Sydport and the CBRM: More than miscommunication
Economic growth that benefits everyone is impossible without good governance.
The April 21 meeting of Cape Breton Regional Municipality council offered the most in-depth discussion to date of the 2015-2026 CBRM-Sydport land deal. As we learned at the committee of the whole meeting a week prior, council had been surprised to discover that the 24-acre waterfront property had been sold to Point Edward Marine in March 2026 without their knowledge.
A group of councillors at the meeting on the 21st – deputy mayor Glenn Paruch, councillor Kim Sheppard Cambell, councillor Steven McNeil, councillor Steve Parsons, and councillor Darren O’Quinn – lead by councillor Earlene MacMullin and councillor Gordon MacDonald, took turns asking questions of, and raising concerns with, CAO, Demitri Kachafanas and solicitor, Tony Mozvik.
Watching the meeting, you’d be forgiven for concluding that the culprit behind this protracted mess was poor communication. Improvements to communication were the lone remedy offered by the CAO during the 2.5-hour discussion of the 2015 lease and 2026 sale of property to Point Edward Marine (owned by Albert Barbusci).
But to watch beyond the CAO’s opening commentary was to understand that the dysfunction, as it pertains to the decade-long transaction, runs much deeper.
DECADE OF LOOKING THE OTHER WAY
There were parts of the meeting that were hard to watch and that seemed to justify the community’s perpetual exasperation with the CBRM:
– CBRM staff did not regularly inspect the property to ensure that the condition of the property was being maintained. There was some disagreement about whether the property was atrocious when CBRM bought it or even more atrocious after CBRM owned it for a decade. This lack of regular inspection and documentation persisted, even though councillor Steve Parsons made formal complaints years prior about the neglect and deterioration of the property.
– The CAO was not sure if there was insurance on the property. According to the lease, the tenant was responsible for the primary commercial general liability insurance policy on the property, but no one checked to see if the tenant had insurance in place. If the tenant did not have insurance, CBRM was to take out a policy and bill the tenant for these costs plus 15 percent. This does not appear to have happened.
– The CAO was unaware that the property was allegedly sublet by Point Edward Marine to another user for the last eight years, contravening the lease, and that Point Edward Marine was charging their tenant more in rent than they were paying to the CBRM.
– CBRM staff did not provide any updates on the significant economic benefits (100-plus jobs, $18 million to be invested in the property by the tenant, new paint shop) that were used to justify purchasing the property from one private sector company to lease it to another in 2015. It does not appear that these were measured or reported on at any point in the last ten years.
– The CAO did not think that the renewal of the lease in 2025 and then conversion to a sale in 2026 warranted an examination of lease compliance or notice to council, despite members of council inquiring about the land and lease specifically. Councillor Gordon MacDonald noted two requests submitted to the CAO for information about the lease in January 2026. He did not receive the information he requested. Councillor MacKeigan requested copies of all outside contracts from the CAO on Jan. 28th and did not receive the Sydport lease.
This wasn’t negligence over a few months, or even a few years. This went on for a decade.
LEASE LOOPHOLES
According to CAO Kachafanas, the lease and subsequent sale could not be stopped once approved by council in 2015. He belaboured that this was a decision of a previous council, and so we simply had to live with it. This lease – that apparently offered CBRM no protections or options to terminate – lists then municipal solicitor, Demitri Kachafanas, as the contact for the CBRM, and is signed by then mayor, Cecil Clarke.
If you recall, there was some controversy at the time because Clarke signed the lease in April 2015 before it was brought to council in June 2015 (and the mayor does not have authority to sign a lease of this magnitude without a prior public vote of council).
From Kachafanas’ perspective, as conveyed at the meeting on April 21, if council was given the opportunity to review the lease when it expired in June 2025, they could not have terminated it, even if the tenant breached the lease (by subletting and allowing for property deterioration as had been the case), because these were just “boiler plate clauses.”
Likewise, if council was given the opportunity to review the conversion to a sale prior to its execution in March 2026, they could not have stopped the sale even if the tenant breached the lease (through subletting and property deterioration), because these were “boiler plate clauses.”
