Oshawa's commercial and industrial harbour is set to undergo redevelopment, after the city gained control of a large chunk of land on the west side. In an agreement announced in July, a large portion of the waterfront will be cleaned up and returned to Oshawa, allowing the municipality to realize the full potential of its Lake Ontario position through the development of recreational amenities such as a marina, restaurant/retail space and residential development. (Photo courtesy Oshawa Harbour Commission)

How a thing called divestiture is helping to transform
Ontario's waterfront into major assets for taxpayers

When it comes to the waterfront, “divestiture” is a word that can transform a municipality into the master of its own destiny overnight.  

The benefits of taking control of a federally operated port or harbour can be seen across Ontario, from Leamington to Belleville to Collingwood and places in between.  

In Cobourg, a municipality at the forefront of waterfront development, an industrial waste zone has been transformed into an attractive recreational harbour fringed by upscale condominiums, all linked to Victoria Park and a beautiful sandy beach via a much-travelled boardwalk. Gaining control over the waterfront, an eyesore littered in the 1980s with rotting buildings, rusting railway tracks and giant oil tanks, was the important first step that allowed Cobourg, located an hour east of Toronto, to take advantage of its prime location on Lake Ontario.  

When the federal government in 1995 made port and harbour divestiture official policy, complete with a multimillion-dollar budget for cleanup and repair before the handover, municipalities with visions of their own redeveloped waterfronts lined up to begin negotiations.  

Since 1995, more than 85 per cent of the 549 regional and local ports included in Transport Canada’s Port Divestiture Program have been transferred to new owners — mostly municipal governments. According to Transport Canada, the handovers saved Canadian taxpayers more than $270 million — because the federal government no longer had to maintain small harbours used primarily for recreation — and allowed it to concentrate on the money-generating commercial ports designated as Canada Port Authorities. The divestiture program expires on March 31, 2012.  

At the same time, the Small Craft Harbour divestiture program under Fisheries and Oceans Canada saw the transfer of hundreds of recreational and small fishing harbours to municipalities. In Ontario, of 399 recreational harbours, two-thirds have been divested and 73 are in progress, according to the government’s April 2010 update. Negotiations have yet to begin for 32 other harbours on the divestiture list.  

Negotiations can take 20 years — but it's worth the wait

It’s not unusual for negotiations to take 10 or 20 years — the municipality wants to ensure it isn’t taking over a toxic waste site or docks so rotten it can’t afford to replace them, and the government wants to be certain that whatever it cleans up or repairs before the handover is in fact a responsibility born under its watch, and not the result of an old municipal dump that pre-dated its harbour ownership.  

Among the divestiture agreements announced in 2010:  

Penetanguishene: A deal was signed in August after 10 years of negotiation. Penetanguishene gets control of the small craft harbour and town dock, while the government will pay for repairs to the concrete pier and sheet wall. The dilapidated T-dock will be replaced with a floating dock and breakwater structure.  

Midland: Next door, Fisheries and Oceans announced it was transferring ownership of the harbour and dock to the town for $1. As part of the deal, the feds were to carry out $750,000 in structural restoration to the harbour before the handover. Negotiations had started almost 20 years ago. Jim Downer, then mayor, described the deal in the Midland Free Press as “a positive step that allows the town to control the future use of the harbour.”    

Port Stanley: Transport Canada said it was transferring ownership of the fishing port to the Municipality of Central Elgin, complete with about 52.8 hectares of harbour bed, two breakwaters, two piers and a building. As part of the transfer, the federal government threw in $13.6 million to be used to cover “operational costs and maintain the port’s infrastructure.” “We have a magnificent opportunity to develop the harbour properties in a way that guides economic development both in the community and in the municipality as a whole,” then mayor Tom Marks said at the announcement ceremony. “There are really no limitations on what we can do, save for the limitation of our collective imagination and effort.”  

Dreaming big, however, will only take you so far.  

