EVALUATION REPORT

EVALUATION OF THE GRANTS &
CONTRIBUTIONS PROGRAM FOR THE DISPOSAL OF SURPLUS LIGHTHOUSES

PROJECT NUMBER 6B180
FEBRUARY 2016


EVALUATION DIRECTORATE
CHIEF FINANCIAL OFFICER SECTOR
FISHERIES AND OCEANS CANADA

ACKNOWLEDGEMENTS

The Evaluation Directorate would like to thank all individuals who provided input to the evaluation of the Grants & Contributions Program for the Disposal of Surplus Lighthouses. In particular, the Directorate acknowledges the time and effort of key informants and survey recipients who took time to share insights, knowledge and opinions during interviews and through survey responses.

ACRONYMS

CCG
Canadian Coast Guard
DFO
Fisheries and Oceans Canada
G&C
Grant and Contribution
HLPA
Heritage Lighthouse Protection Act
O&M
Operating and Maintenance
PWGSC
Public Works and Government Services Canada

TABLE OF CONTENTS

EXECUTIVE SUMMARY

Introduction

This report presents the results of the evaluation of the Grants and Contributions (G&C) Program for the Disposal of Surplus Lighthouses. The evaluation was conducted by the Evaluation Directorate within Fisheries and Oceans Canada (DFO). In accordance with Treasury Board’s Policy on Evaluation and the Financial Administration Act, the main objective of the evaluation was to examine the relevance and performance of the Program, including an assessment of its effectiveness, efficiency and economy.

Program Profile

In June 2011, DFO received approval for a G&C Program to facilitate the disposal of lighthouses that are surplus to the Department’s core mandate. The main objective of the Program is to use grants and contributions to ensure that heritage lighthouse properties are preserved and remain accessible to the public. The main activities of the Program include: negotiating agreements with interested parties and developing tools and strategies to facilitate the disposal of surplus lighthouses. The Program is intended to support the outcomes that designated lighthouses are disposed of in a consistent, timely and cost effective manner, that heritage lighthouses  remain accessible to the public for a minimum of 10 years, and ultimately that DFO has  an enhanced ability to focus limited resources on properties that are required in support of priority program requirements.

Evaluation Methodology

The evaluation adopted a theory-based approach whereby program performance was measured against intended results articulated in the Program logic model. The following methods were used: a review of all G&C Agreements (including all financial information); key informant interviews; a survey of G&C recipients; key Program documents; and a review of relevant literature.

Evaluation Findings

The evaluation demonstrated the following key findings:

  • There is a continued need to support lighthouse divestiture.
  • The G&C Program aligns with government priorities and federal roles and responsibilities.
  • The G&C Program did result in a more timely divestiture process.
  • The G&C Program has put the mechanisms in place to ensure that heritage lighthouse properties are preserved and remain accessible to the public.
  • A G&C Program for the divestiture of the surplus lighthouse properties is an efficient and economical mechanism for disposal.

Recommendations

The evaluation demonstrated that the Program is relevant and performing as intended. There are no recommendations required at this time to improve Program performance.

1.0 INTRODUCTION

1.1 Purpose of the Evaluation

This report presents the results of the evaluation of the Grants and Contributions Program for the Disposal of Surplus Lighthouses (the G&C Program). The evaluation was conducted by the Evaluation Directorate within Fisheries and Oceans Canada (DFO). In accordance with Treasury Board’s Policy on Evaluation and the Financial Administration Act, the main objective of the evaluation was to examine the relevance and performance of the Program, including an assessment of its effectiveness, efficiency and economy.

1.2 Evaluation Scope and Context

The evaluation covered the period from April 2011 to December 2015 and included the National Capital Region and all six DFO regions: Newfoundland and Labrador, Maritimes, Gulf, Quebec, Central and Arctic, and Pacific. The evaluation commenced in June 2015 and concluded in February 2016.

2.0 PROGRAM PROFILE

2.1 Program Context

Lighthouses have a great deal of historical importance for many maritime communities.  Due to technological advancements, traditional lighthouses and their supporting infrastructure are seldom required to provide a reliable system of fixed aids to navigation to facilitate the safety of mariners. Program requirements can often be met through alternative options. The lighthouses now present an opportunity for economic development in tourism-based ventures in the communities where they are located. The normal practice regarding the disposal of surplus lighthouse properties was that they be offered at a nominal cost and in order of priority to other federal departments, provinces, municipalities, local non-profit organizations, and First Nations.

