Moncton considers tax credit changes after developer threatens to scrap $25M hotel

A developer threatened to scrap plans for a new, $25-million hotel on Moncton's Main Street if talks with the mayor and city staff didn't result in the project receiving a tax credit, documents reveal.

Harper Building Inc., owned by Valmond Robichaud, proposed a hotel of eight to 14 storeys at Harper and Main streets.

"As it is currently proposed, the project is contingent on the approval of the requested tax credit," Ron Robichaud, Valmond's son, wrote in an Aug. 23, 2018, email to city council and staff obtained by CBC News.

"Should the tax credit be denied, or a decision delayed into the fall months, an alternate more tax friendly project will have to be designed and submitted to council by years end."

CBC requested an interview with Ron Robichaud in mid-November and again Friday. He said he wanted to speak to his father before commenting.  

City staff say changes to a program that offers tax rebates for developers building downtown will soon be proposed.

The hotel was among several major developments planned in and around downtown Moncton. City officials have repeatedly said the opening of the Avenir Centre will make development in the city's core more attractive.

A report to council last year states the hotel, restaurant and 250-car parking garage would likely have an assessed value of $18 million to $25 million. That would generate between $445,428 and $618,650 in property tax revenue for the city each year.

The documents show two city councillors expressed surprise about the apparent tax credit discussions with city officials.

Marc Landry, the city manager, responded to councillors Aug. 23 that staff were reviewing "possible models that could be considered" for project's like the Harper Street hotel.

Landry wrote that options would be presented to a downtown revitalization committee, potentially in September. Any changes would then go to a private council meeting for consideration before ratification at a public meeting, Landry wrote.

Development incentive program 

Moncton has a "financial incentive program" for downtown improvement. If a development project is valued at more than $10 million, it can receive an incremental tax grant over 10 years based on a formula.

For example, the city's 2019 budget indicates five properties will get payouts through the program. That includes FiveFive Queen, a hotel, retail and residential development behind city hall which will receive $361,539 next year and $325,783 in 2020.

According to the incentive program rules on the city's website, applications are reviewed by city staff from economic development, urban planning, building inspection, engineering, legal and finance departments. The group then provides a recommendation for council approval. 

But the Harper Street site is outside the downtown boundaries the city has set for eligibility.

City looks at incentive program changes

CBC requested an interview with Moncton Mayor Dawn Arnold or Landry about the contents of the documents.

"The City is looking at ways to enhance the incentive program," Isabelle LeBlanc, the city's director of communications, wrote in an emailed response to the interview request. "At this time, there is no information to share; however, it will be coming forward in the very near future."

Coun. Shawn Crossman, who represents Ward 1, where the hotel is proposed, said the email from Robichaud "was the first time that I was aware of the conversations on the fifth floor," a reference to the location of the mayor's office at city hall.

'Conversations in private'

"Council has had conversations in private," Crossman said when asked if the city has considered changes to the incentive program. "However, those are only on staff recommendations, not direction received from council."

Coun. Paulette Thériault, who also represents Ward 1, said she did not recall hearing anything more about the hotel's request since receiving the emails about it in August.

She said the project would be a good addition to the area and has advocated for the incentive program's expansion.

Various proposals

The Harper Street location, near Staples, is vacant. ​Robichaud purchased the land from the city in 2012, property records show.

Various developments for the site near Staples have been proposed but have not materialized.