Buying our way to prosperity?
Ron Bolin: Nov. 8, 2011
Last Monday evening, in what could only be viewed as a stealthy move as the agenda material was only available shortly before the meeting, Council gave three readings to REVITALIZATION TAX EXEMPTION BYLAW 2011 NO. 7143. This bylaw has the potential to cost taxpayers millions of dollars in extra taxes to fill the void made by the proposed exemption(s). Tax exemptions do not reduce the cost of operating the City; they merely relieve a chosen few from that burden. This bylaw gives Staff the power to negotiate and Council the power to finally approve property tax exemptions for 10 years to any hotel or motel which spends $2 million dollars or more in either new construction or improvements to the quality of rooms in Nanaimo. Naturally enough, it has already caused considerable dissent from our existing hotels and motels: imagine having to subsidize your competition.
It can be expected to cause yet more dissention among other segments of our economy who might also wish to build new facilities or improve the quality of those presently existing. It is further a slap in the face to the new CEO of our Economic Development Corporation who appears to have been left out of the discussion, at least one hopes that subsidization is not her opening gambit for economic development in Nanaimo.
This entire spin is constructed around the proposition that the reason that our existing conference centre is bleeding cash is that there are not enough quality hotel rooms in town. We have switched the object of our build it and they will come from the VICC to the need for a new hotel. This farce is supported by reports that we have had contacts from large conference organizers who have turned us down due to a lack of sufficient hotel space. It is unfortunate that this list has never been made public. One can anticipate that any new facility will get inquiries, usually in anticipation of cut rates to stimulate business. Where did those who inquired eventually go? It is unfortunate, but at the present time Nanaimo simply doesn’t have the amenity drawing power to equal our competition in Victoria, Vancouver, and Whistler, particularly given the additional cost of coming to and leaving the island. This has been pointed out in numerous studies all the way back at least to the Main Street report and was noted in the documents prepared in the run up to the 2004 referendum.
The problem is NOT that we don’t have the hotel rooms. The problem is that the VICC is too big for the attractions that Nanaimo can offer to a large convention. The original idea for a conference centre was about half the size ( and about a quarter of the cost) of what was eventually built by those on Council whose eyes were so much bigger than our pocketbooks. We need to find uses which can pay for the overbuilt space. A City Hall Annex comes to mind, or VIU space, or perhaps a home and incubator spaces for our new Economic Development Corporation despite the high rent location. One suspects that the reason a dollar store is located in this space is not because it can necessarily pay first class space rent, but because the rent they pay is better than nothing. It’s time to re-evaluate this enterprise.
In a yet to be published letter to the editors of the Daily News I described this hotel venture as putting a lot of very expensive lipstick of a pig in order to take it to market. In fact, what we are getting is more lipstick then pig.
Right now adjectives fail me. We can’t accurately describe this as incompetent planning. This is not incompetent. It’s three or four steps below incompetent.
Locating the conference centre where we did, was stupid. Building the thing without a hotel agreement in place was even dumber. Now, subsidizing the effort to build a hotel is several notches below as stupid as anything possibly could be. Its as if people are sitting around saying things like, ‘This idea isn’t dumb enough. There has to be a way to fuck things up even more.’
This is Greek economics only more deliberate in its complete mindlessness.
But you are wrong about the Dollar Store. The Dollar Store was moved to the conference centre so that the re-model of the Port Place Mall can take place. The plan is to move the Dollar Store back to the mall as soon as the construction is over. Remember, the same people own the commercial space in the Conference Centre and the Port Place Mall. We don’t see a dime of extra rent money from those business located in the Conference Centre.
As for the future of the Conference Centre, the only hope is to subdivide the air space above the parking garage and sell it, in pieces, to developers who promise to remodel and rebuild to provide a layer of commercial and three or four layers of residential above. This is a long, slow and expensive process, but in the end we get tax revenue and redevelopment that works.
If you want to express your disgust for this latest example of ineptness on city council, we will have to vote EACH sitting member out on the 19th. As they ALL voted in favour of this latest example of lunacy.
Does anyone hear know the story about ‘just needing a bigger wheelbarrow’?
