Nanaimo mayor Bill McKay vented his frustration on Friday over the death of the conference centre hotel deal.
On Thursday, legal representatives of SSS Manhao International Tourism Group informed the City of Nanaimo via letter that SSS Manhao would no longer move forward with the proposed conference centre hotel project.
The city was awaiting a reply since council passed a motion on June 22, extending the construction start date on the condition that the developer sought a building permit within six months, SSS Manhao commit $100,000 towards improvements to Piper Park and that it relinquish right of first negotiation for potential management of Vancouver Island Convention Centre.
The letter, sent by Richmond legal firm Kahn Zack Ehrlich Lithwick LLP, said SSS Manhao does not believe that project has the support of the majority of city council.
“This was evident at the city council meeting which took place on June 15, 2015. Accordingly, the company has determined that viability of the hotel development is at risk, and the company cannot therefore accept the terms of the proposal," the letter read.
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McKay said while SSS Manhao “killed the deal,” he believed it was already dead. He said SSS Manhao representatives were ill-treated the three times they came before council, as they were scolded and chastised, causing them to lose face.
"The next thing that happened was I couldn't shake this notion that there's still an appetite on council to repurpose the conference centre even though there's a proponent come forward that we would like to build a $50 million hotel adjacent to it. In fact, we forced them to build a walkway between the hotel and the conference centre,” said McKay.
“They get the green light to go ahead with the hotel and we continue to talk about repurposing the conference centre. That's just bad business faith dealings," McKay added.
Andre Sullivan, Nanaimo Economic Development Corporation board chairman, said he is disappointed at the news, but thinks the blame can be shared.
"I'm not going to say that they left because of the way they were treated, but it sure doesn't help when a large investor comes to town and I'm also going to say that as a two-sided street, communication from the proponent since the beginning has been less than perfect," Sullivan said.
Sasha Angus, NEDC chief executive officer, who was in extensive discussion with project proponents over the motion, said the decision came as a disappointment.
"For the other projects still moving forward we just need to make sure we maintain a welcoming environment for investment," Angus said.
SSS Manhao International notifies City of decision to discontinue Hotel project http://t.co/bntX67MOWu
— City of Nanaimo (@cityofnanaimo) July 10, 2015
Meanwhile, Kim Smythe, Greater Nanaimo Chamber of Commerce president, was disappointed about the decision but doesn’t believe council’s recent actions were a factor in the cancellation.
“I don’t think it was,” Smythe said. “I think it was the level of confidence and the level of comfort that they were left with after that last [city council] meeting, in which the 12 months was denied and then the next meeting, when the six months was quickly approved. I think they didn’t get a good feeling after that.”
McKay said he believes there is "zero hope of salvaging" the deal and the next order of business will be to try to reacquire the hotel site property from SSS Manhao. The original agreement terms allow the city to purchase the hotel property back for the original sale price of $565,000.
"We would, first off, have to buy that property from them and hope that it doesn't get caught up in any legal entanglements; that they'll willingly sell it to us in short order," McKay said.
McKay said SSS Manhao has already spent about $4.5 million on the project.
"If it were me I'd be trying to recover those costs before I gave that property up," he said.
With files from Karl Yu and Nicholas Pescodphotos@nanaimobulletin.com