Nova Scotia money for Yarmouth-to-Maine ferry all spent

The Nova Star ferry dwarfs the city of Portland's fire boat as it prepares to leave Portland, Maine, May 15, 2014.
The Nova Star ferry dwarfs the city of Portland's fire boat as it prepares to leave Portland, Maine, May 15, 2014. Robert F. Bukaty/The Canadian Press/AP

HALIFAX – The entire $21 million loan that the Nova Scotia government committed over seven years for the new Yarmouth-to-Maine ferry has already been spent by its American operator only two months into its first season, the province’s economic development minister said Thursday.

Michel Samson said the Liberal government wants to keep the money-losing service afloat, but he would not answer directly when asked if he is considering subsidizing Nova Star Cruises.

“We have not been able to find one ferry service that is not subsidized by taxpayers,” he said after a cabinet meeting.

“We made a commitment to restore the service and we did our best to make the deal work. It’s now become clear that deal was not realistic.”

Samson was referring to a deal struck by the previous NDP government, which promised last year to revive the service after killing it early in its mandate by eliminating an annual subsidy that amounted to $12 million in 2009.

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“We had concerns from Day 1,” Samson said. “We tried to make it a success.”

During the election campaign that saw the NDP swept from power last October, the Liberals said they would ensure the “service remains sustainable for generations to come.” The party also pledged to end subsidies to large corporations and “bailouts to industries in decline.”

In November, Samson announced that the government signed a final deal to re-establish the ferry service. The agreement included the $21-million forgivable loan that has been spent, of which $10.5 million was supposed to go to startup costs in the first year of service and another $1.5 million was to be set aside annually for marketing.

On May 30, a company spokesman said Nova Star expected to secure a line of credit through the Financial Authority of Maine, the state’s business financing agency. He also said the company planned to repay the province by the end of the summer for a $2-million bond required by U.S. maritime authorities.

At the time, Samson said Nova Scotia’s financial commitment to Nova Star had already risen to $19 million — only two weeks after the Nova Star ferry carried its first paying passengers between Yarmouth and Portland, Maine.

The final $2 million was handed over Friday to cover the service’s operating costs.

Mark Amundsen, CEO of Nova Star Cruises, issued a statement Thursday saying the service has faced several significant challenges after a four-year hiatus.

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“We know it will take more than the first year to rebuild,” he said. “We have required the committed funds from the province to get the service established and we continue to be in ongoing conversations with officials from the province.”

Amundsen said after a slow start, Nova Star has had “exceptional visitor feedback” and ticket bookings significantly increased as soon as summer arrived.

Samson said part of the problem is that Maine Gov. Paul LePage has failed to deliver on a promise to offer a $5-million line of credit to Nova Star, which is based in Portland, Maine. But a spokesman for LePage said in May the state had only agreed to help the company find private financing.

Samson said he would be speaking to LePage in the next few days, insisting that the state had promised financial support.

The 161-metre Nova Star ferry is scheduled to make daily round-trip crossings until Nov. 2.

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