I really do not the meaning between here and hear, just don’t always proof read. :^)
Try that again, I do KNOW the meaning between here and hear……. unfortunately sometimes my fingers don’t …… :^)
Another example of why people take to the streets here & around the world.
This is utterly disgusting.
Perhaps we can send a box of lipstick to ALL councillors.
Lets think of some comparable tax exemption. How about a ten year tax holiday for the developer of a new supermarket. A medium size supermarket employs at least fifty people. Big employment gain for Nanaimo! Well no, not exactly. The new supermarket further divides up a limited market and simply takes away business from the other ten or eleven stores in town and results in 50 or so layoffs. Of course the previously existing stores are less than happy about having to compete against the one store which has been gifted a big cost advantage by the taxpayer.
The property tax exemption for new hotels is little different. There is a limited market for hotel space in Nanaimo and building new space will not create new demand beyond the possibility of attracting a few additional conventions each year. But as the hoteliers have pointed out most of the days of the year the new hotel facility(ies) will be competing head on with the existing properties. Everybody’s occupany rates will drop. This is not a Las Vegas where a huge new hotel will have gambling facilities attached and provide big name entertainment. Contrary to the disingenuous comments of our mayor middle class tourists are not lining up at the front doorsteps of Nanaimo waiting for suitably classy accommodation before spending a night or two here Build it and no one will come (except for some additional conventioneers) who was not already going to come here.
The hoteliers have also pointed out that if a new hotel is built to take advantage of this tax holiday it is more likely to be something on the edge of the City. It will most likely be another four story Ramada Inn with lots of surrounding parking rather than a downtown Four Seasons. The ten year tax holiday is unlikely to be sufficient subsidy to entice a developer to build an inevitably very expensive highrise structure on the small plot of land behind the Conference Centre.
I haven’t heard from Fred Pattje on this issue but I assume he supported it along with all the other councillors. Or from Mr. Kipp who claims that he “thinks outside the box”. Very disappointing.
The hotel which is likely to take advantage of this tax break, first, is the old Moby Dick, now the Watermark. I believe they have completed the planning stages and are putting the financing in place. This could well be the first tower on the waterfront in that neighbourhood.
We have to stop voting for these people. They have no vision, no planning skills, and no idea how to develop a tourist industry. These useless bums need to be thrown out.
Perhaps, in retrospect, we have little need to worry.
With the current world financial situation it is unlikely that anyone will take Nanaimo up on it’s generous offer.
Add to this that even before the financial collapse tourism & conferences were in decline.
Is a bellwether decision about to come down November 19: Will ex-mayor Gary Korpan and ex-councilor Jeet Manas be recognized? Given the state of their pet project I’m surprised they even have the gall to show.
Bellwether being the message these two gadflies convey the integrity and veracity of Nanaimo voters and their political choices.
It is a fact, FPN put up a good case against the conference centre when it was proposed.
Despite Professor Heyward Sander’s . . .
http://goliath.ecnext.com/coms2/gi_0198-351439/Professor-of-teflon-it-s.html . . . sobriquet, Dr No, he turned out to be dead on: viz VICC.
My advice to FPN back in 2004, was to team up with downtown hotels: I was scorned!
Ron Bolin tells me the hotels were not interested. I doubt that and given the proposed crony tax give-away they may be now.
To the sentient person VICC is in terminal decline irrespective of the Hughes mural, Christmas parties, marriage parlor games: whatever: its original purpose is irretrievable. Does a VIU annex come to mind?
VIU not interested? It’d better be!
Roger: You never were scorned by FPN. Perhaps you were scorned by the hotels that you contacted…. I never said the hotels and motels weren’t interested. What I said was that those I had talked to weren’t interested in making their statements in public. This time they are.
PS: You forgot then Councillor and now again candidate Brennan who left Dr. Sander’s presentation at the Dorchester with the well known snipe: “This is Nanaimo.”
This idea that the conference business is somehow a growth industry, and that somehow Nanaimo can become a Tourist Mecca, and all we have to do to make that happen is build a hotel, is all the proof needed that the lack of competence on city council is only exceeded by the incompetence of senior city hall staff.
Has anyone ever looked into the background of these guys to see what qualifies them in making multi-million dollar business calls??? What exactly is the business background of any of the senior managers? How many degrees are hanging on the city managers office??
