City’s Buy-Back of 618-624 Queen St. Raises Important Questions

22 Aug

In response to City Council’s decision to buy 618-624 Queen St. from DPM to seek another hotel developer, some important questions have been raised. Below are some of my thoughts on the questions I’ve heard.

To start, do we even need another hotel? Whether or not more hotel space is needed seems generally to be met with a ‘yes’ by people who try and host events in Fredericton, and who strive to attract more and more events to the region. To be fair, discussions about drawing major events to Fredericton necessarily include an acknowledgment of the transportation limitations (airlines and more accessible public transportation) we face, so I think it’s fair to say that this pending hotel development is one piece in a bigger puzzle. That said, the question of whether we need another hotel forces the related question of how desirable and/or possible it is to compete with other cities for major conferences/events. At present, Fredericton has decided it can compete, and is going to try, and so that drives subsequent decisions.

So, assuming we can and should compete, and do need a hotel to do so, the next question is whether or not the city should be involved in such transactions. I find this question more complex, and I’m somewhat torn about it. On the one hand, advocates of private development are likely to see this as the purview of the private sector. On the other hand, many (me included) are strong advocates of a city’s role in advancing progressive, creative, socially inclusive, and sustainable development. I’m not necessarily suggesting that this hotel project will meet these kinds of aspirations. However, I do think that the idea of the city having a plan of development for the east and west ends of the downtown core, and subsequently of being involved in bringing these plans to fruition, is a good one in concept at least.

The final question I’ll bring up is whether or not the costs of getting involved in deals such as this outweigh the benefits. I may be throwing myself to the wolves here, but for me, this is the most difficult one because we don’t have very good ways of assessing the full costs or benefits of many of the decisions we make, partly because we tend to focus on short-term economics rather than on longer-term and more diverse outcomes. We certainly discuss potential long-term impacts, and I certainly try to use the range of information that is available to me (as do others, I think), but assessing diverse impacts of decisions is a pressing challenge facing governments, organizations, and companies alike, and it’s a challenge that’s becoming more complex as the world becomes increasingly networked, and therefore, as we become more exposed to emergent (unknown) realities. There is a golden leadership opportunity for Fredericton in working towards addressing this challenge as a small urban centre. I realize that there’s lots of room for debate rolled into this paragraph. If anyone ever wants to discuss, I’d love to chat about it with you, and learn from you.

Advertisements

10 Responses to “City’s Buy-Back of 618-624 Queen St. Raises Important Questions”

  1. Roy August 27, 2012 at 1:29 pm #

    Leah,

    What is our City’s business rational for this purchase? Are the planning to hold the land indefinitely and lease it to the new development or, are “we” going to handle the remediation costs and then resell the land at a loss – essentially subsidizing the developer?

    If we simply want to entice a hotelier to build next to the convention centre, there are less costly and risky ways to provide incentives. Though, I guess, as landowner, we could require the developer to erect an edifice with more architectural dignity and appeal than its downstream neighbour.

    Our recent history in the role of middleman, real-estate broker (i.e. York House) does not bode a favourable outcome for the purchase of half a city block.

    • leahlevac August 31, 2012 at 2:21 pm #

      Hi Roy,

      As I understand it, the rationale is to get a hotel in the space as soon as possible by issuing an RFP or EOI so that other developers can submit proposals. We have not made any commitments to deal with the remediation; similar to the property on the other end of Queen St., remediation will fall to the new owner. My hope is that we will deal with incoming proposals in a way that strives for some impressive architectural features. The winning proposal will ultimately be voted on by council.

      Leah

  2. Garth Hood August 28, 2012 at 11:28 am #

    I think there are many more questions that need to be asked and answered here:

    First, how much did the city originally purchase these properties for? With this information we can compare the costs past and present.

    Second, if building the convention centre was a bad idea do we want to continue investing in this? Good money after bad? Should a city be involved in this type of development and shaping our city this way when there are so many smaller and less costly ways to make our city a better place to live and more attractive to tourists?

    Third, is a new hotel the only and best option? A city government should be looking at the best interests of each and every citizen. Would an approach that tries to develop bed & breakfast accommodation and small inns be both more cost effective and provide more opportunities for more Frederictonians? Likely yes, (with a very limited amount of research on my part) but has anyone at city hall done the proper research and asked the people about this in an open and accountable way.

    Large projects with head offices outside the city will always drain money from our community. Smaller projects are more sustainable and employ more local people. If one or two fails it also has less impact than one big failure.

    And imagine what local businesses might follow those small inns and B & Bs – we might also see more cafe’s, restaurants, shops and small grocery stores that both visitors and residents alike can walk to. I’,m sure there are many more great ideas out there if someone at city hall or on council took the time to ask citizens. And the people at a convention might actually meet some real city residents rather than only seeing the inside of another McHotel and eating fast and convenient McFood.

