Marriott hotel funding plan started with previous council

The more than $3 million in revitalization funds offered to the developers building another downtown hotel stretches back to the previous city council, documents show.

After the Delta hotel project stalled in 2014, the current city council picked up with the $35-million Marriott development where the project left off, with a plan to use the bulk of a $5-million fund created by Northern Development Initiative Trust to encourage development in downtown Prince George.

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The city forwarded to The Citizen a 2013 letter from former Mayor Shari Green confirming NDIT had set aside $3.6 million from the benefit program for developers River City Hotel Inc., subject to it starting construction by Dec. 31 that year. That didn't happen. With some of the funds spoken for by other projects, the city is now offering $3.2 million.

The Early Benefit Program is similar to the city's existing tax exemptions offered on improvements to many businesses downtown. The NDIT fund instead offers the value of that investment in an interest-free loan. Under the current policy agreed to by NDIT and the city in 2011, a developer can't apply for both the tax breaks and the interest-free loan. Since the Marriott can't get the full $5 million from the partially-depleted fund that it's likely eligible for, the city says it will ask the NDIT board to change its rules so it can also offer a tax exemption for the remaining portion, valued at an estimated $1.8 million.

In a December interview, Mayor Lyn Hall said the option would go before Prince George city council for discussion first and then before NDIT board, likely early in the new year. Hall was not made available for a phone interview Wednesday or Thursday before The Citizen's deadline but the city responded to emailed questions to say it did not know when the proposal would appear before council, but it would happen "after discussion with NDIT occurs."

While the city has remained steadfast in its plan to use NDIT funds for the hotel, documents show a change in tone from the trust's former CEO, who retired last year.

"New hotel and condo development in the very dated Prince George market is a welcome addition for executives and residents who want to live and stay closer to the hub activity of government, industry and convention services in the downtown core," wrote Janine North in a February 2012 letter addressed to developer Rod McLeod. McLeod did not respond to request for comment.

Calling it a "catalyst investment in downtown Prince George," North said the trust was eager for the development.

"The Delta's upscale accommodation will attract executives who are responsible for the billions of investment in central and northern B.C.'s economy."

But by 2016, when the project was trying to get off the ground again after a construction delay of more than two years, the board said it was concerned the bulk of the funds were going to one project and North was firm on the rules that the project couldn't apply for both incentives.

That offer was first presented to the developers by Green in her 2013 letter, which was sent to North.

New NDIT CEO Joel McKay said he could not speak to what was said or done at the time because he wasn't with the organization.

"What I can say that certainly the project itself has changed and gone through multiple versions in recent years and where I'm sitting today the real question going forward is what's going to be done with the remaining $3.4 million in the community revitalization program," he said.

In the intervening years, NDIT came under scrutiny when it filed for a $1.45-million foreclosure action on a loan given to a group of local investors who assembled land to house what became the Wood Innovation and Design Centre.

The parties reached an out-of-court settlement last July and the terms remain confidential.

McKay said the organization hasn't yet sat with the city to discuss the hotel proposal.

"From our perspective the key question we have and the board would have is how does the trust get paid back?" he said.

"We steward a capital base on behalf of all the citizens of central and northern B.C. and they trust us to sustainably manage those funds and make good decisions around where those funds go."

The city said there are safeguards in place, noting NDIT doesn't pay the property owner until the project is complete and an occupancy permit issued.

"The city collects taxes on the assessed value of the development related to the $3.2 million that is repayable to NDIT. Ultimately, if the development doesn't pay its taxes on the assessed value related to the $3.2 million benefit, the city sells the property at tax sale to recoup the taxes owing," the city's statement said.

Since The Citizen reported on the use of the program's funds, the Ramada reached out to the city about the use of funds for Marriott.

"City officials explained that the Marriott's incentives are being provided for under the same program from which the Ramada is receiving a tax exemption valued at approximately $1.15 million over 10 years," said the city.

While some supporters of the new hotel have expressed hope the added rooms mean the city can vie for bigger conferences, some are still out of the question.

City emails discussed applying for annual conventions for both the Federation of Canadian Municipalities and the Union of B.C. Municipalities. Even with the added rooms to the city inventory, both are still out of reach.

The Marriott would bring the city to between 1,000 and 1,100 three-plus diamond rated rooms, a June 2015 staff email said, leaving it "significantly shy" of FCM's 1,800 room minimum. UBCM said it has only ever rotated between Vancouver, Whistler and Victoria and did not respond to a query if it would consider new cities.

Last year, its delegates numbered more than 2,000.

Much of the more than 200 pages released by the city after The Citizen's Freedom of Information request follow the project's many evolutions, picking up again in 2016 as staff worked with the developer on design and its building permits, which were split into two for a total value of $20 million.

A sticking point between staff and the developer was whether it was building too close to a watermain and whether it needed to be moved.

The city confirmed by email that the watermain, which was installed in 1959, would be moved at the developer's cost.

"The city will use the opportunity to upgrade water infrastructure elsewhere on 10th Avenue," it added.

In October, Hall asked if the city should put branded signs at places like the Marriott and RiverBend to indicate it supported a project.

City manager Kathleen Soltis said if the city puts up signs, it should be when it contributes developer incentives, like revitalization tax exemptions.

"Doing so may be well received by some members of the public and not so well by others," she wrote.

When asked why the city's involvement and support of the Marriott project hadn't been publicly discussed, the city pointed to Green's letter to show the approach was "the same in 2013 as they are in 2016."

"The Revitalization and Early Benefit program has been in effect since 2011 and was implemented following extensive research, analysis, and stakeholder consultation."

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