Hotel Revitalization Tax Exemption Bylaw: My Take

Gord Fuller: January 28, 2012

There can be no doubt that this tax exemption bylaw only came forward as a result of our Mayor and some others strong beliefs that the only way to up usage at the convention centre would be to entice someone to build a hotel on land we would be willing to give them behind said centre. Initially in bringing forward the bylaw there was somewhat of an outcry from the Hospitality Association and this latest inception is designed to placate the association and bring them on board with the tax exemption. 

At council’s meeting on January 23rd these points were approved to be added to the above bylaw:

To include renovations to existing hotels and motels that achieves any one or more of the following:

adds services

adds rooms

improves the quality of the stay for the visiting public;

Also approved was that staff do a report “on the potential for redevelopment of some hotel/motels into nonmarket rent low income housing for the working poor and low income seniors.” As well mention is made that “Council could consider expanding the “downtown” boundaries for revitalization reasons to potentially assist some of the properties currently on the fringes of this boundary.”  This one directly related to Development Cost Charges (DCC’s) and the fact that development within downtown boundaries currently does not pay DCC’s.

The report then goes further in talking about “ways that we, collectively, could mitigate the drop in occupancy through increasing visitors to Nanaimo, particularly if the City attracts a hotel partner.”  There you have it; the main reason for developing the bylaw in the first place, a hotel for the convention centre.

In looking at the above one would initially see the creation of housing for the working poor and low income seniors as a positive and as an advocate for such one would think I am strongly on side with this point.  The fact is that many motels already offer monthly accommodation, though not necessarily affordable at rates of $700.00 and higher.  How I ask would the city propose to ensure the cost to monthly renters if redevelopment is done is affordable, affordable being one of those hugely subjective terms. Also in the event the idea is taken up by current owners there would then be a decrease of low cost temporary accommodation that could see many travel straight throughNanaimoinstead of staying a night or two.

Development cost charges are the means by which the city secures funds to put in the infrastructure needed to support development.  Many years ago, as a means to promote the revitalization of Downtown Nanaimo these costs were waived by the city to promote development.  If these costs are not paid the burden is then put on taxpayers to come up with the costs.  If the Downtown boundary is expanded the costs born by taxpayers can only increase. 

When added together the loss of DCC’s and revenue as a result of the Tax Exemption would be in the millions and have to be born by the taxpayer, this with no guarantee that a hotel for the convention centre would be built anytime soon.  

There is no real, only anecdotal, evidence that a hotel for the convention centre will increase its usage or in any other way, especially with tax breaks, benefit the community.  Currently operating at less than 3% capacity; even with the proposed delegate days for 2012 and 2013,mentioned in the report, capacity would still be less than 5%.  It will take far more than one hotel to bring about any change that would result in the taxpayer subsidizing the facility any less. Yes if it were built it would add to the abundance of underused 4 or 5 star accommodations in the core but at what cost to the community/taxpayer.

The report on the whole is an interesting read and I would encourage folk to check it out.

January 23, 2012 Council Video 

(Hotel Revitalization Tax Exemption Bylaw 2011 NO. 7143 – pgs 28 – 48)