Historically, DFO’s lighthouse disposal program was reactionary. Projects were created when interest was expressed from another party. However, the Heritage Lighthouse Protection Act (HLPA) which came into force on May 29, 2010, required DFO to proactively determine which of its fixed aids to navigation would be declared surplus and available for ownership by third parties. Lighthouses can be declared surplus if they are no longer required as active aids to navigation by the Canadian Coast Guard (CCG), or if a priority interest group expresses interest in acquiring an active lighthouse and maintaining the site and structure on behalf of DFO for a specified time period or for as long as an active aid to navigation is required.Footnote 1

DFO’s G&C Program to facilitate the disposal of surplus lighthouses began in June 2011. The Program, which provides funds to eligible recipientsFootnote 2 who wish to assume ownership to preserve the heritage value of the lighthouse and ensure the lighthouses’ public purpose, runs until December 2015.

The main objective of the Program is to use grants and contributions to ensure that heritage lighthouse properties are preserved and remain accessible to the public. The main activities used to achieve this objective are: negotiating agreements with interested parties and developing tools and strategies to facilitate the disposal of surplus lighthouses..

The Program is intended to achieve the following results:

  • Designated lighthouses are disposed in a consistent, timely and cost effective manner;
  • The preservation of heritage lighthouses that remain accessible to the public for a minimum of 10 years; and,
  • Enhanced ability to focus limited resources on properties that are required in support of priority Program requirements.

Annually, there is $500,000 (Vote 10) available for the Program. Below are the expenditures for the Program since 2011-12.Footnote 3

Graph 1 - G&C Spending per Year
The bar graph shows grant and contribution (G&C) spending by the program, per year. The amount shown for 2011-12 is $0. The amount shown for 2012-13 is $312,000. The amount shown for 2013-14 is $85,000. The amount shown for 2014-15 is $1,020,000.

Graph 1 - G&C Spending per year

2.2 Logic Model and Performance Measurement

A Performance Measurement Strategy for the G&C Program was developed in 2010 and performance measures were available to assess Program performance.

3. EVALUATION METHODOLOGY

3.1 Evaluation Approach and Design

This evaluation adopted a theory-based approach whereby Program performance was measured against intended results articulated in the Program logic model. The chosen design was able to demonstrate the extent to which the Program is achieving issues of relevance, effectiveness, efficiency and economy. Use of triangulation was undertaken as an analytical method, where multiple lines of evidence helped corroborate findings. There were only minor limitations to the evaluation, none of which impact the interpretation of the findings and conclusions.

The evaluation questions covered relevance and performance, including effectiveness, efficiency and economy. The evaluation questions were determined based on:the Treasury Board’s Policy on Evaluation (2009), a review of key Program documents, and results from preliminary discussions with key Program personnel.

To calibrate to the most appropriate level of effort for this evaluation, the evaluators assessed the risks associated with the evaluation and determined that since performance data was accessible and the degree of the complexity of Program delivery was low the level of effort for this evaluation could be reduced. Evaluators adjusted the breadth of the evaluation and limited the number of evaluation questions to directly respond to the five core issues within the Policy on Evaluation and to the information requirements of the Program.

Additionally, as the G&C Program has only been in place since 2011, the evaluation team did not anticipate being able to fully assess long term outcomes, namely the enhanced ability to focus limited resources on properties that are required in support of Priority Program requirements.

3.2 Data Sources

Existing administrative and financial data were reviewed for this evaluation and supplemented with additional data sources where required. The sources used are described more fully below:

  • An examination the value of G&C Agreements;
  • A review of key documentation related to the Program, including all G&C Agreements;
  • A review of relevant literature, including related evaluations;
  • Interviews with key Program personnel within DFO, CCG in National Headquarters and in the Regions (n=10); and,
  • A survey was conducted with all G&C recipients (n=25), which received a response rate of 40%.

4.0 FINDINGS

4.1 Relevance

Demonstration of a Continued Need for the Program
Key Finding: There is a continued need to support lighthouse divestiture.

In 2010, DFO had 540 surplus lighthouse properties in its real property inventory. As of 2014-15, DFO had transferred 6% (n=32) of these properties through the G&C Program. There are currently 88 remaining viable expressions of interest that have been received, and 42 Agreements still in negotiation. The Agreements in negotiation represent 8% of remaining DFO surplus lighthouses. It is expected that by 2018, 14% (n=74) of all surplus lighthouses properties could be divested, provided that a G&C Program continues to be available.

