By Dominic Abassi

With building permit issued, developer says construction on downtown Nanaimo hotel imminent

Feb 21, 2019 | 4:50 PM

NANAIMO — For the first time in the storied history of 100 Gordon St., a building permit has been issued for a hotel behind Nanaimo’s downtown conference centre.

On Wednesday, the City handed a building permit to Utah-based PEG Developments for a nine-storey, 172-room Courtyard by Marriott hotel. The progress is viewed as the biggest and most notable sign to date the project will come to reality because collecting the permit required the developers to pay the City more than $300,000.

PEG project manager Kevin Perry said they hope to mobilize to the site in about six weeks and start construction this spring.

“Those dates can ebb and flow a little, but I would expect to see activity on that site within two months,” Perry told NanaimoNewsNOW Thursday afternoon.

PEG’s excitement about the estimated $22-million project continues to grow, he said.

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“The market has some really good, basic drivers for hospitality. There’s demand that is not being filled there…Over the past 18 months, we’ve actually become more and more bullish on the prospects of that market. We’re looking forward to getting this hotel out of the ground and bringing it to market.”

The 100 Gordon St. lot has a long and failure-filled past when it comes to hotel proposals, leaving many in Nanaimo extremely hesitant to show belief one will ever be built there.

Perry said while every proposal has risk all the way along, this project is past almost all of the major stumbling blocks.

“We’ve gotten through all the hurdles of design and feasibility and coming up with a design that is cost-effective. That was the biggest challenge: how do you build it in a market that has rising construction costs and still have the deal pencil-out financially. We’ve overcome that issue, which is the most substantial hurdle.”

The current design is far more modest than two previous hotels pitched for the site.

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.

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.

Bill Corsan, the City’s deputy director of community development, said PEG becoming the first company to actually complete the building permit process is a significant milestone. He said the amount of money and time invested shows the company is committed.

“When the conference centre was envisioned, for it to be successful, it really required a hotel next to it. Without the hotel I think they’ve struggled to attract larger conventions. So this is a significant step forward for the conference centre to be in a position to have this new hotel to compliment the Coast,” Corsan said.

Mayor Leonard Krog said the importance of the development can not be overstated.

“The hotel is crucial for downtown revitalization, crucial for the success of the conference centre. It’s probably the best news the citizens of Nanaimo have had here for several years,” Krog said, adding the building of the hotel will give confidence to every other investor about the future of Nanaimo.

In late 2017, Council approved a 10-year property tax exemption for the hotel. That exemption is estimated to save PEG roughly $4.5 million. The hotel is also eligible for an exemption from development cost charges, an estimated savings of $650,000.

To earn the exemption, the hotel must be open by December 2020.

The building will also include a pool, spa, fire-side patio dining and a street-level cafe at the corner of Gordon St. and Museum Way.

dom@nanaimonewsnow.com

On Twitter: @domabassi