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This article was published 8/6/2015 (1931 days ago), so information in it may no longer be current.

City officials are concerned about the Winnipeg Convention Centre’s ability to repay a $33-million loan used to finance its expansion project.

An administrative report to Wednesday’s executive policy committee recommends council send a senior finance official to work out financing options for the convention centre, including: scaling back the expansion project until a new hotel – key to the loan repayment – is built and in business; and, renegotiating the convention centre’s bank financing to defer any payments until after the new hotel opens for business.

Convention centre board chairman Bob Silver said he’s not surprised by the administrative plan, adding he told city hall in January that the delay in the hotel project will mean the convention centre won’t be able to make its debt repayments to city hall as planned.

"The convention centre is not in a position to make its debt repayment," Silver said. "It’s high time this be dealt with."

Uncertainty over the status of the hotel project is what’s prompting worry by city and convention officials.

While construction work is proceeding on the convention centre’s $180-million expansion, uncertainty surrounds the status of the hotel.

City council had given the convention centre a $51-million grant for its project, and a $33-million loan.

The convention centre is to repay $17 million of the loan from its revenues once the expansion is completed.

Incremental property tax revenue from the new hotel – to be built at 220 Carlton St. – was to be used to repay the remaining $16 million.

Silver said the $17-million repayment plan was based on new convention centre revenue that needed a four-star hotel with about 240 rooms built close by.

Silver said that without another hotel of that quality, the convention centre won’t be able to attract the new business needed to repay the city loan.

But now that True North Sports & Entertainment has bought 220 Carlton St., it’s not known how a hotel will figure into the convention centre’s ability to repay city hall.

True North announced last week it would buy 220 Carlton St., for inclusion in its proposed $400-million True North Square project.

While the True North project envisions three towers with residential housing, office space, hotel and a retail, it’s not certain when the hotel will be built or where.

City hall doesn’t know what True North will construct at the 220 Carlton St. location and when, and whether it will generate the amount of property tax revenue that was anticipated from a hotel at that site.

When city council gave the convention centre the $33-million loan, one of the conditions was that the winning contractor for the expansion would build a hotel and, until that was done, the contractor would make the annual debt payments that would be generated by the hotel when it opens for business.

But in a controversial move, the contractor – Stuart Olson – bought itself out of the hotel commitment with a $3.75-million payment, which council approved in January.

In another controversial move, True North included the Carlton Street property at the invitation of the city’s downtown development agency, CentreVenture, which was looking for someone else to build a hotel for the convention centre.

However, the administrative report suggests the city’s finance officials don’t know when or if they’ll see any of the incremental property tax revenue from what is eventually constructed at 220 Carlton St.

Silver said if True North’s plans for its project do go ahead, a new hotel likely won’t be open for business until late 2018 or 2019 – meaning that’s the earliest the convention centre could start repaying the $17-million and when the city could expect to see incremental property tax revenue to pay off the remaining $16 million.

Silver said he hadn’t seen the administrative report but added it’s not possible at this stage to make any substantive changes to the expansion project for the city’s benefit.

But Silver added the convention centre and city hall must look at all options on how the $33-million debt can be restructured.

"The city and convention centre discussed all sorts of options," Silver said. "Probably the most important of which is restructuring the loan – extending the time period or change the interest and principal payments so it accommodates the delay better than it does today."

Silver said the convention centre expansion remains on budget and on schedule, with substantial completion for November this year and final completion by March 2016.

aldo.santin@freepress.mb.ca