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Hotel tax exemption sees interest, but no construction to date

One year after city council approved its controversial Revitalization Tax Exemption bylaw as an incentive to increase up-to-standard hotel rooms downtown, no hotel developers or companies have officially applied to take advantage of the tax break.

Council passed the motion Feb. 27, 2012, mostly to attract developers to build a conference centre hotel to help bolster delegate numbers for the underutilized Vancouver Island Conference Centre.

The conference centre is capable of hosting up to 1,300 delegates at a time, but the downtown area is only equipped with about 400 rooms council sees as fit enough to accommodate delegates.

Mayor John Ruttan, who made building a conference centre hotel a priority when first elected in 2008, said there have been discussions with interested developers over the past four years but the economic climate remains soft enough that there has been no commitment.

“We have had some inquiries and we’re working on one now that would be contingent upon the bylaw’s consideration,” said Ruttan, noting there has been ongoing interest from offshore organizations interested in building the conference centre hotel.

“Like any incentive it’s offered with the hopes it will draw something in but for something like this it takes time, but I think a hotel will be built.”

He added there are two other projects in the preliminary stages of discussion that could also benefit from the exemption, though nothing concrete has emerged yet.

The bylaw provides a 10-year tax exemption for new hotels or rebuilds with a minimum $2-million investment, but would not diminish the existing tax base.

Existing motels and hotels that improve guest services, add rooms or improve the overall quality of stay for the visiting public are also eligible for some tax savings.

It is estimated that a new conference centre hotel worth $25 million would receive about $330,000 annually in tax breaks for the 10-year period.

“Looking back I still believe it was the right thing to do at the time and as we move along, I’m confident it will bear fruit and be a successful move,” said Ruttan.

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