Sydport land deal raises questions, lacks principles of good governance

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In 2015, Cape Breton Regional Municipality (CBRM) Mayor Cecil Clarke and council voted to purchase property from East Coast Metal Fabrication and Sydport Operations Inc. (both owned by local businessman Jim Kehoe) so that it could lease the same to another private company, Point Edward Marine Inc.

The vote to purchase the property followed the presentation of an issue paper by then Port of Sydney CEO Marlene Usher. The issue paper noted that the deal had been brokered by Harbour Port Development Partners (HPDP), the predecessor to SHIP, the company that tried and failed earlier this year to extend its exclusive 10-year port development contract.

The Sydport land, and its lease, were on council’s agenda this past Tuesday after councillors learned that the land had been sold by CBRM in early April to Point Edward Marine ULC (a new iteration of Point Edward Marine Inc.), owned, as it turns out, by Albert Barbusci, majority shareholder of both HPDP and SHIP.

MUNICIPAL PROCESS AND PURPOSE

This latest chapter in “things about the port that make us go huh?” raises several questions about both municipal process and municipal purpose.

Typically, when a municipality sells a property to a private sector buyer it requires (as per the Municipal Governance Act) two things:

1. that the property formally be deemed surplus in an official vote of council
2. that there be an appraisal to determine fair market value.

No vote took place to deem the property surplus. Unless embedding the option to purchase the property in the lease was meant to infer that it was surplus? But the lease to Point Edward Marine Inc. was written before the property was purchased by the CBRM, so why would the municipality go out and buy a piece of property that it already saw as surplus to its operations?

Perhaps intervening in what should have been a private sector transaction (selling and buying of land for private sector activities) stood to benefit the CBRM in ways that justified the municipality acting as property developer for more than a decade.

Thankfully, for our purposes, the benefits that we were to accrue were laid out in the 2015 issue paper: creation of 100+ jobs, $18 million invested by Point Edward Marine Inc. to improve the wharf, and construction of a $1-million East Coast Metal Fabricators paint shop. None of this was realized. East Coast Metal Fabrication closed its doors in 2023. And, if the asset was part of a larger port development plan on behalf of the community, we no longer own it.

In fact, if the CBRM had not bought the property, they’d be $200,000 richer. They purchased the property for $1.2 million and sold it for $1.2 million. Six hundred thousand of this was paid to the CBRM on closing, and each year, $60,000 of the annual $90,000 lease payment was credited to the purchase price, leaving the CBRM with just $30,000 per year (or $300,000 over 10 years) on land that previously generated $50,000 per year (or $500,000 over 10 years). CBRM was additionally responsible for maintaining fire insurance, boiler and machinery insurance, and an all-risks insurance policy on the property during this time.

When the lease was drafted in 2015, an appraisal was conducted to determine the value of the land. Based on average appreciation in industrial properties in Nova Scotia over the last decade, with no changes or improvements to the property, its value today would be between $1.75 million and $1.95 million (based on an annual appreciation rate of 3% from 2015 to 2019 and 6% from 2020 to 2023).

Thus, not only did CBRM save Barbusci the interest he’d have otherwise paid (approximately $550,000 in interest alone over 10 years on a 6% 20-year commercial mortgage if he had to buy the property directly from East Coast Metal Fabricators), but he’s saved having to pay the CBRM for the property’s increase in value under their ownership.

‘PRACTICAL LESSONS’ TO BE LEARNED

There are some practical lessons here for future transactions:

• options to buy must be based on a current appraisal
• options to buy must be subject to a specific and public council vote to deem the land surplus
• projected economic benefits must be measured and reported on
• when significant long-term contracts expire (as the 10-year PEM lease did in June 2025) council must be invited to review and determine whether to renew or change course
• council must be made aware of the sale of all municipal assets, but especially those valued above $1 million.

But there are also lingering questions about the role of the municipality in light of a deal that has enriched Barbusci, a private citizen, to the tune of $1.1 to $1.3 million (the total of the appreciation and the absence of standard interest payments) but failed to enrich the CBRM.

Under the Municipal Governance Act, municipalities are responsible for fire protection, solid waste, parks/recreation, wastewater, streets and sidewalks, economic development, building and fire code inspections, public transit, and land use planning. What municipal responsibility was advanced by this transaction?

Did the community benefit financially from the appreciation in the value of the asset over the last 10 years?

No.

Did the community realize some or all the economic benefits that were held up as the rationale for the transaction?

No.

Did the community meaningfully advance port development in a way that is material, transparent, and clearly communicated?

No.

IS THE SYSTEM WORKING, AND FOR WHOM?

Municipal governments play an important role in stewarding public resources and advancing the long-term interest of the communities they serve. This includes investing in infrastructure, enabling growth and, where appropriate, facilitating developments that achieve clear public purposes.

It is not, however, the role of a municipality to assume risk or pursue transactions that deliver private gain without a corresponding and demonstrable public benefit. When that occurs, it undermines public trust and blurs the line between legitimate economic development and the inappropriate use of public resources.

As we wait for a tender for the Greenfield to be issued, after council put an end to the 10-year untendered contract to various companies that were majority-owned by Barbusci, this experience highlights what happens when we don’t abide by the principles of good governance (transparency, consistent public process, and an exclusive focus on benefits to the CBRM). Private actors win and the community loses. And when those same outcomes surface repeatedly, it asks us to consider whether the system is working, and for whom.

In an effort to right past wrongs, councillors at Tuesday’s meeting laid several important questions on the table, called for the circulation of pertinent documents, and requested an open discussion of the issue. It will be back on the agenda this coming Tuesday when council reconvenes and, the man said to have all the answers, CAO Dimitri Kachifanis, is in attendance.

Erika Shea is the President & CEO of New Dawn Enterprises, Canada’s oldest non-profit community development corporation.

Cape Breton Post, April 16, 2026