Ottawa mayor opposes $13-million grant for new airport hotel

Ottawa's mayor says he will vote against spending $13 million in public money on a new hotel at the Ottawa airport.

Mark Sutcliffe said he has heard repeatedly from residents that "they don't want their tax dollars going to these kinds of projects" and won't support the proposal at the city's finance committee on Tuesday.

"Using taxpayers' dollars to pay for this hotel is not reasonable at this time and doesn't respect the wishes of residents," he said on Twitter.

The plan would see taxpayers provide a $13-million grant over 25 years to Germain Hotel's proposed $55-million Alt Hotel at the airport.

"I support the airport authority and its plan to turn Ottawa into a travel hub. But the city is facing significant financial pressures and there is the prospect of economic uncertainty in the months ahead," Sutcliffe said.

The grant would fall under the Ottawa International Airport Community Improvement Plan.

Council approved plan in July to support the airport's rebound after it saw a significant decline in passenger traffic during the pandemic.

When the proposed grant for the hotel surfaced more than a week ago, Sutcliffe said he was "not a fan" of that kind of financing, but wanted to hear from airport staff, councillors and the public before taking a stance on the issue.

But on Monday, he said he doesn't support community improvement plans that provide tax breaks to specific private businesses.

He also requested that city staff review the program and make recommendations "to narrow the scope to focus on affordable housing and other urgent priorities."

Councillors on the city's finance and corporate services committee will debate the proposal on Tuesday.

Speaking on Newstalk 580 CFRA's Ottawa Now with Kristy Cameron, Sutcliffe said he believes market forces will determine whether a hotel is needed at the airport.

"If there's a market for a hotel at the airport, and I suspect there is, then there will be a hotel at the airport," he said. "If there isn't a market for a hotel at the airport, then I don't think the taxpayers of Ottawa should create a market for the hotel by subsidizing a privately-owned hotel. We don't do that for all kinds of other businesses."

Sutcliffe said he wants to see these kinds of incentives go toward council's priorities.

"I think there are projects that we can do going forward that will line up with our priorities for the next term of council, and that's a process that's just getting started," he said. "Obviously, we want to build more affordable housing, we want to revitalize downtown Ottawa, we want to stimulate the economy in a number of ways."

He says he hopes a review of the community improvement plan will identify clear and narrow criteria going forward.

HOTEL RESURRECTED BECAUSE OF GRANT PROGRAM

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

In July 2019, Germain Hotels and the airport announced plans for $42 million, eight-floor hotel at the airport. But by the summer of 2020, the project was abandoned due to the pandemic business climate.

When Germain re-examined the project in the fall of 2021, the cost of the project jumped to $55 million and the company determined that the project was no longer viable.

However, the airport authority approached Germain following council's approval of the community improvement plan to 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 meeting.

The report for the finance and corporate services committee says the Alt Hotel project would result in an increase of $17.4 million in property taxes over 25 years, resulting in a net profit for the city despite the $13 million grant.

A similar tax break given to Mark Motors for a Porsche dealership in 2021 got the green light from council but caused controversy, including protests and a petition against the idea.

The $2.9 million grant for the planned dealership at Montreal Road and St. Laurent Boulevard was given under the community improvement plan for Montreal Road.

- with files from Josh Pringle, CTV News Ottawa