In his business column that appears each Friday in The Citizen, Dave Fuller often speaks about being emotionally engaged in running your business but also being able to take a step back, put feelings aside and approach a problem without feelings and ego attached.
Thankfully, that's what the City of Prince George and the Northern Development Initiative Trust have done in regards to their disagreement over funding support for the Marriott Hotel development.
In the big picture, both the city and NDIT want the local and regional economy to be healthy and robust by recruiting and retaining new businesses, while diversifying into new economic sectors.
It is in neither of their long-term interests to be opposing each other.
That's why their contradictory views on the Marriott were so troubling.
As The Citizen first reported back in December, documents from both organizations released through a Freedom of Information request showed the city's willingness to invest heavily to reboot the stalled hotel development and NDIT's reluctance to sink millions into a project with soft corporate support.
The city sought to offer the Marriott developers both a tax exemption over 10 years, as well as development money up front, to get the hotel going again, after it sat for more than two years with nothing happening except for rust accumulating on the exposed rebar.
NDIT had three problems with that plan.
First, there was a written agreement in place between the trust and the city that developers could be offered one option or the other but not both simultaneously.
Second, there was no guarantee the tax exemption money would be repaid if the hotel failed after it opened and the owners stopped paying the property taxes.
Lastly, NDIT was concerned that the city emptying the fund for the Marriott would mean not having money available for other applicants until the pot was replenished.
Unfortunately, the city turned the misunderstanding into a problem by assuring the developers that both the grant and the tax exemption were on the table. Suddenly, there were emails and formal letters going back and forth between the city and the trust, each demanding to know what happened and why.
NDIT had the final say, however, with their iron-clad agreement. As a result, Mayor Lyn Hall had to assure NDIT in writing last summer that he had informed the Marriott developers that the two funding sources, worth about $5 million combined, was not an option, leaving just the $3.2 million grant available. The new arrangement reached between the city and the trust allows the developers of future projects to apply for both the grant and the tax exemption, with some strings attached, including the city being liable to NDIT for outstanding funds owed if the developer fails.
The updated deal will allow the city to offer both options to the Marriott developers, since it's still under construction, and will be an option going forward.
This is a win for both sides, meaning neither is completely happy. The city does not get to provide the full $5 million it thought it could to the Marriott developers and the NDIT does not get to question how the city spends that money, whether a little bit is handed out over time to multiple applicants or all in one shot to one developer.
The incentive for NDIT to even agree to reopen the deal in the first place was that the city takes over all of the financial risk. The trust will be repaid, regardless of what happens to the developers and the projects the city supports.
That potentially makes future city councils and taxpayers the losers in this deal, should the worst-case scenario occur. In that event, the mayor and council of that day would be hiring lawyers to chase proponents and property owners after forking over outstanding money owed to the trust.
Hopefully the city's current political and bureaucratic leadership has a better handle on risk assessment than it did on what it could and couldn't offer the Marriott developers or it's only a matter of time before good intentions on economic development will lead to a nasty, unexpected bill for local residents.
-- Managing editor Neil Godbout
