City's building boom has government help

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CentreVenture denies it bought the Carlton Inn for the convention centre expansion, but the convention centre's new hotel will likely be built on the site. (MIKE APORIUS / WINNIPEG FREE PRESS ARCHIVES) Photo Store

In a slow-growing city finally feeling optimistic, "100 per cent private-sector-driven" is a badge of honour. Until recently, it was unusual to see a major development get by without a massive infusion of public funds.

Unfortunately, "100 per cent private-sector-driven" is just a label. Much like "100 per cent pure" strawberry jam that contains high-fructose corn syrup or "all-natural" bacon that still has some nitrates, claims about the absence of taxpayer help for major Winnipeg developments often fall short.

For example, there's no question Longboat Development Corp., assumed a tremendous risk in bankrolling the Centrepoint development, the $75-million-plus hotel, office and residential complex on the northwest corner of Portage Avenue and Donald Street. But claims of 100 per cent private-sector investment are inaccurate when $660,000 of city funds went into preserving the Mitchell-Copp Building's facade, a parkade is rising with the help of a low-interest, $5-million city loan and a city-provincial property-tax mechanism allows for area improvements.

Likewise, there's no question IKEA Canada and Fairweather Properties are leading the redevelopment of the former Tuxedo Yards. But the commercial development was made possible with the help of $22 million of infrastructure incentives.

Now, a new hotel planned to support the $200-million expansion of the Winnipeg Convention Centre has also been sold as 100 per cent private-sector-driven. The only problem: Downtown development agency CentreVenture, an arm's-length government agency, just spent $6.5 million acquiring land for the supposedly private-sector-driven hotel.

Last year, when the Winnipeg Convention Centre selected Stuart Olson Dominion to oversee its $200-million expansion, Dallas-based Matthews Southwest was supposed to build a hotel north of the convention centre at no cost to the public. But Matthews Southwest quit the project, leaving officials scrambling to find somebody to build the hotel, almost without a doubt on property recently purchased by CentreVenture.

In December, city council approved a line-of-credit increase for CentreVenture to help it acquire the Carlton Inn, which sits immediately north of the Winnipeg Convention Centre. CentreVenture previously purchased the Bell and St. Regis hotels as part of an effort to eliminate public-intoxication problem spots in downtown Winnipeg.

The Carlton Inn purchase appears to be in line with that mandate. As well, CentreVenture CEO Ross McGowan said he would like to see a mixed-use development rise on the Carlton Inn site, which sits in the middle of downtown's sports, hospitality and entertainment district.

"We are acquiring the Carlton Inn as a strategic development," said McGowan, denying the hotel purchase is part of the convention-centre expansion.

However, CentreVenture's funding request made explicit reference to the Carlton Inn purchase as serving the convention-centre expansion. The convention centre itself doesn't hide the fact its new hotel will almost certainly wind up on the Carlton Inn site.

"CentreVenture buying the land doesn't mean the hotel is public-sector-sponsored," insisted Klaus Lahr, the convention centre's general manager. "Just because they bought it, it doesn't mean anything other than they are the new owners."

It's unlikely the new hotel builder will require the entire Carlton Inn site, so CentreVenture could split the land into two parcels and potentially recoup the $6.5-million purchase price. But there is a risk it will not, as the entire land had an assessed value of only $1.9 million before the sale.

That means there is public-sector cash on the table to support the convention-centre expansion above and beyond existing commitments from three levels of government. That contribution disappears only when the hotel deal is done.

There is no question the redevelopment of the Carlton Inn property will be good for the convention centre, good for downtown and good for Longboat, which plans to develop the MPI-owned surface parking lot between the hotel and Cityplace mall.

But you can't call a construction project 100 per cent private-sector-driven when one government agency is buying the land on behalf of another government-funded, non-profit organization. In fact, it's unclear why CentreVenture had to help out the convention centre at all.

bartley.kives@freepress.mb.ca

Republished from the Winnipeg Free Press print edition January 8, 2013 A3