By Ian Holmes

Nanaimo Council sells key downtown lot for hotel development

Jul 11, 2017 | 6:23 PM

NANAIMO — City Council has approved the sale of a strategic piece of property beside the downtown conference centre to make way for a hotel.

The $750,000 sale to PEG Development follows an expressions of interest process where the Utah-based firm was selected to build a six storey hotel on the empty lot at 100 Gordon St.

Last month, the City announced a deal in principle with PEG Development, who envision a 118-room hotel under the Courtyard by Marriott banner.

A City staff report stated terms of the sale include a four month window for PEG to do pre-construction planning, including obtaining a development permit, along with environmental and geotechnical work. Another condition on the sale is the acceptance of the project into the hotel tax exemption program, which would leave the property exempt from property taxes for 10-years.

The report said should PEG not meet its obligations the City would be able to buy the .04 acre site back for $750,000. Failure to complete $1 million worth of physical improvements to the land within 24-months would trigger the repurchase option.

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The hotel deal is a vastly scaled-down version of what the City had hoped would be paired with the neighbouring 10-year-old Vancouver Island Conference Centre.

In 2013, Chinese travel agent SSS Manhao proposed a 21-storey, $50 million hotel. That project never got off the ground following numerous delays, triggering the City to buy the property back for the same $565,000 price tag it was sold for.

The SSS Manhao letdown followed a 2009 proposal from Millenium Development Corp, which didn’t have the necessary financing to pull off a large hotel.

Last month, mayor Bill McKay told NanaimoNewsNOW the experience of PEG Development made them Council’s preferred option.

“It’s not the grand, 25-storey building down there but it’s certainly going to be a much welcomed addition to our hotel inventory…To have a competent operator, with a competent brand out front of that conference centre, as was originally intended,” McKay said.

Prior to Council rubber-stamping the sale Monday night, McKay said their partnership with PEG points to an improved climate for hotel operators in Nanaimo. He said it was just two years ago that the Marriot recommended to not build in Nanaimo.

“Because of the low revenue available per room and our occupancy rates…They’ve gone up to a such a level that this particular corporation can see their way clear to building this project,” McKay said.

– with files from Dominic Abassi –

ian@nanaimonewsnow.com

On Twitter: @reporterholmes