery only as per prior Council direction. The City will collect these funds as part of the annual licence fee and reimburse the private owners for maintenance expenditures to a predetermined maximum value.
PURPOSE
This report seeks Council approval to enter into a licence agreement with the two ferry companies operating in False Creek for equal access to all ferry docks covered by the licence agreement. This report also requests approval to increase the annual fees payable by the two ferry companies operating in False Creek and to consolidate all ferry dock expenditures and revenues under one account structure.
BACKGROUND
There are currently 11 docks in False Creek which are serviced by two ferry companies, Granville Island Ferries Ltd., which operates as False Creek Ferries, and Aquabus Ferry Ltd. (Aquabus). The approximate locations of the docks are shown in the figure on the following page.
The current ownership, jurisdiction, and management arrangements of the docks are summarized as follows:
· Granville Island - The two docks are federally owned and are not within the jurisdiction of the City. The management of these docks is thus not considered further in this report.
· Maritime Museum/Vanier Park - This dock is owned by the City but is leased to the Vancouver Maritime Museum Society (VMMS). The VMMS in turn has an agreement with False Creek Ferries for exclusive use of the ferry portion of the dock which expires at the end of 2006. Once this lease expires, this dock will be managed under the master licence agreement and both ferry companies will be able to service this dock.
· Aquatic Centre - This City-owned dock is under the jurisdiction of the Park Board, but is on a provincially-owned water lot leased to the City. This dock has historically been used exclusively by False Creek Ferries under a licence agreement. Under the new agreement, both companies will have the option of servicing this dock.
· Foot of Hornby - This City-owned dock is on a water lot leased from the Province, and has historically been used exclusively by Aquabus under a licence agreement with the City. Both companies will have the option of servicing this dock under the new agreement.
· Spyglass and Science World - These docks are owned by the City and are on City-owned water lots. Although both ferry companies currently service these docks, there are no formal agreements in place governing their use of these docks.
· Stamps Landing - This dock is owned by the City and managed by Park Board. Although both ferry companies currently service this dock, there is no formal agreement in place for use of this dock.
· Quayside - This dock is privately owned by Concord Pacific (Concord) and their assignees, specifically the marina strata. The dock is on a City-owned water lot that is leased to the owner of the dock, and the dock must be operated and managed to the satisfaction of the City Engineer under a legal agreement with Concord. This dock was being exclusively serviced by Aquabus until May 2003 when the City required that both ferry companies be given equal access. Under the new agreement, the City will collect licence fees to cover maintenance associated with ferry operations at this dock, and will reimburse the owner for maintenance expenses up to a pre-determined value which represents the same standard of maintenance as will be applied to the City-owned docks.
· Plaza of Nations - This dock is also privately owned, but must be managed and operated to the satisfaction of the City Engineer under a legal agreement with the owner, Canadian Metropolitan Properties Corporation (CMPC). Both ferry companies have been servicing this dock for the last two summers under an informal arrangement with the City and CMPC. As per the Quayside dock, maintenance funds for this dock will be collected by the City as part of the annual licence fees and these funds will be available to reimburse the owner for maintenance expenses up to a predetermined value.
· David Lam Park - This dock is currently owned by Concord and is leased exclusively to Aquabus. This dock will be dedicated to the City as part of the Concord Area 1 development and will become part of this licence agreement at that time. Both ferry companies will be able to service this dock once it is dedicated to the City.
The existing City and Park Board controlled docks are being managed through several different agreements with varying terms and conditions, and the use of some of the docks by the ferry companies is not currently covered by any legal agreement.
An interim strategy was set in May 2003 at the two privately owned, but City-managed docks, whereby the ferry companies would pay the City $200 per month of operation for each dock, to be held in a City account designated for dock maintenance. The private owner was entitled to apply to the City to have dock maintenance costs reimbursed up to the total received per month for that dock. This strategy was to be in place pending review of the current dock management structure, and development of an overall ferry dock management system. This report discusses the proposed dock management system and resulting licence agreement, which will bring seven City-owned, leased or managed dock sites in False Creek under one agreement.
DISCUSSION
There are numerous advantages to the City to have the docks managed through a master licence agreement with both of the ferry companies, as follows:
· Standardization and Consistency: The docks in False Creek are currently operated by the Park Board, Engineering Services, the Maritime Museum, Real Estate Services (Property Endowment Fund), and the private owners under different and inconsistent agreements. The master licence includes, among other things, standardized delineation of indemnification and liability, insurance requirements, and outlines maintenance/repair responsibilities. A master licence provides for consistent and more efficient business practices, ultimately contributing to increased safety and the greater good of Vancouver citizens and tourists.
· Equitability: The master licence is based on equal access to each City-owned or managed dock to further promote business competitiveness between ferry companies, and to better serve the transportation needs of ferry boat users.
· Maintenance and Capital Recovery: Maintaining the passenger ferry docks at a consistent and high standard better ensures public safety is maintained, reduces liability risk to the City and is simply good business practice. The annual licence fee also includes a savings plan for capital replacement of the public docks, which will help ensure that the City can continue to serve the public's demand for ferry service in False Creek.