In Port Stanley’s case, the $13.6 million in federal funds must go toward the port’s operation (no one is saying how many years that cash will cover). The municipality, located on Lake Erie, will get added parkland out of the deal — the feds will clean up the east berm before handing it over — and there’s enough in the budget to keep the harbour open for recreational purposes, alongside a small fishing operation. But there’s no money for a marina, and no money for the dream tourist attraction — a re-creation of the former Stork Club dance hall.  

In Port Hope, next door to Cobourg, some residents are wondering if the municipality got the short end of the stick when council approved an agreement that would see 173 acres of Lake Ontario waterfront transferred to the town, along with $300,000 in federal money for future dredging work at the harbour. In July, resident John Floyd issued a formal request to the province for a public inquiry into the transaction, which he fears will end up costing taxpayers millions of dollars in future liabilities.  

Much of the transferred land, which includes five acres occupied by Cameco Corporation, which operates under licence from the Canadian Nuclear Safety Commission, is subject to a pending low-level radioactive waste cleanup for all material that pre-dates 1988. 

Once that has been completed, the town can begin to implement its 15-year waterfront redevelopment plan, which includes a new east marina, improvements to boating and docking facilities, trail development, playgrounds, fishing pier and connections to downtown and the Ganaraska River.  

Is $300,000 enough?

As the town sees it, owning the waterfront, including the land that Cameco sits on, will allow Port Hope to be “able to use its value to generate revenue, construct amenities, and secure funding from upper tiers of government and/or private investment.” As part of the deal, Port Hope will receive the revenue from the Cameco lease, which is now going to the federal government. In future, the town plans to sell Cameco the land it now sits on, using the proceeds from the sale to fund the waterfront redevelopment.  

As some residents see it, however, Port Hope is taking control of future problems that could cost taxpayers a lot of money, including environmental cleanups not covered by the current agreement, and solving the problem of sediment buildup (the $300,000 is “to assist with short-term sediment management until a longer-term solution can be found”) that can curtail future use of the harbour for recreation.  Many wonder why waterfront redevelopment would ever include a plant such as Cameco.  

Floyd, the resident and small developer who is calling for an inquiry into the deal, complained that compared to the $300,000 Port Hope received, nearby Oshawa hit the “harbour divestiture 6/49” when it received $19.1 million as part of its recent agreement with the federal government.  

For Oshawa, which sits at the eastern edge of the Greater Toronto Area, the announcement in July that a portion of the waterfront will be cleaned up and returned to the municipality will finally allow the city to realize the full potential of its Lake Ontario position through the development of recreational amenities such as a marina, commercial space including restaurants and — most important — residential development.  

Unlike nearby Cobourg, however, waterfront development in Oshawa will take shape against the backdrop of a federally owned commercial deep-water port and industrial lands that currently include asphalt and steel companies, and could soon be home to an ethanol plant and a CN rail spur.   “A mixed-use port including a marina is extremely important,” John Henry, Oshawa’s newly inaugurated mayor, told  

Now that the waterfront issue has finally been settled, both sides can plan for a future that has the municipality owning most of the west side of the harbour and the federal government, under a Canada Port Authority, controlling the east side. As Henry sees it, the fact the port is an important shipping point to export markets (thanks largely to General Motors and the area’s agricultural industry), and has plans to expand, gives the city “a competitive edge on the world stage.”  

“In the big picture, a commercial harbour is important for Oshawa,” Henry says.  

Condos, shipping and asphalt

After a lengthy battle that included a lawsuit, things are moving swiftly at the harbour, with crews already cleaning up contaminated land before the official handover. Public meetings are planned in early 2011 on Oshawa’s waterfront master plan, which includes a proposal to reopen the marina that the feds, under the Oshawa Harbour Commission, closed in 2002 citing environmental concerns.  

While facilities will likely be in place in time to allow boats to be launched by summer, Henry says a full-service marina is probably “a couple years down the road.” The city has an open invitation to the private sector to team up on a P3 Canada project that could see Oshawa and a partner collaborate on a development that includes highrise condos, retail and a marina. Under the P3 Canada program, the federal government would pay up to 25 per cent of new public amenities, such as a marina.  

