– Woody Hayes, FCPA, FCA is a retired partner who remains active with Hayes Stewart Little & Co in Duncan, Nanaimo, and Victoria.
VANCOUVER ISLAND – Capital investment is important to Vancouver Island’s economy as it creates jobs and boosts productivity in both the short and long term. CPABC Regional Check-Up noted that for the mid and north island and mainland coast, the resource and related manufacturing industries play an important in our region’s economy. Unfortunately, plummeting energy and commodity prices have impacted capital investment, creating uncertainty for many of the major projects proposed for our region.
Between December 2014 and 2015, the value of all major projects in the region decreased by 1.2 per cent to $61.3 billion. At the end of 2015, there were a total of 143 major projects either proposed, under construction, completed, or on hold in the Vancouver Island/Coast Development Region. Sixty-five of these were in the proposal stage, accounting for three-quarters of the total value, and $30 billion of this total was attributed to the Sarita Bay LNG facility project in Port Alberni.
Other large proposed projects include the $2 billion Discovery LNG project; the $3.3 billion Bute Inlet hydroelectric project in Campbell River; the $1.5 billion Sage Hills University and residential community in Union Bay; the $1.6 billion Port Alberni LNG export facility; and the $1 billion Sandstone Towne Centre in Nanaimo.
At the end of 2015, a total of 18 projects with a combined value of $2.0 billion were on hold, compared to 14 projects with a value of $837 million at the end of 2014. Many of the projects on hold were residential and commercial development projects, and some were related to mining and forestry.
This included the $213 million Raven Underground Coal Project in Comox, as Compliance Energy Corporation withdrew its second environmental assessment application in March 2015 and it is unknown when or if it will move forward. TimberWest Forest also placed its $60 million proposed wood fuel pellet facility project in Nanaimo on hold while the company reviews its business model for the facility and product.
The overall value of projects under construction increased by 7.6 per cent to $11.9 billion at the end of 2015, when compared to same time period in 2014. Last year sixteen projects began construction, but only two were located outside of Victoria. They are the $37 million Eden Gardens seniors housing in Nanaimo and the $29 million Campbell River substation capacity upgrade.
Both projects are expected to be completed in 2017. While building permit values for non-residential construction were at a nine-year low, down 16.6 per cent compared to 2014, residential building permits values were up 7.2 per cent, and large multi-phase developments are in progress, including the $1.1 billion John Hart generating station in Campbell River.
It has been a tough year for capital investment in our region. These concerns about capital investment are somewhat masked by the buoyant real estate market and strength in the construction industry. Certainly this is more significant in the Greater Victoria region, but it is also being reflected to a lesser extent in the rest of the Island and Coastal region.
With ongoing uncertainty in the resource industry impacting energy and commodity prices, it is unknown when these major projects will move ahead. Indeed, the success of our region’s economy moving forward is intrinsically tied to the advancement of several of the proposed projects, as they will create both new short and long-term jobs that will benefit our population.