Canadian town seeking $6 million from feds to repay loan for submarine museum

The HMCS Ojibwa submarine was officially opened at Port Burwell on July 6, 2013. The former Canadian Cold War vessel has been converted into a museum. (Ben Forrest, Times-Journal)

Ben Forrest/St. Thomas Times-Journal
13 March 2015

A rural Elgin county municipality is hoping the Canadian federal government will shoulder at least some of the burden of a $6 million loan associated with the HMCS Ojibwa submarine in Port Burwell.
The Municipality of Bayham says it’s being asked to cover costs associated with Project Ojibwa, a campaign that brought the submarine to Port Burwell in 2012.
HMCS Ojibwa -- a Cold War-era, Oberon-class submarine -- opened for tours in 2013, drawing just under 30,000 people in its inaugural season.
Elgin Military Museum in St. Thomas spearheaded the campaign and borrowed against a $6 million letter of credit Bayham provided to Royal Bank Canada, according to Bayham administrator Paul Shipway.
Bayham has been told the museum is in default of its repayment obligations toward the $6 million loan, Shipway said.
If the museum does not come up with the money by March 20, the municipality is on the hook for the entire $6 million, Shipway said.
So Bayham has reached out to MP Joe Preston and MPP Jeff Yurek, seeking a solution that won’t require the municipality to shoulder the entire burden.
There is some historical precedent involving a vessel in Hamilton that went from private to provincial hands and is now in federal hands, Shipway said.
“They stepped in and took care of everything,” Shipway said. “So we're looking for the same sort of support that was shown in the GTA-H would be shown in rural Ontario.”
Without financial help, the municipality would pay about $275,000 this year out of reserves and future payments would come out of the municipal tax levy.
That would mean a 10.5% levy hike next year unless council can find a way to lower other costs, Shipway said.
“If it does hit the levy, we're going to work towards ensuring that the Municipality of Bayham tax rates continue to stay one of the lowest in Elgin county,” Shipway said.
“And the municipality's known for its people, its community and its companies, not this one incident.”
Elgin Military Museum executive director Ian Raven did not comment directly on the issue of payment defaults when reached by phone on Friday afternoon.
But the museum issued a statement later in the day, saying it is in talks with the bank to explore  potential solutions.
There are a number of reasons for the situation to have developed as it has, the museum said. Original cost estimates received by the museum for the project were vastly exceeded when final invoices arrived.
And other work was found to be required that none of the project experts had anticipated, generating more costs, the museum said.
Delays beyond the museum's control in the movement and preparation of the vessel pushed back the start of operations, which reduced revenue generated in the submarine's opening seasons, the museum said.
The statement pointed to other circumstances like record cold and snow in the last two winters, saying they further limited the museum's ability to operate the site and generate year-round revenue.
And some revenue, such as promised federal funding, did not materialize, the museum said.
“The museum intends to continue operations while our team works to develop new proposals and strategies to bring the project to a successful conclusion for all parties.”
Bayham is holding a public information session on the matter March 16 at 7 p.m. at the Vienna Community Centre.