The municipality will pay to upgrade water and sewer infrastructure for a developer who wants to build a Holiday Inn, an issue that generated debate on city council about the “free-market enterprise system.”
During its Jan. 27 regular meeting, city council voted 6-1 to approve the developer’s request for the City of Moose Jaw to upgrade services to the property line with a minimum six-inch water line, eight-inch sewer line and 12-inch storm line for 195 and 211 Diefenbaker Drive. This is where a Holiday Inn will be built.
Furthermore, there would be a reduction in the five-year tax phase-in policy incentive — from 100 per cent to 80 to 60 to 40 to 20 — to account for the estimated cost to upgrade the service and the interest included in the purchase agreement.
Coun. Brian Swanson was opposed.
Paying the upfront costs
The owners of the Town ‘n’ Country Mall issued a letter saying they didn’t understand why council was providing tax incentives to businesses — including Canadian Tire for its purchase of exhibition property — when there is a surplus of retail space here, said Swanson.
“Providing tax exemptions to retail and hotel space I view as unnecessary and foolish,” he remarked.
The developer is using this policy to have the municipality pay for the upgrades to the water and sewer lines; council denied a similar request from another hotel recently, he continued. These are costs the developer should pay in exchange for council reducing the tax exemption during the next five years.
“This is a dangerous precedent to set,” said Swanson, adding even the Hotel Association of Moose Jaw has voiced concerns about the municipality paying to upgrade the water and sewer infrastructure. He added that the developers should be responsible for the front-end cost of financing this capital development.
A busy community
“We live in a free-market enterprise system. Holiday Inn has come to us and they’re a flagship hotelier and we’re very lucky to have them,” said Mayor Fraser Tolmie.
Tolmie explained he toured the Thatcher Drive area recently and noticed that parking lots of major hotels and motels were full. To prove his point, Tolmie held up pictures he had taken and printed out.
It is not an anomaly that they were full, or that restaurants, gas stations and shops were also busy, he continued. Moose Jaw is doing things to attract events. The parks and recreation department told him there were several sports tournaments and conferences happening that weekend.
The developers told council they have done their research about building here, Tolmie said. They pointed to major projects by SaskPower and TransGas as reasons for building. Furthermore, he pointed out there will be spillover from the 2020 Grey Cup, Telemiracle in March, the largest car show in Canada and the Saskatchewan airshow.
A not-so-rosy outlook
If Tolmie believes in the free-market enterprise system and can show pictures of full hotel parking lots, then Swanson hoped the mayor also saw the contradiction of taxpayers upfronting the money to develop another hotel, which is not in the tax abatement policy.
Furthermore, the rosy picture painted of Moose Jaw’s hotel industry is likely inaccurate, especially when a letter from the hotel association is considered, Swanson continued. He thought the organization had a more realistic view of the community.
Tolmie did speak with the hotel association about the letter, he said. It was also concerned about a lack of concerts and economic development here. However, council is working to change that, particularly with major construction projects coming.
“We’re being aggressive and going out to market our community, so we can bring prosperity to our city so our citizens have jobs, so that our electricians have contracts (and) our plumbers are working,” he added.
That’s business
This request is outside of the regular tax policy in place, but that policy allows developers to come to council with requests, said Coun. Heather Eby. While council is “doing them a favour” with this request, the developers will have a complete cost recovery in the first year. They will then pay full taxes after year five.
“Whether we agree with the tax policy (or not), the tax policy is there to be used and for people wanting to come to Moose Jaw to do business,” she added.
This business fits the policy council has, said Coun. Dawn Luhning. The business offered to pay for these upgrades through the tax abatement policy. The municipality will recover the costs and she didn’t see what the big problem was. She suggested if councillors didn’t like the policy, they should get rid of it.
The next regular council meeting is Monday, Feb. 10.