All of the interviewees stated that there was a continued need for a G&C Program to support lighthouse divestiture, and almost all of the respondents to the recipient survey stated that they would have been unable to move forward with the divestiture if the G&C funds were unavailable. The G&C funds allowed them to leverage funds from other sources, ensure the long-term sustainability of the lighthouses, and invest in necessary structural repairs.

Aligned with Government Priorities and Federal Roles and Responsibilities
Key Finding: The G&C Program aligns with government priorities and federal roles and responsibilities.

The evaluation found that the G&C Program aligns with government priorities and federal roles and responsibilities. Several key federal government documents (Budget 2012Footnote 4, Budget 2013Footnote 5, the October 2013 Speech from the ThroneFootnote 6) commit to reviewing federal assets and divesting these where appropriate. As well, the Treasury Board Policy on Management of Real Property states that “real property surplus to program requirements” is not to be retained.Footnote 7

In addition, the G&C Program supports the Departments’ National Real Property Portfolio Strategy to reduce the size of DFO’s real property portfolio. The G&C Program feeds directly into this strategy (as well as broader, whole-of-government commitments mentioned above) as it exists to divest lighthouse properties which are no longer necessary to fulfill program delivery requirements. This helps ensure that assets retained in DFO’s portfolio are those that are essential for enabling programs core to the Department’s mandate.

Finally, the G&C Program is in line with the stated purpose of the HLPAFootnote 8, which is to conserve and protect heritage lighthouses by “facilitating sales or transfers of heritage lighthouses in order to ensure the lighthouses’ public purpose.”

4.2 Effectiveness

Demonstration of a Timely Divestiture Process
Key Finding: The G&C Program did result in a more timely divestiture process.

The evaluation found that the G&C Program did result in a more timely divestiture process. The evaluation found that since 2011, 26% (n=32) of lighthouses with viable expressions of interest have been divested through the G&C Program. The average length of time to divest a lighthouse property during this time has been approximately 2.5 years.Footnote 9 Program documents analyzing routine disposal projects (not using the G&C mechanism) indicate that these projects have taken approximately 5-7 years.

Almost all of the interviewees said that the provision of G&Cs contributed to a more timely divestiture process. According to those key informants, the G&C Program sped up the process of project approval internally and with Public Works and Government Services Canada (PWGSC). The reality of many surplus lighthouse properties is that the condition of many of these properties often deters prospective acquirers and as a result the majority of the acquirers request that DFO make the sites more marketable prior to transfer. The G&C Program has allowed DFO to provide recipients with funds to complete improvements themselves which results in a much timelier process of divestiture.

All of the survey respondents said that the Program was somewhat or very responsive to their needs. Some survey respondents did note that they were not fully satisfied with the process, with most additional comments noting that the process was long, bureaucratic, and not well understood.

Preservation of Heritage Lighthouse Properties
Key Finding: Mechanisms are in place to ensure that heritage lighthouse properties are preserved and remain accessible to the public.

The HLPA is intended to conserve and protect heritage lighthouses by, among other things, facilitating sales or transfers of heritage lighthouses in order to ensure the “lighthouses’ public purpose”Footnote 10. The evaluation found that lighthouses designated under the HLPA were given priority status for G&C funding, and as such, 81% (n=26) of the lighthouses divested through the G&C Program were lighthouses designated under the HLPA.

It was noted that while the Program has been fairly successful in supporting the divestiture of properties designated under the HLPA, there are a number of properties listed under the Act for which the Department has not received an expression of interest.

While the Program has not been in place long enough to verify that heritage lighthouse properties remain accessible to the public for 10 years, the evaluation found that all G&C Agreements contain wording to ensure that heritage preservation and lighthouse public purpose are maintained. The recipient survey did indicate that public access is not simple in all cases. Some recipients noted that they did not have direct public access due to safety issues and ease of accessibility, but that public access is a long term goal.

4.3 Assessment of Resource Allocation

Key Finding: A G&C Program for the divestiture of the surplus lighthouse properties is an efficient and economical mechanism for disposal.

The use of a G&C Program to divest surplus lighthouse properties is an efficient and economical mechanism for disposal. Expenditures for the G&C Program from 2012-13 to 2014-15Footnote 11 , [ATIA, Section 21] , are detailed below in Graph 2. While the Program is provided with $500,000 annually, the Department was able to convert funds (from Vote 5) to provide the Program with additional funds, allowing for the divestiture of additional properties. While the average cost of a G&C was about $44,300, Agreements ranged in value from $6,000 to $245,000.

