YOW Alt Hotel [1085 Airport Pkwy] | ?m | 7f | Completed

[phil235]

Originally Posted by acottawa

Most development companies would have a clear idea of where their profit point is on a project (because they need to get financing, etc). If a project that the city wants built is slightly below that point it might be worth a subsidy. Otherwise it makes absolutely no sense for the city to subsidize the project.

Companies do those calculations, but they don’t tend to share them as it is competitive information. And as I mentioned, timing and location are important. The purpose of those plans is to incentivize development in a particular area that is struggling. Even if something is theoretically viable, that doesn’t mean that it will necessarily be built soon or in that location. The point is to spark development in the near term.

[acottawa]

Originally Posted by phil235

Companies do those calculations, but they don’t tend to share them as it is competitive information. And as I mentioned, timing and location are important. The purpose of those plans is to incentivize development in a particular area that is struggling. Even if something is theoretically viable, that doesn’t mean that it will necessarily be built soon or in that location. The point is to spark development in the near term.

Clearly the area isn’t struggling, as the same hotel got built without the taxpayers’ subsidy.

So the lack of corporate welfare delayed the project by a few months at most?

If companies don’t want to divulge their financial information for a project they shouldn’t be in the corporate welfare business.

[roger1818]

Originally Posted by phil235

Companies do those calculations, but they don’t tend to share them as it is competitive information. And as I mentioned, timing and location are important. The purpose of those plans is to incentivize development in a particular area that is struggling. Even if something is theoretically viable, that doesn’t mean that it will necessarily be built soon or in that location. The point is to spark development in the near term.

I totally agree! The narrative that the CIP should only be used to subsidize white elephants is nonsensical.

[acottawa]

Originally Posted by roger1818

I totally agree! The narrative that the CIP should only be used to subsidize white elephants is nonsensical.

Who is talking about white elephants?

[phil235]

Originally Posted by acottawa

Clearly the area isn’t struggling, as the same hotel got built without the taxpayers’ subsidy.
.

The airport clearly isn’t struggling? It’s been by far the slowest to bounce back of any major airport in Canada and had to delay a number of major capital projects. The fact that a number of important direct routes still haven’t bounced back continues to act as a drag on the region’s economy. Now the airport authority is getting a smaller project later in the recovery cycle and most likely had to make rent concessions to make it happen. As a “taxpayer” these things aren’t saving you money in the big picture.

Your argument is changing a bit. Now you are saying the airport shouldn’t have been part of the program, whereas before you were saying that politicians should be able to deny an individual application that meets the criteria for political reasons. I don’t think either one is correct, but they are different positions.

[acottawa]

Originally Posted by phil235

The airport clearly isn’t struggling? It’s been by far the slowest to bounce back of any major airport in Canada and had to delay a number of major capital projects. The fact that a number of important direct routes still haven’t bounced back continues to act as a drag on the region’s economy. Now the airport authority is getting a smaller project later in the recovery cycle and most likely had to make rent concessions to make it happen. As a “taxpayer” these things aren’t saving you money in the big picture.

Your argument is changing a bit. Now you are saying the airport shouldn’t have been part of the program, whereas before you were saying that politicians should be able to deny an individual application that meets the criteria for political reasons. I don’t think either one is correct, but they are different positions.

Yes, they are different arguments, but I believe they are both true.

1) Projects that would have otherwise been built should not be eligible for CIP funding. To the extent the program was poorly designed council should use its discretion to block those projects. CIP funding should be used to get marginal projects built, not provide corporate welfare for projects that were going to happen anyway.

2) The airport area should never have been designated for a CIP, the “community” is doing fine with lots of thriving businesses. The airport authority is struggling from a lack of demand, but that has nothing to do with the “community.” The Senators are struggling, it doesn’t mean the west side of Kanata needs a CIP.

[J.OT13]

A few points.

1. It's impossible for the City to determine if a project will or will not get built if the CIP is denied.
2. The above is not part of the ctiteria.
3. This is not the same project as was proposed pre-pandemic and under the CIP. It has been downsized.
4. The City might have left money on the table, or at least closed the gap, by forcing Alt to build a smaller project i.e. smaller project, lower tax rate over time.

One project we knew would get built anyway for the Porsche dealership that did get the CIP. Marks Motors confirmed that if the CIP was rejected, they'd build it on Merivale instead.

If a City has CIP programs, they should honour them. If they don't want CIP programs, then cancel them outright. How much time and money was wasted by the Airport Authority, ALT AND the City for a program that won't be honoured anyway?

[YOWflier]

Once a program is established council should have no business arbitrating individual applications. That’s for staff to do based on program criteria, not for councillors to do based on political wind blow.

If there’s a perceived flaw there should be a debate on fixing or halting the program, not penalizing individual, legitimate applications.

We owe this transparency and predictability to business.

[acottawa]

Originally Posted by YOWflier

Once a program is established council should have no business arbitrating individual applications. That’s for staff to do based on program criteria, not for councillors to do based on political wind blow.

If there’s a perceived flaw there should be a debate on fixing or halting the program, not penalizing individual, legitimate applications.

We owe this transparency and predictability to business.

Nothing in the program suggests there is an automatic approval. Lots of programs, grants, etc. are subject to some sort of decision making body.

Approvals
Applications wil be processed and approved on a first come, first served basis,
subject to funding as approved by Council.
Staff from Economic Development Services and Finance will review each
application to ensure eligibility under the YOW CIP program.
Staff will prepare a report for each application and submit to Council for approval. •
As a condition of approval, applicants must execute an Agreement with the City.
The Agreement wil be registered against the land to which ti applies and wil
specify the terms, duration, and default provisions of the grant provided.

