City pushes hotel tax-exemption bylaw

The controversial final step in an effort to encourage new hotel and motel investment was approved by Nanaimo council Monday.

The new Revitalization Tax Exemption Bylaw is specifically designed as incentive for a hotel to complement the Vancouver Island Conference Centre, which is operating well below capacity partly because of a lack of up-to-standard rooms in the downtown core.

The VICC can host up to 1,300 delegates at a time while feeding 950. Nanaimo's downtown is equipped with about 400 rooms council sees as fit to house visiting delegates.

Coun. Jim Kipp said he sees the bylaw as "giving away money" at the same time property taxes are going up and other demands on the city, such as purchasing more parkland, are also increasing.

"We're offering a million bucks a year to a hope hotel yet we can't find money for park land, we can't find money for other stuff. I understand this is really based on the hotel and trying to get the convention centre to be successful, but it's tough for me to see this."

The bylaw, however, passed unanimously.

Dan Brady, chairman of the Nanaimo Hospitality Association, said he is not comfortable with the unlevel playing field the bylaw creates, but understands its purpose.

"The main issue from the point of the NHA is to ensure that we have concrete plans to boost the tourism industry in Nanaimo," said Brady by e-mail. "Our goal is to see a vision generated that will make Nanaimo a destination."

It's estimated a new conference centre hotel worth $25 million could enjoy a tax break of about $330,000 annually for the 10-year term, according to the city's financial department. That is solely for the city portion of taxes, as school, hospital, regional district and other taxes would still be collected.

The tax relief does not diminish the city's existing property tax base.

The bylaw will provide a 10-year tax exemption for new hotels or rebuilds with a minimum $2 million investment. Existing motels and hotels that improve guest services, add rooms, renovate or improve the overall quality of stay for the visiting public are also eligible for some tax savings. The bylaw was amended before third reading to also explore the redevelopment of some motels and hotels to provide rentals for the working poor and low-income seniors.

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