The long-held goal of building a hotel at city-owned Exhibition Place has suffered a setback after contaminated soil was found on the site.

Officials scrambled to find the money — estimated up to $5 million — that will be needed to remove the hazardous soil and send it to a disposal facility.

A report for Exhibition Place board members said excavation has turned up the presence of petroleum hydrocarbons, volatile and semi-volatile compounds and inorganics.

More information about the nature and extent of the contamination is expected after further excavation is carried out in coming weeks.

Last week, Exhibition Place board members approved a strategy to tap capital funds of $1.7 million, a move that postpones work until next year on the Festival Plaza venue needed for the 2015 Pan Am Games. Despite the delay, officials think it can be ready for the Games.

The strategy also earmarks $700,000 of the park’s 2013 profits to soil cleanup and takes $2.6 million from the Allstream Centre for conferences — to be paid back with future years’ profits from Exhibition Place.

The waterfront park turns its profits over to the city, which may see less money coming in due to the disposal costs.

Dealing with soil contamination is the responsibility of Exhibition Place, which is leasing the land to the New York City-based Library Hotel Collection, formerly HK Hotels, which operates four boutique hotels.

A hotel spokesperson could not be reached for comment.

Earlier probes of the soil conditions turned up the presence of earth fill that also contained brick, concrete, topsoil, coal, cinders and ashes likely dumped there more than 100 years ago, says the report to the board.

Further work this past summer discovered evidence of hazardous contamination that may mean some delay in building the hotel. The site is near the Allstream conference centre, formerly the Automotive Building, and across from the Direct Energy Centre which hosts trade shows.

A hotel has been talked about as far back as 1999, but talks with potential operators never went anywhere until a deal was reached with the New York company.

When the deal was announced in 2009, the hotel was to open this year, but the operator is now targeting 2015.

The discovery “slows us down a little bit” but the current goal remains to have the hotel ready for the Pan Am Games in July, 2015, said Councillor Mark Grimes, chair of the Exhibition Place board.

Exhibition Place is hiring an environmental consultant to oversee the cleanup.

“It’s a setback, but hey, it’s got to be done,” Grimes said. “It’s our property. It’s unfortunate we found it but it’s something we have to deal with.”

A $5 million cleanup bill is “the worst case scenario,” he added. “We’re doing our due diligence now. Hopefully, it’s not going to be that bad. We needed board approval to keep moving and get that dirt out of there.”

Councillor Gord Perks, who was an environmental activist before his election to council, said Exhibition Place was created from landfilling the lake, and some contamination should not be a surprise.

“The shoreline of the lake used to be further north,” said Perks, who is on the Exhibition Place board. “Given it is fill, you’d expect there would be the possibility of a contaminant.”

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Grimes said the pollution, while considered hazardous, is not “glowing green.”

Councillor Gloria Lindsay Luby, another board member, said she would have expected excavation to turn up historical artifacts, not pollution.

“I don’t know how it got there, no idea,” Lindsay Luby said. “It’s not like there was a gas station there.”