John Gray, who served two terms as mayor of Oshawa before being defeated by Henry on Oct. 25, says Oshawa may not have got everything it asked for when it launched a lawsuit for the return of all harbour lands handed over to the federal government in the mid-1960s for economic development, but what it did get opens up exciting opportunities. He points to residential/commercial waterfront development in Cobourg and Pickering as “inspiration” for what Oshawa can achieve. “We have the same potential, and maybe more,” he told  

It was a desire to control its own destiny that prompted Oshawa to launch a lawsuit in 2006 for the return of the 61 acres of land transferred to federal hands in 1966. For years, the city believed the port was not being operated in such a way that it was contributing to the local economy, which was the intention when control was given up. The last straw occurred in April 2006, when the Oshawa Harbour Commission and CN proposed a rail spur on a portion of the 61 acres the city had requested be returned.  

In an effort to sidestep the lawsuit, the federal government commissioned David Crombie to study the situation and report back. In 2009, the government rejected Crombie’s recommendations (he agreed that the city should get all the land back) and announced that it planned to create a Canada Port Authority to run the port on the Crown’s behalf. It also offered to hold talks to negotiate a settlement to the lawsuit.  

Learning to co-exist, with $19.1 million to help out

In the end, Oshawa received 29 of the 61 acres it asked for, plus another 19 acres of land on the west side of the harbour, including the former marina lands, which were not part of the lawsuit. The feds also offered up $19.1 million, $9.2 million of which is to be used for environmental cleanup, with another $10 million spent moving the more industrial port uses from the west wharf to a new east wharf, leaving the west wharf near Lakeside Park — an Oshawa gem on the waterfront — for more compatible uses. Another $200,000 is to be spent on landscaping Crown port lands that border Simcoe and Farewell streets and Harbour Road. For its part, the city must spend $1 million developing new parkland on its new harbour lands.  

The end to the dispute allows both sides to move ahead, bringing an end to the uncertainty that has hampered the port’s expansion and kept condo developers away.  

A new fight may yet be on the horizon, however, if the port goes ahead with plans to allow a 12-hectare ethanol plant to set up on federal land known as Gifford Hill, which is next to the environmentally important Second Marsh. Council is already on record as opposing an ethanol plant on the waterfront.  

“It will negate any improvements that are done to the harbour facilities ... no developers will want to come in and establish commercial property or businesses in the harbour area,” Oshawa citizen Russ Rak told council at a public meeting in October, citing concerns about noise, odour and pollution.  

Henry, like his predecessor, says he will fight an ethanol plant with everything council has in its toolkit. “It goes against the direction the City of Oshawa is going regarding cleanup and beautification of the waterfront,” he says, adding that a “toxic” ethanol plant is not compatible in a successful mixed-use waterfront that includes the treasured Second Marsh.  

While council generally would have no say in what goes on Crown land, Henry says there are “options” council can take to protect its waterfront. For example, he says the proposed ethanol plant would not be insured without fire services, which currently are not available at the Gifford Hill site. Without insurance, the plant could not operate.  

In the case of Gifford Hill, any request for fire services would come directly to council. “We can use the rulebook,” Henry says. “We’re not looking for a technicality, but there are options for us.”  

The city may not own the entire waterfront, but it still has a major role to play in influencing its development. Expect to see condos overlooking a reopened marina, restaurant and shops on Oshawa’s Lake Ontario waterfront within the next five years.  

For municipalities, gaining control of the waterfront definitely has its rewards. Yes, dreaming big costs money. And keeping the waterfront beautiful and healthy for future generations can mean rising taxes. Only time will tell if the pros outweigh the cons. But at last count, not one municipality involved in a harbour divestiture has asked the federal government to take back what has been handed over.  

Little by little, Ontario’s waterfronts are being transformed into major assets. You can thank federal penny-pinching — the reason for the divestiture programs — for that. — December 2010