Year in Review: Luxury hotel incentive package sparks controversy

As 2017 draws to a close, paNOW is taking a look back on the most important and impactful stories of the year, selected by our reporters and editorial staff.

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An incentive package for an upscale luxury boutique Premier Best Western Hotel slated for development on the city’s southend drew national eyes this fall and was a contentious topic inside Council Chambers.

Initial hotel announcement

At a press conference held at City Hall on Oct. 3, two local business partners flanked by city council members announced their massive new plans for hotel development in the city.

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Abdul Hirani and his son Faizan — who currently manage the Best Western — were eager to announce their plans. 

The $15 million project would house 82 suites in a modern four-story structure. A new liquor store will also be on site alongside two empty lots for future development.

This was the first hotel slated to open in Prince Albert since the Holiday Inn over a decade ago.

Securing the development transpired over two years and faced a number of speed bumps along the way. Mayor Greg Dionne said the foremost difficulty was securing a liquor permit to open a store and generate cash flow as the hotel is built. This was a key component for developers, as it would allow them to generate cash flow during construction.

It was later unveiled the city had a $700,000 package of incentives it needed to hand over to secure the development.

The cash grant covered the $519,000 in new road construction, and the waiving of $181,000 in permit and levy charges.

Mayor Greg Dionne said the incentives were not sizeable considering the scope of the project, the number of jobs and said the money will be recouped relatively quickly through taxation.

“We’re going to get our investment back in taxes in approximately three years,” he said. “Any businessman in the world always hopes to get their investment back in five years.”

Not everyone around the table, however, agreed with this assessment.

Councillor opposes taxpayer subsidy for hotel

Coun. Terra Lennox-Zepp led the charge in opposition to the subsidy.

“The city needs to focus on serving residents and delivering services that improve the lives of people who live in Prince Albert,” she said.

Lennox-Zepp took issue with how the proposed development would be in direct competition with other local businesses, how there was no report that showed why the city should subsidize another hotel and beer store, and questioned whether it would even lead to more tourism. While she’d be delighted to see the hotel built, she was concerned about the lack of evidence to support “donating money to a beer store.”

Droves turn up for package vote, war of words ensues

When it came time to vote on the item at City Hall, tensions were high and fingers were pointed alongside accusations of misinformation campaigns and passionate monologues.

Lennox-Zepp made four unsuccessful amendments to the motion before the vote, leading some debates to snowball into moments of heated exchange. Many accused her of spreading misinformation and half-truths online over the weekend prior to the vote, causing them to field an array of calls and “put out fires.”

Despite, she continued to argue there was a lack of evidence over the need for the development or how the cash grant would improve the economy of the city. Though not opposed to tax incentives or subsidies, she didn’t see evidence it was needed here.

“In this case, it is shocking the lack of information that we have,” she said after the vote. “This shouldn’t be about what a developer wants. City councillors need to govern the city in a way that is in the best interest of the residents of Prince Albert, and this proposal that passed today is not in the best interest.”

Hesitations also existed over wording in the motion. She cited the fact that nothing forced the developers to hire local builders, or explicitly stated the money needed to be used for a luxury hotel. She attempted to slide these changes in, but the amendments died on the floor as they received no seconder. The mayor called foul on many of Lennox-Zepp’s arguments, such as the cost impacts for things like snow removal and garbage collection, deeming a number as “false statements.”

The motion for the incentive package finally passed 7-2, with Councillors Terra Lennox-Zepp and Dennis Nowoselsky opposed. Nowoselsky wanted a more cookie cutter policy for future developments, saying “some cookie cutters cut good cookies.”

A strong proponent of the project was Coun. Dennis Ogrodnick. He said the city needed to “send a message that this city is open for business,” amidst a passionate monologue where he called those against the proposal “wrong.”

“When we give this developer this break… to provide 70 jobs… this is a win for our city,” he said.

He and a number of his colleagues around the table pointed out a need to grow the tax base in order to fund programs and services in the city, more so as funding avenues dry up from the province. 

“The city doesn’t have a pot of money behind the door,” Coun. Ted Zurakowski added. “We can’t deal with infrastructure without having businesses to collect taxes from… I don’t want to pay higher taxes… but we need to broaden our tax base.”

Local business leaders applaud development

From job creation and economic growth to increased investor confidence, local business leaders said the announcement of a new, luxury hotel project in Prince Albert will have plenty of benefits to the community.

Meghan Mayer, chair of the Prince Albert Chamber of Commerce, said she was thrilled when she first heard about the project.

“I read the news and I just was ecstatic,” Mayer said. “This is such huge news for Prince Albert.”

The hotel will create immediate benefits for the city, Mayer said, particularly in the tourism sector. 

The project will also act as a signal to other potential investors, she said, letting them know that Prince Albert is a great place to make major investments. 

Mayer said the city was right to offer tax incentives to the developers, as they will likely see tremendous returns on their investment in the long term.

Jamie McGuin, chair of the Prince Albert Hospitality Association agreed the new development will be good for the city.

“You’ve got some people willing to commit a large portion of capital investment to our community,” he said. “The city will certainly benefit from it.”

The market in Prince Albert is not as strong as it could be, McGuin said, but the announcement of such a major investment indicates the developers’ high level of confidence in the future of the local economy.

tyler.marr@jpbg.ca

On Twitter: @JournoMarr