City considers $13 million grant for new hotel at Ottawa airport

Ottawa taxpayers could provide a $13 million grant to support the construction of a 180-room hotel at the Ottawa International Airport, as part of a program to support the airport's post-pandemic rebound.

A report for the finance and corporate services committee recommends approving the grant over 25 years under the Ottawa International Airport Community Improvement Plan to support Germain Hotel's proposed development of the $55 million Alt Hotel at the airport.

The proposed hotel would have 180 rooms, a restaurant, meeting rooms and covered pedway connecting the hotel to the airport terminal via the parkade.

Mayor Mark Sutcliffe says he is not a "fan of this kind of financing" to use taxpayers' dollars to support development, but tells CTV News Ottawa he wants to hear from airport staff, councillors and the public on the issue.

Last July, Council approved the Ottawa International Airport Community Improvement Plan (YOW CIP) to provide financial incentives in the form of a grant for companies who develop or redevelop properties in the airport area. The YOW CIP offers a grant to airport tenants of up to 75 per cent of the increase in municipal property taxes directly related to the development each year, up to 25 years, and the grant is only paid after all annual property taxes are paid in full each year.

The goal of the grant is to support the airport's post-pandemic rebound and city-wide economic growth, after the airport saw a significant decline in passenger air travel during the pandemic, city staff say.

The report for the finance and corporate services committee says the Alt Hotel project would result in an increase of $17.436 million in property taxes over 25 years. With a $13 million grant over 25 years, staff say the city would still see $4,359,228 in new property tax revenue over the 25-year period.

Staff say Germain Hotels decided to proceed with the proposed hotel after learning of the Ottawa International Airport Community Improvement Plan grant, after initially shelving the plan due to escalating costs and the impacts of the pandemic. 

In July 2019, Germain Hotels and the Ottawa International Airport announced plans to build a $42 million, eight-floor hotel at the airport. By the summer of 2020, the project was abandoned due to a "business climate resulting from pandemic impacts on air travel and visitation to Ottawa, mandated business closures, and supply chain issues affecting costs", staff say.

When Germain Hotel re-examined the project in the fall of 2021, the cost of the project jumped to $55 million and the company determined that, "given the pace of pandemic recovery and escalating construction costs, the project was no longer viable", according to the report.

The Ottawa International Airport approached Germain Hotel following council's approval of the Ottawa International Airport Community Improvement Plan to try and resuscitate the Alt Hotel project.

"In late 2022, Germain Hotels decided to proceed with the project, but only if they could secure the financial incentive available through the YOW CIP program," staff say in the report for the April 4 finance and corporate services committee meeting.

"A YOW CIP grant would represent a material change to the project's financial forecast and feasibility and was a deciding factor, in addition to positive trends in the Ottawa visitor economy and air travel generally, to move the project forward."

The report says the new Alt Hotel at the Ottawa International Airport would create 50 new full-time jobs when it opens, while the economic impact of the proposed development is approximately $55 million in direct construction costs in addition to "significant indirect and induced economic benefits to the local economy."

Staff say the new hotel would generate $17.4 million in property taxes over the 25-year period for the grant, and $3.7 million for city project permits and fees.

According to the report, the grants would start at $295,347 in 2025, ballooning to $809,691 in 2049. The city would see an increase in municipal taxes starting at $393,796 in 2025, jumping to $1.079 million in 2049.

Mayor not "a fan" of taxpayers' money supporting businesses

Mayor Sutcliffe says he wants to hear from the Ottawa International Airport, staff, councillors and the public about the proposed grant for a hotel under the Ottawa International Airport Community Improvement Plan.

"I've said many times I'm not a fan of this kind of financing … or for development like this because we are taking taxpayers' dollars and putting it into a private business," Sutcliffe told CTV News Ottawa on Saturday.

"I know residents have raised a lot of concerns about that in the past. I'm ready to listen to the airport's proposal, and I'm open to hearing what other councillors have to say about it."

Sutcliffe campaigned during the fall municipal election on a promise to end two programs that subsidize property taxes for businesses, including the Community Improvement Plan program like the one that would provide a grant for the hotel at the Ottawa International Airport.

In December, council voted to suspend accepting new applications under the Brownfield program, which provides grants for the cleanup and revitalization of a site, while staff evaluate the program.

"In principle, I'm not supportive of these kinds of projects where we are essentially investing taxpayers' dollars in private businesses," Sutcliffe said.

"I want to support the airport and the airport is a huge economic driver, but this is not the kind of format that I like to see for the city to be supportive of a type of project like this."

Councillor, community group reacts 

Somerset Coun. Ariel Troster said the CTV News Ottawa article on the proposed grant was the first time she had heard of the proposal.

"It's a nope for me," Troster said on Twitter.

"Not a cent to luxury hotels until we end chronic homelessness and stop forcing entire families to live in cramped motel rooms."

Horizon Ottawa said on Twitter, "public funds should be going to public services."

Former Coun. Alex Cullen also spoke out against the proposed grant.

"We don't pay property taxes to enable private businesses to make money," Cullen said on Twitter Saturday afternoon.

"We pay property taxes to fix potholes, have garbage picked up, run buses, etc."

Ottawa resident Michael Vorobej spoke out against the grant when a city committee approved the program last summer.

"I don't qualify for a grant on my property tax, my neighbours don't …. I don't see why big businesses are getting these deferrals," Vorobej said Saturday.

Vorobej says he has two concerns about the project.

"One is the idea that we are subsidizing large businesses with property tax dollars. I mean I pay property tax and it's a very big expense every year, I’m very concerned about the very idea of providing these subsidies to big businesses," Vorobej said.

"I’m very concerned the city will be providing incentives to clear forests…to locate businesses where there’s much better places for them."

Councillors on the finance and corporate services committee will debate the proposal on April 4.