Graph 2: Grant and Contribution Expenditures per Year
The bar graph shows grant and contribution (G&C) spending by the program, per year. The amount shown for 2011-12 is $0. The amount shown for 2012-13 is $312,000. The amount shown for 2013-14 is $85,000. The amount shown for 2014-15 is $1,020,000. G&C spending for 2015-16 and the anticipated spending for 2016-17 has been excluded as per Section 21 of the Access to Information Act.

Graph 2 - Grant and Contribution Expenditures per Year

As shown earlier in the report, with the use of a G&C Program, the length of time of divestiture was approximately 2.5 years versus a more traditional divestiture process which can typically take 5 to 7 years to complete.

The evaluation also examined the costs of a G&C in lieu of the Department’s option to demolish the surplus property (Graph 3). Since 2012-13, the cost of the G&C Program for divestiture has been significantly lower than the estimated costs of demolitionFootnote 12 demonstrating value for money to the Crown in all Agreements. Furthermore, in both interviews and a survey of recipients it was stated that providing funds to communities allows the recipients to leverage funds from other sources. It also allows recipients to seek more economical options for remediation projects. The evaluation examined a sample of projects undertaken by the Department and confirmed that project fees can increase the costs of projects when undertaken internally.

Graph 3: Cost of Divestiture v. Cost of Demolition
The bar graph shows the estimated cost of demolition of lighthouses compared to the cost for divestiture, per year. In 2012-13, the cost of demolition is estimated as $587,738, whereas the cost of divestiture is $312,000. In 2013-14, the cost of demolition is estimated as $176,175, whereas the cost of divestiture is $85,000. In 2014-15 the cost of demolition is estimated as $2,111,166, whereas the cost of divestiture is $1,020,000.

Graph 3 - Cost of Divestiture v. Cost of Demolition

Finally, a review by other evaluations of the use of G&Cs as a mechanism for divestiture similarly reported a benefit to the Crown with respect to resource utilization, concluding that a grant or contribution as a tool for divestiture is generally a cost-effective mechanismFootnote 13. Transport Canada reported a savings of up to $22M over the next 25 years through the Port Divestiture Program (which includes a contribution program)Footnote 14.

4.4 Key Barriers

The evaluation found that there were a number of barriers which complicate the divestiture of lighthouse properties. These include:

1. The need for environmental remediation
Many of the Department’s surplus lighthouse properties require environmental remediation work to be completed, for issues such as mercury contamination, lead paint on the structures, etc. It is costly for the department to do the work, but many community groups or potential recipients of the lighthouses are reluctant to assume the liability of accepting the properties “as-is”. Another issue associated with this barrier is the difficulty associated with the alignment between the construction season and the government fiscal year, combined with cumbersome PWGSC processes, making it difficult to complete necessary work. As discussed earlier, the use of a G&C Program mitigates this barrier.

2. Resources:
Resources are limited both in terms of funds available to provide grants (there is more interest than funds available), as well as a limited budget for completing pre-disposal activities. A $500,000 budget has limited reach, especially considering the number of surplus lighthouses remaining in the Department’s inventory. The limited budget for completing pre-disposal activities restricts the ability to advance files. In addition, some of those interviewed noted the risk of creating false expectations by having a G&C Program available, but only with limited funding.

3. Complexity of consultations required
The complexity of consultations required in order to divest of many of the properties affects the timeliness of divestiture. Due diligence activities, such as ensuring title information for the properties is correct, as well as complications related to land access, can also cause unanticipated delays.

4. Processes associated with divestiture
With multiple stakeholders involved, the number of steps to complete the divestiture  increases, making for a longer process. The HLPA, in particular, has a number of steps (including a 90-day posting requirement) which lengthens the divestiture process and causes difficulties in completing divestitures within the fiscal year timeframe.

5.0 CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusions

There is a continued need for the G&C Program. The Program continues to be aligned with Government and Departmental Priorities. The Program is performing as intended. Divestitures are more timely while ensuring that lighthouse properties designated under the HLPA are transferred to those who will continue to ensure the lighthouses’ public purpose. Further, the use of a G&C Program to dispose of surplus lighthouse properties has proven to be an economical and efficient mechanism.

With an additional 42 Agreements still under negotiation, G&C funding continues to be of value in the short term, allowing the Department to capitalize on current interest in these properties.

5.2 Recommendations

The evaluation demonstrated that the Program is relevant and performing as intended. There are no recommendations required at this time to improve Program performance.