Convention centre hotel delay has city scrambling to cover loan costs
Delays to building a hotel adjacent to the RBC Convention Centre have forced the City of Winnipeg to look for options to cover it's share of the expansion project.
The hotel development was supposed to generate tax revenue the city would use to cover $33 million in loans for part of the convention centre expansion.
The report includes looking at whether the convention centre can postpone work on some of its upgrades and talking with lenders about deferring paying the principal or the interest on the loans.
Originally the city was going to use municipal property and businesses' taxes generated from a hotel development to cover part of its share of the $180-million convention centre expansion. The convention centre has also received a $51-million grant from the city for the construction work.
Long, clouded history behind expansion
Construction firm Stuart Olson Ltd. won the bid for the convention centre upgrades in part by promising to find a developer to build a four-star hotel nearby. Stuart Olson was ultimately unable to deliver on the promise and the board of the convention centre and Stuart Olson eventually agreed the company would pay a $3.75 million penalty.
CentreVenture does a deal
City development agency CentreVenture purchased the Carlton Inn next to the convention centre, closed the hotel and demolished the building.
It was later revealed that in the fall of 2014, CentreVenture had entered into an option agreement with True North, the company that also owns the Winnipeg Jets. The option agreement gave True North the first look on developing the 220 Carlton St. site.
News that CentreVenture had a deal in the works with True North angered Mayor Brian Bowman and members of his executive policy committee, prompting a very public war of words with True North owner Mark Chipman.
Development coming, but not fast enough
True North and CentreVenture announced last week the purchase of the Carlton land had concluded and the company would move toward a massive development of a city block adjacent to the convention centre.
The company hopes to develop the land into a $400-million hotel, office and residential complex called True North Square by 2017. The plan includes three office and retail towers and an upscale hotel. The hotel complex would be built across the street from the 220 Carlton lot and connected to the convention centre by a skywalk.
True North has not released a detailed timeline for the development, but the original plan drawn up by the city and the board of the convention centre anticipated a hotel in operation and generating tax revenue much sooner, creating the funding gap now confronting city politicians.
The report to executive policy committee this week calls for meetings between senior city staff and the Winnipeg Convention Centre Corporation to find options on payments for the debt guaranteed by the city.
Beyond deferring any capital expenses the convention centre might make and talking to the banks, the report suggests perhaps taking tax revenue from other properties within the SHED (Sports, Hospitality and Entertainment District) and dedicating those to the convention centre debt.