Jim that “ . . . the lack of competence on city council is only exceeded by the incompetence of senior city hall staff. ” is certainly true.
However, Nanaimo’s economy has rapidly degenerated from a FIRE (post-manufacturing) economy into a FART economy: Fiddling (as in books), Art, (as in JJ) Regrets (as in lost potential), Toadying (as in historic).
(Jane Jacobs, wrote, art is a substantial economic booster when artists have gonads).
Given what I see VIU is VICC‘s only hope. The former has some pretty aggressive expansion plans on hold. For students downtown is the ideal learning environment (as SFU and UBC learned the hard way).
Still, for common sense to penetrate our hallowed halls of learning and council’s carapace of ennui would be a stretch.
And the very powerful local, sotto voce lobby (old family prejudice and sheer nastiness), Nanaimo’s bête noir, is still very much in the driver’s seat.
I’ve decided to plump my note and let the devil take the hind-most.
When I lived in Mexico City I had an insight into the drastic outcome when elections bring change.
1998 Cuauhtémoc Cárdenas (yes, the son of famous Lázaro) became mayor of Mexico City. His PRD swept the long reigning PRI out: swept is an understatement!
I had a friend who was a local official appointed by the PRI that had reigned for . . . I’m talking +/- seventy years.
She was unceremoniously dumped.
I helped clean out her desk. She wasn’t a high official, she didn’t have a private office.
I saw the effects sin embargo of the change.
She was in a “bull pen” with, I dunno, maybe twenty desks.
The whole place was a rout! Change of guard, big time!
Whatever the outcome, we won’t have the pleasure of seeing anything like that in Nanaimo after November.
To Jim. City Hall managers have lots of degrees hanging on the walls of their offices but unfortunately not many of them relate to the hospitality industry. You don’t, however, have to be an MBA to figure out that tourism (and conferencing) in Nanaimo has its limitations. You just have to be a realist. The build-it-and they-will come group in Nanaimo are akin to the cargo cultists of New Guinea who believed that by building replicas of the foreigner’s ships they could conjure up the goods carried by these ships (a simplistic statement of cargo cultism). If only people like yourself replaced all your negative thoughts with positive thoughts, Nanaimo would attract a new hotel and thousands of conventioneers.
“If only people like yourself replaced all your negative thoughts with positive thoughts, Nanaimo would attract a new hotel and thousands of conventioneers.”
Are you serious?????
No Jim I was being sarcastic. But there is a large contingent of positive thinker types in Nanaimo who seriously believe that by imagining something to be true that you can make it true. I think that the term used is the “law of attraction”. Of course it is all nonsense as Nanaimo’s past and recent history amply demonstrates.
“City Hall managers have lots of degrees hanging on the walls of their offices but unfortunately not many of them relate to the hospitality industry.”
They are not very adept at running construction projects either …….. $50 million centres for only $75 million and $12.5 million offices without a public tender ….. and oh yes, $3 million to not build a hotel……
In the meantime water, sewer and road infrastructure is underfunded by $13 million a year….. I am having trouble figuring out just what their field of expertise actually is.
Lest we forget . . . THU VICC debt! Capitol expenditures are today, but the effects of interest compounding goes on forever.
And don’t forget Vancouver Conference Centre West. Another federal/Provincial boon doggle . . .
. . . it may not be in Nanaimo but we pay just the same.
Look at the numbers: KPMG started the dream with C$495 million and ended the nightmare with C$883 million . . . oh but that doesn’t matter, it’s Provincial / Federal . . . ?
Whatever, don’t do the math, it’ll ruin your breakfast!
It isn’t an election we need Saturday . . . sooner than later odious debt must become the issue . . . it’s an auto-da-fé.
Apodictic . . .
. . . no comment necessary . . .
Roger: Thanks for pointing to this very interesting piece. It should also be noted, however, that most managers can’t manage. This is partly due to too many managers spoiling the broth, and partly due to poor managers trying to deal with their shortcomings by appointing more managers. One need only look at the inability of our Council to provide clear guidance to their only employee to see the results.
Having a degree only means that you can learn, it does not mean that you can apply what you have learned. And there lies our problem.
Voting is meaningless . . .
. . . count the numbers!