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Tax exemption piques interest in VICC hotel

A hotel tax exemption passed earlier this month by city council has caught the attention of at least one organization.

A hotel tax exemption appoved earlier this month by city council caught the attention of at least one organization interested in building a hotel for the Vancouver Island Conference Centre.

Nanaimo Mayor John Ruttan said he is "guardedly optimistic" a conversation with an interested developer could be the one that sparks a hotel deal. But he added it is too early to say for sure if there is any commitment.

"We're expecting a submission from one group we've had ongoing discussions with for some time, about two or three months really," said Ruttan, adding there has been no formal proposal. "Like any other commodity, there is a lot of back and forth."

The city entertained several interested parties over the past three years since the original developer, Millennium Properties Ltd., defaulted on the original agreement. Ruttan said he has heard inquiries from Chinese investors and Vancouver hoteliers, among others, though none have resulted in a commitment due to doubts about profitability.

"The thing is we've had so many people come right up to the altar and we're expecting them to say 'I do' and they don't," said Ruttan. "Hopefully this added incentive will be what is needed to get that 'I do.'"

The new 10-year tax exemption, which would be provided to any new hotel or existing hotel that spends more than $2 million in renovations, could save a developer as much as $1 million annually on a $40-million hotel.

The tax exemption was passed with the intention of increasing the number of quality rooms downtown to allow the conference centre to operate at its potential, something it hasn't done since opening in 2008.

There are currently 400 hotel rooms in the downtown area suitable for hosting conference participants. The VICC can seat 1,300 people and feed 950 at a sitting.

Since being built, Nanaimo taxpayers have subsidized the VICC for roughly $1 million annually to make up the shortfall.

Ruttan said uncertain financial viability and financing in the hotel sector has deterred commitments for the project, often resulting in incentive demands.

"Most groups demand a list of concessions before talks even begin," he said. "Incentives are what they are looking for. We needed to be flexible in a very difficult market and we're not going to be able to achieve the goals we set out unless we create some opportunities."

One of Ruttan's first acts after being elected mayor in 2008 was to ensure the city retained ownership of Millennium's detailed drawings of the hotel, an act that could also result in the additional incentive of saving a developer some preliminary legwork.

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