The 60-year-old ferry service that connected Bar Harbor with Nova Scotia was discontinued in 2010, but the town and the Maine Port Authority (MPA) still consider the terminal to be a valuable asset for the region.
After a study of alternative uses for the four-and-a-half-acre property, the MPA is now looking to acquire the facility, with an eye toward developing it for the use of cruise ships.
The study, to evaluate potential uses for the terminal, was commissioned by the town, Bar Harbor Chamber of Commerce and MPA and conducted by Bermello, Ajamil & Partners, Inc. (B&A) of Miami, Fla.
Bar Harbor is a popular cruise ship destination, and the cruise ship industry is an important economic engine for the town and state, said MPA Executive Director John Henshaw.
According to the study, the industry brought $36 million in direct spending to the state in 2010. Additional benefits come when passengers return for shore-based vacations.
Cruises are “one of the fastest growing tourism products in the entire world and one that Bar Harbor has been able to compete very well in during this timeframe,” the study states.
But Bar Harbor is at a disadvantage because it doesn’t have a pier, according to the report. Cruise ships send tenders into a private facility adjacent to the town pier, which is limited in area available for tour buses and creates congestion for passengers and the town.
“Tendering of passengers from a big ship results in passengers having to wait for long periods of time on the vessel and in long lines at the pier to get onto the ship,” the report says. “What this does is reduce the amount of time a passenger can stay in town and thus reduces the economic impact of that passenger by limiting the length, number and types of tours. In addition, tendering discourages many passengers from actually getting off the ships. Ports that rely on tendering are quickly building piers, and those that are not are losing traffic.”
The terminal’s development for cruise ships would be a plus for both the town and for passengers, as “it would provide an opportunity to better manage visits,” Henshaw said.
Shoreside docking would allow passengers to leave and return to the ship at will. Their distribution to the attractions of Acadia National Park and Bar Harbor would flow more evenly, and traffic congestion would be alleviated, he added.
The MPA has sent a proposal to the terminal’s owner, Marine Atlantic, and is awaiting reply, Henshaw said. As a crown corporation—an enterprise owned by the Canadian government—Marine Atlantic receives guidance from Transport Canada, the Canadian government’s equivalent of the U.S. Department of Transportation.
Henshaw declined to cite the proposed purchase terms at this time. However, he said the plan is to finance the purchase, in coordination with the town of Bar Harbor, through a revenue bond, by which repayment depends on an asset’s revenues, as opposed to a general obligation bond, which is secured by taxation. Revenue bonds generally have higher interest rates.
The terminal was built as the first ferry link between Maine and Canada. In 1949, Canada began to develop a new ferry terminal in Yarmouth for service to Maine. Bar Harbor subsequently bought the counterpart site for $15,000. In 1953, the Maine Legislature funded $1 million to build the terminal. Bar Harbor transferred ownership of the property to the MPA, which leased its use to a crown corporation.
The first ferry, Bluenose, was christened in 1955. Bay Ferries, Ltd. bought the ferry operation in 1997 and introduced the high-speed catamaran, The Cat, in 1998.
Since its inception, the service relied on Canadian subsidies. The elimination of the subsidies was a factor in the discontinuation of The Cat‘s operation in Bar Harbor and Portland in 2010. Other factors included declining use—from a peak of 160,000 passengers in 2002, down to 80,000 in 2010; more stringent U.S. immigration requirements; and the cost of the service—a round trip for a family of four in a car cost $912 in its final year.
Since discontinuation, most businesses in Bar Harbor adapted and thrived, according to the study.
“Bar Harbor was more quickly able to recover than Yarmouth because it had a robust tourism industry already,” Henshaw said. “Yarmouth was more impacted because it didn’t have as much of a tourism industry outside the movement of passengers using the ferries.”
In the meantime, the property has lain fallow.
B&A weighed three scenarios: restart ferry service; expand cruise traffic into the terminal; and a combination, plus commercial development.
Ferry service was deemed a money-loser for the long-term.
Conversely, cruise traffic in Bar Harbor has increased dramatically over the past decade. For 2012, 119 ships and 147,000 passengers were expected in Bar Harbor, between early May and late October. Increasingly, two or three ships arrive in a day; this year, four ships arrived on Sept. 23.
The study analyzed whether it would be best to move existing cruise traffic to the terminal and provide shuttles for passengers, or maintain existing traffic in town and invite new traffic to the terminal.
The first concept would rob business from the center of town, the report says.
The second concept “can provide a profitable operation which would pay the current taxes that the town’s collecting, pay for the improvements, pay for the operating expenses, and yield a modest surplus revenue that can be used to make further improvements to the facility.”
The report says that Carnival and other cruise lines have responded positively to the idea of additional facilities.
A ferry, commercial enterprise and public access could be added onto cruise ship development, Henshaw said. Restarting the ferry, however, partly depends on Canada’s financial support.
The report prices a new cruise ship pier and site improvements at $24.7 million. The terminal currently has a fixed pier originally built to accommodate the Bluenose, and a floating ramp system used by The Cat. Henshaw said the idea is to build a new pier—whether fixed or floating has not been decided—to replace the old structures, parts of which would be salvaged or demolished as the case may be.
The goal is to acquire the terminal in 2013 and have operations running by 2015.
In a related development, a new report out of Nova Scotia, concludes that a re-established ferry service between Yarmouth and Portland could become commercially viable.
The study, called “Re-establishing a Yarmouth-U.S. Ferry? An Analysis of the Issues,” was commissioned earlier this year by Nova Scotia Premier Darrell Dexter.
According to the report, “viability hinges on being able to build passenger traffic back at least to the 130-135,000 level. This is the critical uncertainty.”
The report calls for a shift in the ferry business model, to be built around the passenger’s experience onboard what is termed a “cruise ferry,” rather than simply offering another transportation route, and around promotion of Nova Scotia as a “destination experience.” A potential ferry could break even in the seventh year and achieve a “modest” profit thereafter, the report says. However, initiation of service would require roughly $30-$35 million of support from the federal and provincial governments.