Hotel tax break lands in front of council Wednesday, with airport and hotelier proposing smaller grant than original $13M
Reduced property tax payments had been baked into the plans for a 180-room, terminal-connected Alt Hotel at the Ottawa airport
Taylor Blewett, Ottawa Citizen
Published Apr 10, 2023 • Last updated 11 minutes ago • 4 minute read
After a tie vote at a city committee last week, the Ottawa International Airport and Germain Hotels will find out Wednesday if they’ve been able to secure enough council support to land a contentious municipal tax break.
Reduced property tax payments had been baked into the plans for a 180-room, terminal-connected Alt Hotel, after the last city council voted to create a community improvement plan (CIP) to support economic development on federal lands surrounding the airport.
City staff determined that Germain’s proposal met all technical eligibility criteria for the CIP, so they recommended that council forgive up to $13.1 million in property tax payments over 25 years that the hotelier would otherwise be on the hook for if it goes through with the project.
Over that same time period, the city would collect the remaining 25 per cent, or $4.4 million, of the estimated $ 17.4 million in property taxes generated by the development.
The idea of forgoing potential tax revenue for this particular project hasn’t sat well with many people, including the mayor, who ran in last fall’s election on a platform that included opposition to the community improvement plan program.
Last Tuesday, Sutcliffe and five others on council’s 12-member finance and corporate services committee voted against giving the requested CIP tax break to Germain.
It has set the stage for a tight — and closely watched — final council vote on the matter, and has been followed up by a compromise proposal brought to the mayor’s desk by Ottawa airport authority CEO Mark Laroche and Hugo Germain, the vice-president, operations at Germain Hotels.
“We recognize that the Germain Hotels application, even if it meets all the criteria of the CIP, represents a significant financial ask,” they wrote the mayor, in a letter shared with all council members. “Second, the term of 25 years represents a far different term than past-approved CIPs, all of which are capped at ten years.”
They propose limiting the airport hotel CIP grant to 10 years. Germain has retained lobbyist Jeff Polowin, who said this would reduce the amount of forgiven municipal taxes from $13.1 million over 25 years to $3.7 million over 10 years. The city would still collect just 25 per cent of the development-induced increase to property taxes over a decade, totalling $1.2 million, but then resume full property tax collection after 2034, rather than after 25 years. Polowin passed along a chart from city staff, confirming these figures.
Laroche and Germain said they are both prepared to bring the revised terms of the deal back to their respective boards of directors, “and feel very confident that they will be accepted.
“This new path forward will provide relief to Germain Hotels to help manage construction costs. Additionally, the (airport authority) will make some adjustments to Germain’s lease payment obligation.”
At the city finance committee meeting, Sutcliffe had challenged Laroche on whether he had considered reducing the rent the Germain hoteliers will pay the airport for its project on leased land as a way to incentivize the development of the terminal hotel, considering its importance to the airport authority’s own plans.
Laroche said at the time that if he were to do so, “I kind of snooker myself,” as rental revenue goes to airport operations. By giving a discounted lease, he would also be giving up money he could use to try to entice airlines to add service to the airport, he said.
He declined to disclose at committee how much rent the airport authority would be paid for the hotel lease, citing business reasons.
The letter from Laroche and Germain shared with city council did not specify how, exactly, the lease arrangement would now be altered, but did say “our proposed relief will mean less revenue from the hotel lease payments for years, and will affect the (airport authority’s) ability to fund other airport initiatives and opportunities.
“Ultimately, we believe this is still the right decision, which supports our shared vision for the airport and creates economic prosperity for our community.”
Ahead of council’s Wednesday meeting, Polowin, who was retained two Fridays ago, said his job “is not to twist arms, but to provide information to the councillors so that they make a decision based on all the facts that are there.”
He’s also not the only one trying to shape how councillors vote.
Horizon Ottawa, a progressive activist group, has seized on the file, making critical statements about it — as well as about councillors who have supported the grant — on social media. The group has shared an email template that residents can sign and send council members, urging a vote against the Germain application, and outlining arguments in favour of opposing it. It’s been filled out nearly 1,000 times, according to the Horizon website.
Joining Sutcliffe in voting against the original grant at committee last week were councillors Riley Brockington, George Darouze, Jeff Leiper, Shawn Menard and Tim Tierney. The “yes” votes for the grant came from Laura Dudas, Cathy Curry, Glen Gower, Rawlson King, Catherine Kitts and Matthew Luloff.
They will all be joined at the table for the final vote on Wednesday by the rest of city council.
https://ottawacitizen.com/news/local...n-original-13m
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