This means one of two things:
Either, then solicitor Kachafanas allowed, and then mayor Clarke signed a bad lease that did not protect the CBRM, or they signed a reasonable and enforceable lease, and had it been brought to council by current mayor Clarke or current CAO Kachafanas, council could have terminated it.
PROFIT AND LOSS
We learned at Tuesday’s meeting that there is still no complete financial analysis of the deal.
One might have assumed there would have been a review of the financial terms of the lease before it was renewed by the CAO in 2025 to assess the costs of the lease to the CBRM and whether lease rates needed to be updated after ten years, or at very least, before the property was sold in 2026.
To recap what we know:
– When it was owned by East Coast Metal Fabrication (ECMF), the property cost the CBRM nothing and generated $50,000/year in tax revenue for CBRM.
– In 2015, CBRM paid $1.2 million to buy the property from ECMF so it could turn around and lease it to Point Edward Marine.
– Point Edward Marine paid CBRM $90,000/year as a lease payment. Of this, $60,000 was set aside each year to be applied to the purchase price, should PEM decide to buy the site.
– This left CBRM with a net of $30,000 per year in revenue.
– Had CBRM not inserted itself into the deal between East Coast Metal Fabricators and Point Edward Marine, it would have earned $500,000 in tax revenue over the last 10 years on the property. With the lease no property taxes were paid, and the revenue earned by the CBRM (lease payments after cash set aside for a future purchase) over the same period was $300,000, a loss in revenue of $200,000.
Marie Walsh, who in 2015 was the CFO for the CBRM had raised objections to the lease, noting in an email sent to, among other, mayor Clarke and dolicitor Kachafanas, that under the Municipal Government Act (MGA), even if the CBRM owned and leased out the property, they were obligated to charge property tax to PEM, and yet this was not included in the lease.
We learned at the April 21 meeting that CBRM in fact borrowed the $1.2 million for the purchase, and so in addition to the above, was paying loan interest. In 2015, the interest rate would be around 3 percent (on account of lower borrowing rates available to municipalities) and amount to an additional cost to the CBRM of $205,000 in interest payments for the 10-year period.
If CBRM netted a total of $300,000 (lease payments less the portion applied to the purchase price), paid $205,000 in interest payments, and lost $500,000 in property tax revenue, the result is a loss of $405,000. This does not account for any incidental costs (insurance) or appreciation in the value of the land.
RAISE THE BAR
The mayor and CAO are the two most senior positions in the municipality. Mr. Kachafanas has been employed, first as solicitor and then as CAO, by the CBRM for 27 years. He is the sole employee of council, and thus is responsible for the performance, or failure, of all other employees of the municipality. Mr. Clarke has been mayor for a combined total of 10 years, including when this Sydport arrangement was first put in place.
And it would seem they cannot figure out how to draft a lease that protects the CBRM, what to bring to council and when, how to ensure that tenants are adhering to their lease conditions, whether CBRM properties are insured, and what we earn on our property transactions.
This is a dysfunction runs far deeper than communication.
We deserve to expect more than this of our municipal officials. We deserve to expect that the community’s best interest is the basis for every decision, that those executing these decisions have the skills needed to ensure good process and protections, and that contract (lease) development and enforcement, due diligence, and good asset stewardship are the bare minimum.
Several councillors at April’s meeting – MacMullin, MacDonald, Kim Sheppard Campbell, Paruch, Steven McNeil, Parsons, and Darren O’Quinn – were pushing strongly in this direction.
Without this, we’ll continue to be but a stepping stone for companies like Point Edward Marine, who are glad to purchase our properties below market value, and make a quick buck on subleases, all the while we pinch pennies, cut spending, watch our child poverty numbers climb, and our roads and sidewalks continue to fall apart.
Economic growth that benefits everyone is impossible without good governance.
Erika Shea is the president & CEO of New Dawn Enterprises, Canada’s oldest non-profit community development corporation.
