Bas-Caraquet mayoralty candidate questions shipyard deal

A candidate running to become mayor of Bas-Caraquet says he probably would have rejected letting the village become part of a flawed financial deal surrounding a local shipyard.

Théophane Noël, who was mayor from 1986 to 1991, says putting the village and the neighbouring town of Caraquet on the hook for millions of dollars in loans wasn't realistic.

The shipyard, the New Brunswick Naval Centre, is a non-profit corporation founded by the two municipalities and subsidized by the province and Ottawa.

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The centre was incorporated to revive and run the long-dormant shipyard in Bas-Caraquet.

But the project ran into trouble last year when the centre was unable to borrow $4 million for infrastructure and $13 million for a new dry dock.

"By definition, a non-profit company has no money, because there are no investors in it," Noël told CBC News. "This is why I don't understand why the two levels of government accepted this formula.

"Most likely, if I had been there [as mayor], I would have refused this kind of formula. I would have preferred to go and get investors."

The centre's inability to borrow the money led several suppliers to file liens against the property last fall over unpaid bills.

One of them, Quebec's Groupe Océan, which was building the dry dock, halted work in December, throwing 28 people out of work.

Province buys shipyard

That forced the province to step in with more money.

On the weekend, Liberal cabinet minister Victor Boudreau announced that the government will buy the shipyard to ensure the work is completed.

Noël says he supports the goal of reviving the shipyard.

"Definitely if I'm elected, I will push to continue with the development of this industry."

But he says he has questions about why the initial agreement was set up the way it was, and about the details of the province's bailout.

The government says it will buy the facility for $1, pay off existing debts, and finish the existing infrastructure project for $10 million and other upgrades.

That includes a $13-million dry dock and $15 million in other construction.

It will also hire a management company to run the shipyard.

But the bailout is conditional on Caraquet and Bas-Caraquet agreeing to continue funding the centre with $80,000 each per year for the next 10 years.

Property tax could be raised

Noël said in a village of only 1,200 people, that expense will require a big increase in the property tax rate.

He said if elected, he'll try to negotiate a deal with the province that softens the local impact.

Noël said incumbent Bas-Caraquet mayor Agnès Doiron and her council "did their best with the information they had and the experience they have."

But he said he doesn't know why the New Brunswick and federal governments agreed to a financing deal that relied on two small municipalities being able to borrow millions of dollars.

"We have no information on that. I suppose the province supported the idea of a non-profit company, and this is my question: why?"

Boudreau said this week the naval centre's role was set out by a preliminary deal put in place by the previous Progressive Conservative government and announced just days before the 2014 election campaign.

Boudreau said when the Liberals took office, cabinet documents prepared for them on the deal were "inaccurate" because they didn't mention the naval centre would have to borrow the money up front.

"I remember being under the impression the entire $13 million was Groupe Océan's responsibility," Boudreau said on Monday.

Confusion over deal details

A government press release last May said Groupe Océan "will invest" in building the dry dock, but the Quebec company's spokesperson said in December that wasn't the case and it was up to the naval centre to come up with the money.

Denis Caron, who was the deputy minister of the Regional Development Corporation when the package was presented to the Liberal cabinet, refused to comment on Tuesday.

"In order to respect the confidentiality pertaining to Mr. Caron's previous responsibilities with the Province of New Brunswick, he is not in a position to comment on the file," said a spokesperson for the Port of Belledune, where Caron is now CEO.

Doiron, who is running for a third term as mayor against Noël, said on Tuesday she believed she was aware "from the start" that the naval centre would have to come up with the money.

But she said she couldn't be sure, and she refused to discuss the agreement in detail, hanging up her phone in mid-conversation.

The mayor of Caraquet, Kevin Haché, did not respond to calls from CBC News on Tuesday.

The centre was also supposed to raise $4 million from banks to match the province's $4-million infrastructure grant. Ottawa put in $2 million.

Noël says part of the problem is the naval centre, as a non-profit private company, doesn't have the same transparency obligation as the two municipalities that created it.

"There's kind of a trick there. It's very difficult to be transparent when you're running such a company."