Ottawa city council rejects tax break for airport hotel

Ottawa city councillors have voted to reject a plan that would have granted a yet-to-be-built airport hotel a break on its future municipal tax bill.

Last weekthe city's finance and corporate services committeetied in its vote on theproposal to grant the hotel's developer a $13 million cut to its property taxes over the next 25 years.

During Wednesday's meeting of the full city council, Coun. Glen Gowerput forward a watered-down version of the original proposal, offering to cap the tax break at $3.7 million over a maximum of 10 years.

Gower's motion was defeated by a margin of 18 to 7, with Ottawa Mayor Mark Sutcliffesiding with the "no" side.

"Although I do support economic development, the airport and the business community, I have been clear for a very long time about the fact that I do not support tax breaks for private businesses," said Sutcliffe.

"I am confident that we will find other ways that do not involve taxpayers' money to stimulate tourism and economic development, and to support the airport's aspiration to become a travel hub."

City staff previously determined Germain Hotels would be required to pay $17.4 million in tax revenue to the City of Ottawaover 25 years if the companybuilds a new 180-room Alt Hotel attached to the terminal of the Ottawa International Airport.

Germain Hotels was the first applicant under a new community improvement plan for the airport area approved by the former city council last July.

The city has used the process in Bells Corners, onMontreal Road, and inmuch ofOrlansto spur development where it might not otherwise happen, but the tool attracted negative public attention whena Porsche dealership appliedsuccessfully in 2021.

Councillor believes tax break would boost revenue

Those councillors who supported the tax break, including Coun. Catherine Kitts,argued it would increase the chances of a hotel being built on undeveloped airport land, resulting in tax revenue for the city down the road. The proponents also saidthe airport authority would increase its revenue, and then use the money to lure airlines into schedulingmore direct internationalflights to and from Ottawa.

Kitts said the hotel might not be built without a tax break, and the hotel would lead to "guaranteed money in city coffers" for the next 25 years, whichcould be used for infrastructure, housing and transit, among other projects.

Fellow councillor Jeff Leiperquestionedwhether there would be a market for the hotel, arguing it might not be there in 25 years even if the tax break was granted.

Leiper also said airport revenue from the hotel would not be enough to financially encourage airlines to offer direct flights to Frankfurt, Londonor other international destinations.

"You have to pay to play, we're told, and if we want to play in that spacelet's make that decision as a council," said Leiper. "We're going to have to make a much, much bigger bet. In international aviation and tourism, I think the amount of money that we're talking about is very, very small chips."

Airport authority 'disappointed'

In a written statement, the Ottawa International Airport Authority said without government-funded incentives to attract airlines, the community improvement plan was a keyfinancial tool to support acquiring new routes to new destinations.

The statement said Germain's application met all of the necessary criteria, and the authority "is very disappointed in the outcome" of the vote.

The airport authority's statement goes on to explain an initial lease agreement with the Quebec-based hotel chain is still in effect for a few more weeks, but the company will have to decide whether it wants to pursue the project.

Germain released its own statement saying it would "go back to the drawing board" to try to"find ways to make this project work."

"We remain committed to the National Capital Region and will be happy to continue welcoming guests in our two existing properties in downtown Ottawa," Germain's statement said.