City: A year ago, a representative from the Port Authority was here in Rochester...
Lundy: That would be Henry Pankratz [chairman] and Lisa Raitt [CEO].
City: And we understand they signed a memorandum of understanding to start construction on the Toronto terminal.
Lundy: This goes back to adequate funding from the north side of the border. And when the memorandum of understanding was signed back in August of 2003, what was attached to that --- and the mayor may not be aware of this; certainly CATS was aware, because it was signed between CATS and the Port Authority --- was a qualifier that funding for the construction had to be provided. It didn't stipulate a particular level of government. Basically, it had to come from some other funding partner.
The intention was to have it funded by the Toronto Waterfront Revitalization Corporation, which is made up of our three levels of government --- municipal, provincial, and federal governments, basically the benefactors of a ferry service such as this.
That all fell into a huge void come September of last year. The discussion went back to the board room. We worked with CATS again to figure out what could be done. There were a lot of changes that happened at that point to make the project become a reality.
City: What were the reasons for it falling into a void?
Lundy: There was a lack of money. We were turned down by the organization [Toronto Waterfront]. The city would not come onside with the project. There was no money. It was a different mayor. This was September 2003, and our elections were in November.
It really wasn't until December that the Port Authority said: We believe in this project; we think it's a very important marine transportation opportunity, and we will be prepared to fund it, up to a certain level.
We knew what the prices were, and the board made a commitment to do the construction. Then there were a number of alterations made to the requirements from Customs, which had drastically changed from our initial plans.
City: Did you consult Customs in your initial planning?
Lundy: Yes, we did. It was a change on their end. When we were initially talking to them in 2002, the terminal [design] was based on the existing Bar Harbor-Yarmouth ferry service [from Maine to Nova Scotia]. From that, we had requirements for space and various offices and the four departments that would be operating out of the terminal. When we got into the nuts and bolts of the project, things just went awry.
City: How much money was required to construct the terminal originally?
Lundy: I can't quite remember all the exact details. But the cost for Customs and Immigration skyrocketed. It doubled.
City: Did Customs give you a reason as to why there was this change?
Lundy: They said these were new, post-9/11 requirements. And we said: Well, we were talking to you in 2002. They didn't know how to do a new terminal. What we were basing things on was an existing terminal that was in place pre-9/11. Their problem was they didn't know how to treat it. Should it be considered a land-border crossing? Or should it be treated as an airport, with that type of security?
City: So, originally your plans were based on an older terminal?
Lundy: Yeah, it was based on how they handle marine ferry service in Bar Harbor, which is very straightforward.
In our discussions, they certainly required a lot of changes. But those changes also required a lot of time, a lot of time that was lost in the project. So our original [planning] was aimed at a May 1 startup, coinciding with the ferry service. These changes came in, and we didn't have money to make them. We had to go back and say: We don't have the money to do what you're asking. It just got into a money problem. And the May 1 date never changed. We kept saying to CATS: Look, we can't take this on. That wasn't in our original agreement back in August.
City: What were you hearing back from CATS at that point?
Lundy: Well, they were working along with us. Obviously, they had commitments they had already made. They started making payments on the vessel. The vessel left Australia. It was en route. What we had to do was say: OK, this is what we can do. And this is everybody: This is CATS, the Port Authority, Customs. We all said: What can we do?
And we decided we could make a temporary facility happen when the boat goes into service. And we will follow up with a permanent structure shortly thereafter. And that was all signed off. This was no surprise event. This happened, and everybody knew it was happening. So we went to work putting together this temporary facility --- which was a challenge, because it had to leave a footprint for the permanent building.
City: And I assume Customs had certain requirements you had to meet with the temporary facility.
Lundy: Absolutely. And they were strict requirements.
City: Can you give me some sense of them?
Lundy: There's a lot of security issues, to ensure the proper processing of passengers. There are lock-up cells, the proper plumbing, those types of things. But they were certainly accommodating and understanding as well on the situation.
City: So everybody was aware of the temporary deal, and that you'd be working toward some sort of permanent solution.
Lundy: That's right. And that was tied up in the agreement that was eventually signed for the boat to turn over ownership in June. So the lenders were aware;CATS was aware. Everybody knew what our situation was in June. And our contract, the actual final terminal contract, was all wrapped up in this deal, signed off in June.
City: And what has happened since then?
Lundy: The contract was let. And people say, Well, if the contract's let, shouldn't they be in there building tomorrow? But there's a lot of preparation work. It's a marine structure that's built right along the water's edge. There's an existing dock wall that has to be accommodated and taken care of during this construction. There's been a lot of pre-construction work, survey work, layout of utilities and existing anchors: a lot of details like that that are not the same as a conventional construction.
So where we are right now is, the asphalt on the site has been removed. It's been pulverized and graded. The contractor will be coming in next week to excavate for footings, elevator pits, escalator pits, and we'll be proceeding out of the ground very shortly.
City: So you do have the funding now to do the whole thing?
Lundy: Yes. We've committed $10.5 million [Canadian] to the project.
City: And that's money coming from the three levels of government?
Lundy: No. They did not provide any money. That fell through.
City: So this is straight Port Authority money?
Lundy: That's right. If the money had come through, we would have had a permanent terminal May 1. So what happened was, we decided to make a commitment on our own.
City: Given that, why do you think the Port Authority is getting such a bad rap in the press?
Lundy: I don't know. And it's so unfortunate. It's downright depressing. This is a good project. If you look at the ridership the ferry saw: The public has grabbed hold of this as an acceptable mode of transportation. It worked. It's reliable, once they got the schedule figured out. But in August they were doing great. And just to let the axe fall like that is pretty tough.
And what we're trying to do is say: OK, what are the issues? And it's not the terminal. We have a temporary terminal that we used to process full boatloads of people effectively and efficiently. It worked fine. It's not a TajMahal. You guys have done a great job with yours, it looks super. But we can process person-to-person with you anytime.
City:The creditors are telling CATS that the Toronto terminal must be completed before they will release the escrow funds.
Lundy: The lenders were quite aware of the construction schedule and everything else back in June, when that boat was turned over. That was all part of the package that went to the lender.
City: What's the timeline on the construction schedule?
Lundy: Substantial completion of the building January 11. That was always the case. There's been some talk about what to do with the passengers in the fall and early winter, and we've been in discussion with CATS about that, about how we can provide a covered and heated walkway. We've been in discussions. Everybody thinks these are new issues, but they're not. They've been going on for some time.
City: Then why do you think everything has come down this way? If people knew this all along, why the sudden news that the funding's not going to be forwarded?
Lundy: We're as much in the dark as a lot of people. We knew nothing of the suspension happening. We got it off the news. We are trying to get more information. Our chairman is talking with someone in CATS. He spoke this morning with Mayor Johnson. We are as keen as everyone else to get this project back on its feet. Let's go forward. Let's be positive and get this thing working.
City: We hear the creditors are scheduled to come to town next week.
Lundy: That's what I hear as well. We had a meeting set up about two weeks ago to meet with them next Wednesday. And I do not know if that's still confirmed, because the guy who set it up was one of the guys on the chopping block. He's gone.
City: Well, that's a whole separate issue. What impact will the CATS layoffs have on the planning for a new terminal?
Lundy: When you're working on a terminal like this, there are things that have to be planned through. The last details and all the rest.
City: But we're still on track for the January 11 completion date?
Lundy: Yes. I've been in contact with our contractor all this week as this thing unfolded. We're still going forward.