Borrowing limits for Canada Port Authority (CPA) ports and innovative financing tools

Ports are an important part of Canada's transportation system as key connections to the global marketplace. Changes in federal policy are needed to ensure that Canada's ports remain viable and have the capacity to pursue future opportunities.

CPA ports are constrained in the amount they can borrow for capital projects by the terms of their Letters Patent. While CPAs can request an increase in their borrowing limits by applying to the federal Minister of Transport, the process may be long and cumbersome.

Bill C-61, An Act to amend the Canada Marine Act and other Acts, attempts to address the issue of CPA borrowing limits. Under the proposed amendment, CPA ports will be able to increase their borrowing power before supplementary letters patent are issued, so long as the increase is approved by the Minister of Finance and does not exceed $7 million. However, the provinces and territories believe that eliminating the borrowing limits for CPAs and replacing them with whatever level of borrowing is acceptable in the market will allow our ports to better respond to future growth and development opportunities.

US governments at all levels consider their ports to be vital parts of the transportation system. American ports have access to a variety of financing mechanisms, including the ability to issue tax-free revenue bonds and, in the cases of Seattle and Tacoma, the power to tax area residents. In order to ensure that Canadian ports are able to realize future business opportunities, the federal government must create a policy and regulatory environment that allows CPA ports to access innovative and flexible financing tools.

Federal participation in port investments of national significance

Bill C-61 also attempts to address the issue of CPA port access to federal funding. Under the existing Canada Marine Act, CPA ports do not have access to federal funding or loan guarantees. Bill C-61 will allow CPAs to access federal funding (under existing programs) for qualifying infrastructure or infrastructure-related projects, provided the total amount of payments does not exceed 20% of the eligible costs of the project.

These are important first steps in allowing ports access to the capital funding they require to finance infrastructure that will allow them to effectively serve customer needs and take advantage of growth in various areas of port traffic.

Grant ports wider power to manage assets and recognize regional growth strategies

CPAs have limited authority to acquire or dispose of federal real property. This is usually done through the Minister of Transport and, if purchasing property valued at more than $250,000, the Minister must make a submission to Treasury Board. Similarly, for all sales of federal real property, a Treasury Board submission and an Order-in-Council authorization are required. This is a complicated and time-consuming process.

The provinces and territories believe that CPAs should be permitted to acquire or dispose of real property that is valued less than a predetermined maximum dollar amount, on behalf of the federal Crown. Further, we endorse the idea that the CPAs retain the proceeds from these sales for general port purposes.

When seeking third party financing, CPAs are currently permitted to pledge only revenue streams and fixtures. The provinces and territories believe that this policy should be expanded to allow CPAs to pledge all port assets, including real estate.