Summer 2007
So what happened to the dock? It certainly is the first thing you notice as you come onto the island. And what has happened to community ownership?
The walkway to the dock disappeared in a violent wind storm in December, and could not be rebuilt in winter, by Fisheries Canada policy. The community ownership dream has ended, and the facility is back in the hands of the original owner, with some island residents being wiser and poorer.
On the afternoon of 11 December 2006, a hurricane force storm hit the mid Vancouver Island coast. Airline pilots who were in the air at the time reported water spouts, indicating that there were tornados embedded in this storm. The storm came straight from the west over the Vancouver Island mountains - a super Qualicum - and lasted about two hours. It was reported that wind speeds in excess of 170 km/hr were measured at Chrome Island lighthouse. This storm knocked out the power on Hornby Island for eight days.
Some of the devastation is still visible along McFarlane Road on Denman Island, which is where our power lines run. There was so much damage on Denman that Hydro did not even get to Hornby to assess the damage until Wednesday. There was a pile of tree parts, hydro poles, wires and transformers in front of the Community Hall that blocked the road for several days. We had to drive around this by going through the Hall parking lot.
One of the tornados hit the Thatch. One large Douglas fir tree was twisted off its stump and another uprooted. And the walkway to the dock disappeared. The picture above and the one below were taken the next morning. This one shows a large arbutus tree which blew down into the parking lot and shed broken branches which were then blown into the windows of the pub, breaking four of them. The large fir tree was twisted off its stump, carried ten feet west and then fell onto the upper deck of the laundromat building, with its butt resting on a large propane tank - the white object at the right edge of the picture.
There was remarkably little damage to the buildings, although power was cut off to both the laundromat and the main buildings. The damage was covered by insurance, but the adjuster was so difficult to deal with that by February, the costs incurred to limit damage in December had still not been paid back and it was necessary to shut the facility down for the rest of the winter for lack of funds. It only reopened after the foreclosure.
As for the dock, it turns out that Fisheries Canada prohibits repair work docks in this area between February and May, presumably because of the herring spawn.
Many visitors have heard of the community ownership of the pub and have asked about its progress. The reality is that it was a noble experiment that failed. At no time was it ever truly community owned, and it would not have been until the first mortgage loan was paid off. Even so two financial rescue attempts were still opposed by certain people's concerns about loss of community ownership. Here is a brief summary:
In April 2005, Hornby Island Resort was "purchased" by Hornby Island Community Economic Enhancement Corporation (HICEEC), a local non-profit organization, with the aim of rejuvenating it, raising capital by adding accommodation to be sold in some form of shared ownership, and then using the profit to foster economic development on the island. In fact the shares of the operating company were held in escrow as security for the first mortgage up to the time the mortgage was foreclosed, so it never was "owned" outright by the community.
This noble endeavour failed for a variety of reasons, including a poor financial model, insufficient startup capital, lack of businesss experience, lack of continuity from the previous owner, over-staffing, inadequate financial control and confused management responsibilities.
Traditionally the business had to raise anough cash in summer to get through the winter. In the summer of 2005, the business lost $100,000 and the first mortgage owners took over control in September. In hindsight they should have foreclosed at that time, but the community was not ready for this. An attempt was made to reorganize the structure so the shareholders would own the assets and HICEEC or some other entity could operate the businesses on the land. This would provide security for the shareholders. This failed through the refusal of the second mortgage holder to accept a deferal.
In May 2006, the business was put up for sale at a value which would have paid off all investors, a long hope. It was then reduced to about the nominal purchase price, and one offer was received but abandonned with the failure to reach agreement with the second mortgage holder. The December storm and the apparent inability of the insureance agent and the adjuster to advance any cash to repair the damage caused its closure again. Finally in March the second mortgage holder excercised his right to buy out the first mortgage, and then foreclosed on 11 June 2007.
So we have come full circle. The original seller of Hornby Island Resort received about $1.0 million in April 2005, plus some paper which is now worthless. He, with partners, has now bought it back for about the same amount of money. Island shareholders and lenders are out by about $353,000. With two exceptions no one has lost more than they can readily assimilate. No one is happy but no one sees the need to take any further action. The sad fact is that this amount exceeds the amount the community proudy raised to spark the purchase of what is now the Mount Geoffrey Escarpment Provincial Park.
- by Doug Christie