Hey there, time traveller!
This article was published 25/3/2014 (1126 days ago), so information in it may no longer be current.
A mixed-use residential and commercial development on Carlton Street could kick-start the construction of a hotel required to be part of the RBC Convention Centre Winnipeg's $180-million expansion.
More than a year ago, CentreVenture purchased the Carlton Inn north of the convention centre with the intention of securing the property for a hotel to serve an expanded convention centre.
The City of Winnipeg topped up CentreVenture's line of credit by $6.6 million late in 2012 in order to make this purchase -- and gave the development agency one year to sell the property and recoup the cash.
When that didn't happen by the end of 2013, the city offered an extension until 2016, when the convention-centre expansion is supposed to be finished.
Negotiations are now underway to build not just a hotel on the Carlton Inn site, but also a residential and commercial development.
"I'm pushing for a broader development than just a hotel," CentreVenture president and CEO Ross McGowan said Tuesday. "You won't recover the land costs solely from the hotel."
The Carlton Inn was assessed by the city at $1.9 million before it was purchased, but that sum did not include the value of the hotel business.
McGowan said the purchase was justified on the basis of the property's strategic position -- immediately north of the convention centre and two blocks west of the MTS Centre, within the "sports, hospitality and entertainment district" envisioned by CentreVenture.
He also noted downtown land values are on the rise. Toronto's Fortress Developments, for example, paid $9 million for a surface-parking lot on Smith Street.
"When you look at the price that was paid for the parking lot across from the post office, this is certainly right in line," McGowan said.
CentreVenture got involved with acquiring land for the convention-centre hotel after a plan to build a hotel with entirely private money hit a snag.
Stuart Olson Dominion Construction won the bid to expand the convention centre by partnering with Dallas-based consulting firm Matthews Southwest. But the consulting firm left the project, leaving the construction company with the task of building the hotel.
Stuart Olson Dominion is now interviewing several potential partners, McGowan said. The convention centre has no involvement with this component of the expansion, general manager Klaus Lahr added.
The convention centre needs about 300 additional rooms to make the expansion work, said Jim Baker, president of the Manitoba Hotel Association.
"We're short of branded, larger properties," he said. "If they build it, people will come. It's an ideal site."
Nonetheless, Baker said CentreVenture faces a difficult task in trying to recoup all of the money it spent on the Carlton Inn.
"If they sell the land for $2 million, someone will point out they paid almost $7 million," he said. "The hotel community doesn't want the city to subsidize another hotel property, but on the other hand, they want to see a development there."
Baker suggested the tax revenue the city will receive from a new hotel over the long term would justify a short-term capital loss. But if CentreVenture sells the Carlton Inn site for less than it paid, the deal with the city requires the agency to come up with the rest of the cash.