Staff have been working with the ferry companies and the private dock owners to develop a dock management strategy and licence agreement. A summary of the key components of the licence agreement is as follows:
· Level of Maintenance: The license agreement sets out a uniform level of maintenance for all the docks in False Creek covered by this agreement, and clearly delineates responsibilities for maintenance activities. This will help ensure that all required maintenance will be done in a timely manner, and to the same standard of care. The licence agreement also contains a provision to allow the two ferry companies to take on some of the maintenance associated with the City-owned docks, and gives them a pre-defined financial credit for the maintenance work which will be applied to their annual fees.
· Annual Licence Fee: The base annual licence fee is $25,500 per ferry company. The annual licence fee will be reviewed annually and potentially adjusted to account for any increase in costs. As mentioned previously, there are several City-owned docks on which many of the associated maintenance activities are available to be taken on by the individual ferry companies. This has been occurring historically to some extent but has not been documented formally. There is a potential annual fee reduction of $1820 per dock for taking on the associated maintenance activities. The base annual licence fee was set on a cost-recovery basis, and includes funds for maintenance and repairs of the docks, lease payments for the provincially-owned waterlots, and funds for future capital replacement of City-owned docks. A "use" factor was then applied to each dock, to account for the approximate amount of public versus ferry use. For example, the Hornby dock is essentially exclusively used by the ferries, and thus the ferry companies, thru their licence fee, would be responsible for 100% of the associated operating and capital costs for that dock. However, the Science World dock is heavily used by the general public for kayak launching, dinghy storage, and dragon boating, and therefore the ferry companies would only be responsible for 35% of the costs associated with this dock. The City will continue to be responsible for the remaining "public" portion. As per prior Council direction, capital funds were not included for privately-owned docks as the requirement for the ferry stop on these sites was a public benefit originally required as a rezoning condition.
· City-Managed Docks: Two of the docks covered by this agreement are privately-owned but City-managed (Quayside and Plaza of Nations). The owners of these docks will continue to be responsible for the maintenance and repair of these docks, as per the existing legal agreements. However, a portion of the annual licence fees collected by the City will be available to the owners of these docks for reimbursement of dock maintenance expenses.
· Term of the Agreement: The agreement will come into effect on February 1, 2005 and will extend for 6 years, expiring on January 31, 2011. The longer term agreement will give the ferry companies some security of tenure, but the agreement still contains standard termination clauses, including termination of the entire agreement with one year's notice. The City will also have the right to temporarily interrupt the use of one or more docks for another purpose, including a special event such as the Olympics, if required.
· Fees Charged by the Ferry Companies: The agreement will require that fees for use of its passenger service can not increase more than a total of 30% over any given three year period without first obtaining written approval of the City Engineer.
· Insurance: the licence agreement contains standard insurance requirements applicable to activities at all of the docks covered by the agreement, which will lower the City's exposure to risk.
The agreement would be signed by both existing ferry companies. Before authorizing any other ferry company to use the docks for a similar ferry service, the approval of Council would be obtained.
Both ferry companies have reviewed the draft licence agreement and are generally agreeable to the terms and conditions. The funds available for reimbursement to the private dock owners for maintenance work and strategy for reimbursement have also been reviewed with the private dock owners.
FINANCIAL IMPLICATIONS
The aggregate fee that the City/Park Board received for use of the City-owned and leased ferry docks in False Creek was $25,448 in 2004. Additionally, the ferry companies paid $200 each per dock, per month of operation at the two private docks. For year round access by the ferry companies to each of the private docks, the total fees received by the City/Park Board under the current arrangement would be $35,048. The total fees received under the new licence (with the allowable deductions for taking on some maintenance activities as discussed previously) will be $41,900. This represents a 20% increase over current rates. The licence fees set out in this report will cover the majority of the maintenance and capital replacement for City-owned docks. However, the City will continue to be responsible for the "public use" portion of the ferry docks, which equates to approximately $9500 per year.
Additionally, the Park Board currently receives approximate net revenues of $6000 annually for use of the Aquatic Center dock by False Creek Ferries and approximately $1000 from each of the ferry companies for use of the Stamps Landing dock, for total net revenues of $8000. These revenues, and all other revenues and expenses relating to the management of the docks in False Creek will be consolidated under Engineering Greenways.
ENVIRONMENTAL IMPLICATIONS
The ferries provide an alterative form of transportation and enhance opportunities to walk and cycle in the city by providing alternatives to cross False Creek. The proposed license agreement gives the ferry companies additional security of tenure, and ensures adequate funding for continued operation of the ferry docks.
CONCLUSION
The license agreement, as described in this report, gives the ferry companies some security of tenure for the next six years, while ensuring that there is sufficient funding to cover the maintenance and lease payments for the docks in False Creek. Additionally, the licence agreement will facilitate the implementation of a capital funds savings plan to replace the City-owned docks when required in the future. The resulting ferry dock management program will provide a stable environment for the ferry companies to operate in, ensure a consistent, high level of maintenance of the docks, standardize insurance requirements, clearly outline responsibilities, and provide equal access to all docks covered by the agreement to both ferry companies.
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