Troubled shipyard needs province's help: Caraquet mayor

The mayor of Caraquetwould like the New Brunswick government to put more money into a troubled shipyard in the Acadian Peninsula.

The New Brunswick Naval Centre is facing a $4 million shortfall that could jeopardize plans for a major contract that would create 75 jobs.

But the province has been reluctant to pour more money into the facility. It recently cut off funding, saying it wanted "to ensure we are protecting taxpayer dollars."

It's too much of a big deal for the Acadian Peninsula to say we're going to shut it down because it's a $4 million problem.- KevinHach, Caraquet mayor

Mayor Kevin Hach saidthe banks that planned to lend the naval centre the $4 million asked the two municipalities, the town of Caraquet and the village of Bas-Caraquet, to guarantee the money.

But the two municipalities can't do that, so Hach hopes the province will help.

"It's too much of a big deal for the Acadian Peninsula to say we're going to shut it down because it's a $4 million problem," he told CBC News.

"We need the money. So where it does it come from? We're working with them. If they're willing to put more in it, it'll be easier. If they're not, we'll have to find another way. But I hope they do."

In May, the province committed $4 million to upgrade the shipyard's infrastructure.

One of the conditions was that the centre match that amount from other sources.

"It turns out the Naval Centre never fulfilled its commitment to secure its $4million in funding," Victor Boudreau, the minister for the Regional Development Corporation, said in a written statement earlier this week.

That led the province to cut off the funding after it hadhanded over just $1.5 million.

There's another $3.8 million committed by Opportunities New Brunswick as payroll rebates for Groupe Ocan, a Quebec company that plans to have its ships serviced at the yard. But that money won'tflow until people are working.

Couldn't pay suppliers

Hach saidthe problems began when the provincial money was flowing too slowly, and the naval centre wasn't able to pay three suppliers.

Those companies went to court to put liens on the property for a total of more than $1.5 million dollars.

That generated publicity that made the banks nervous. "When the liens came up, and all these problems came up, they started asking for more guarantees," Hach said.

The naval centre had assumed that the existing shipyard site, and its assets, had enough value to provide those guarantees, but they didn't.

The banks asked the two municipalities to guarantee the money, but the amount, $4 million, was too high, saidHach.

"Even a small amount will affect our ability to borrow," he said. "We could a certain amount, but every time we do a certain amount, it goes onto our books. That's not what we're ready to do."

It would also jeopardize the town's ability to borrow money for other priorities, including a new arena it's planning, and water and sewer work.

Owned by Caraquet, Bas-Caraquet

The naval centre was incorporated by the two municipalities, and the two mayors and municipal administrators sit on its board.

But, because the centre is a private non-profit company, it doesn't have the same legal obligation to report to the public on its finances.

"Are they transparent enough?" Hachasked. "I think yes.I don't think they have an obligation to give all that information, but that's my point of view."

The mayor also said the municipal presence on the board was meant to be a temporary move, until the centre was up and running.

Hach said the $1.5 million the province has already turned over was spent upgrading the site, and paying some of the suppliers who did the work.