By Dominic Abassi

Multi-million dollar tax exemption key to downtown hotel project, developer says

Nov 7, 2017 | 2:47 PM

NANAIMO — A highly-anticipated downtown Nanaimo hotel is another step closer to becoming reality.

On Monday night, council approved a 10-year tax exemption and development permit for a hotel behind the Vancouver Island Conference Centre at 100 Gordon St. Utah-based PEG Developments proposed a nine-storey, 155-room Courtyard by Marriott.

Bill Corsan, the City’s deputy director of community development, told NanaimoNewsNOW the 10-year tax exemption means PEG will not pay roughly $450,000 per year in municipal taxes. As part of the agreement, the hotel must be open by December 2020.

“I know there’s sometimes a lot of heartburn around tax incentives and the town forgoing some revenue,” Eric Peterson of PEG Developments told Council. “But I can tell you with strong confidence, we look at dozens of these properties a month and without a tax incentive, this project would not have got done.”

The permit application called for 40 more rooms and three extra storeys compared to what was originally proposed, something several councillors voiced support for. Coun. Ian Thorpe asked the developers why they didn’t choose an even larger design.

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PEG project manager Kevin Perry said they hired a consultant to perform a study and felt comfortable the market could handle an additional 155 rooms without taking on too much risk. Perry also noted construction costs climb exponentially the higher you build.

The proposal features an outdoor patio aligned with Museum Way, something Perry said is an effort to “activate the street level” to create a connection between the hotel and conference centre. “Our hope is to really open that whole front side of the building…to make that street corner quite a bit more vibrant.”

Perry said they met with VICC management and are committed to serving the needs of the underutilized building. “We feel this hotel will really allow them to drive more business for the convention centre. They mentioned (a lack of hotel rooms) has been a big problem for them.”

The project is PEG’s second in B.C., with another Courtyard by Marriott to open in Prince George in early 2018. The developers will now need to submit an application for a building permit and Corsan said they hope to break ground in spring 2018.

The Gordon St. site has seen several unsuccessful hotel proposals since the VICC opened in 2008. A City-commissioned study found a lack of “quality” hotel rooms led to lost business for the conference centre.

A key pillar of the original business plan was having a hotel as part of the development.

The PEG project is the third to be accepted into the hotel tax exemption program since it was adopted in 2011. SSS Manhao’s $50 million concept for Gordon St. was accepted but never got off the ground, while a smaller proposal for Front St. was approved in April. The program is designed to encourage new hotel and motel investment in the city of Nanaimo and promote a higher standard of overnight accommodations.

dom@nanaimonewsnow.com

On Twitter: @domabassi