[YOWflier]

Nobody said anything about automatic approval. Those are your words.

There should be a known and clear set of criteria for which applications can be prepared and assessed. Criteria creep should not be allowed.

[pattherat]

Originally Posted by yowflier

once a program is established council should have no business arbitrating individual applications. That’s for staff to do based on program criteria, not for councillors to do based on political wind blow.

If there’s a perceived flaw there should be a debate on fixing or halting the program, not penalizing individual, legitimate applications.

We owe this transparency and predictability to business.

10,000%!

[roger1818]

Originally Posted by acottawa

Who is talking about white elephants?

You. According to Investopedia, "From an investment perspective, the term [white elephant] refers to an asset, property, or business that is so expensive to operate and maintain that it is extremely difficult to actually make a profit from it." You are saying that only projects that projects that are too expensive to be profitable without subsidy should be subsidized. That is, from an investment perspective, a white elephant.

[acottawa]

Originally Posted by roger1818

You. According to Investopedia, "From an investment perspective, the term [white elephant] refers to an asset, property, or business that is so expensive to operate and maintain that it is extremely difficult to actually make a profit from it." You are saying that only projects that projects that are too expensive to be profitable without subsidy should be subsidized. That is, from an investment perspective, a white elephant.

No, I am talking about projects that are on the margins of profitability and need a little kickstart. If someone wants to build an office building in a CIP area that costs 10 million and the bank will only finance 9.8 million based on the leases signed, it may make sense for the city to kick in the extra 200k to get the building built if that building is a priority in that area.

[J.OT13]

Originally Posted by acottawa

No, I am talking about projects that are on the margins of profitability and need a little kickstart. If someone wants to build an office building in a CIP area that costs 10 million and the bank will only finance 9.8 million based on the leases signed, it may make sense for the city to kick in the extra 200k to get the building built if that building is a priority in that area.

Kind of like how ALT and the Airport needed that extra $13 million on the $55 million budget for the larger footprint and top convention floor?

Because what happened now is that the "bank" (City) rejected the loan so they had to cut the budget down $9.8 million, removing conference space that would have made the project more profitable in the long run.

[acottawa]

Originally Posted by J.OT13

Kind of like how ALT and the Airport needed that extra $13 million on the $55 million budget for the larger footprint and top convention floor?

Because what happened now is that the "bank" (City) rejected the loan so they had to cut the budget down $9.8 million, removing conference space that would have made the project more profitable in the long run.

If the convention space would make the project more profitable in the long run then alt should talk to its investors. It sounds more likely the conference floor was an unprofitable add on.

[OTSkyline]

The Ottawa Airport, as others have mentioned, is struggling to bounce back after the pandemic, especially compared to its competitors or other airports from other major Canadian cities.

Building the hotel was not about increasing the airport's profits but to add services to the airport that would boost its appeal and make it more competitive with other airports in Canada. And the benefits would extend to others in the region (construction industry, new jobs and hotel staff, making it travelling to/from Ottawa easier especially for those in the region needing to drive to YOW from out of town, the business & convention industry, etc). The ROI for every $ forgone in the CIP would most likely be several times that of not providing the CIP in the first place.

[J.OT13]

Originally Posted by acottawa

If the convention space would make the project more profitable in the long run then alt should talk to its investors. It sounds more likely the conference floor was an unprofitable add on.

I was using your example. So it sounds like you're 100% against any CIP then.

I'm necessarily for or against CIPs. I'm just against implementing one with a promise of support and just rejecting any application that comes in. It seems that's the position many of us have. Have the CIP available, or don't. Do not pretend it's available when it's actually not.

[Richard Eade]

Originally Posted by acottawa

Nothing in the program suggests there is an automatic approval. Lots of programs, grants, etc. are subject to some sort of decision making body.

Approvals
Applications wil be processed and approved on a first come, first served basis,
subject to funding as approved by Council.
Staff from Economic Development Services and Finance will review each
application to ensure eligibility under the YOW CIP program.
Staff will prepare a report for each application and submit to Council for approval. •
As a condition of approval, applicants must execute an Agreement with the City.
The Agreement wil be registered against the land to which ti applies and wil
specify the terms, duration, and default provisions of the grant provided.

Please tell me that you didn't copy this directly from a publicly accessible source on the City's Website.

How many people would this text have passed in front of before it was released for all the world to see? If this is the level of incompetance that the City displays publicly, what must go on internally?

[OTownandDown]

How many of the other eight box hotels within a 2km radius did the City subsidize for construction? There are a further 10 or so within 5km...

Did the City provide tax breaks or subsidies for the EY Centre to be built? How about the Infinity Centre? These are conference spaces within about 2 minute drive of the airport.

Did the airport chip in for the airport spur of the O-Train? How much did that cost the City to build? Doesn't that count as helping the airport?

I think a hotel is not really required here, there are a thousand rooms within a very short drive, but it does make the airport look fancy on paper. Many airlines bus their staff downtown for overnight stays anyways.

Large hotel brands especially do not require a subsidy. If the business case isn't good for the hotel to build on the site, and the airport can't afford to sweeten the deal themselves, then maybe it's not the right time.

Is there some sort of new program where the City is handing out tax breaks for new hotel rooms built within City limits? Or what of the tax breaks that Mark Motors took advantage of? If those programs don't exist, why should this be a special case, just because its the airport?

[YOWflier]

The YOW CIP is pretty new. If it existed at the time of those projects (those within the CIP area) they may have been able to apply also. Either have a CIP or don’t.