    Maybe our different way of doing things could be a marketing feature to attract business that is looking for a more sustainable and people centred way of doing things. If Fredericton is going to be successful in the convention business it needs to provide something that others don’t or can’t offer. Doing what others are already doing is a big mistake that is destined for failure.

    Despite my second point I think we likely need to make the best of being in the convention business. This being said I think that there are many more options than “hotel or no hotel”. We need a conversation about ALL the possible alternatives and not just a simplistic one. This is the basic problem with how our city hall and council functions – very little exploration of possible and creative options that involve many citizens and groups so we end up with an old school (generally a single big developer, less trees and more cars) solution.

    • leahlevac August 31, 2012 at 2:40 pm #

      Hi Garth,

      I’m not sure what you mean by the city’s original purchase; as in, whenever in history it became owned by the city, or in this transaction? In this transaction, the city paid $800,000, which is the same price that DP Murphy paid for it.

      In terms of your second question, and last point; the city has agreed to take on the convention centre and my sense is that this will not change. Therefore, we’re onto ‘making the best of it’. I understand that there are still folks that don’t support the convention centre, and to be honest, I’m not sure it would have been my choice of optimal investments either, but it’s done. I have spoken with the team that is issuing the EOI for the property, because I agree that ideally, there would be more to the development of that area than a hotel.

      Finally, I of course agree that there are many ways that we could be doing a better job of engaging with citizens. There are certainly already some examples of good efforts on this front, and I remain committed to working in this area, and to asking many different people their thoughts about various issues, and at various times.

      Leah

      • Garth Hood September 1, 2012 at 11:55 am #

        Hi Leah,

        My understanding is the city bought up the properties to sell to DP Murphy to facilitate the original failed hotel plan. I may be wrong in this as the information publically available is sketchy at best. It would be nice if the public could clearly understand the sequence of events without having to be a detective or investigative reporter.

        I don’t feel you have addressed my third point – that there are better options to stimulate local economic opportunities and to reduce city investments than building a second hotel in the area. Economic opportunity has come up as a big concern, with recent job losses, as well as the city taking on any more debt (we don’t know how soon a new developer can be found and if they will pay back the full $800,000 to buy these properties). Municipal governments need to consider options that stimulate economies for everyone and not just a few chosen developers and corporations.

        Are you (and council) willing to discuss and consider other accommodation options in the area instead of a second hotel?

        Garth

      • leahlevac September 1, 2012 at 3:48 pm #

        Hi Garth,

        I think that the overall question of which pieces of information about which particular situations get communicated, how they are communicated, and in what amount of detail, is a fair question, and something that I don’t know the answer to. So, I’m not sure what to say except to note that you don’t feel that the information available is clear. If you’d like to discuss the entire sequence of events, I think the best option would be to meet with staff who have been involved throughout the process. If you’d like that, please let me know and I will arrange it for you.

        In terms of my willingness to discuss and consider other accommodation options; of course I’m willing. I would be thrilled to see a proposal come in for a creative way to accommodate people, provide other services, advance sustainable building principles, commit to building the local economy, etc. I can’t speak for other councillors, but my experience so far is that they too are willing to consider alternatives. However, I will say that there is a lot of sense that a hotel is needed, so I don’t see it as a strong likelihood that a different vision for that particular location will emerge, especially with the current process already underway. We’ve already voted to buy back the property and issue an expression of interest or request for proposals. So that is what will happen. Now, it’s what people responding to the EOI will propose.

        Rather than my (or anyone else’s) willingness to consider alternatives, the question for me is really whether or not the process to follow (basically, people/companies respond to the EOI, the EOIs/RFPs are scored, and a recommendation from staff is made to council, which council can accept or not) encourages or facilitates proposals more in line with what you’re describing above. Unfortunately, I think the answer to that question is, ‘not especially’. I don’t think that the current proposal process makes the vision of development you allude to impossible, but I also don’t think it encourages the vision of development that you’re describing above. There are factors besides process of course, but process is a big one.

        The obvious response is to change the process. One of the dilemmas (there is more than one, but one that I think is particularly important) with changing the process (I support your call for the need for encouraging more diverse visions of development, and I think we are capable of many interesting things in Fredericton, and I do think that this process needs some serious consideration), is that you can end up with an alternative process that people find equally as problematic (York House being the most obvious recent example), which doesn’t really create a better situation. Another related issue is the extent to which parts of the planning process are governed by provincial regulations, over which we have limited control. I’m not suggesting that there isn’t room for new processes (there is, but institutional reform is not going to happen viz. this particular situation, or overnight), but I am constantly learning where various tensions exist, and there are many. So, I don’t think about this particular situation as being separate from a bigger series of questions. In short, I am thinking about these larger questions, and always willing to hear others’ thoughts.

        Leah

  3. Garth Hood September 2, 2012 at 9:59 am #

    Leah,

    I don’t have the time or energy to meet with city staff every time I want transparent information on a particular issue. This is one of the ways that trust breaks down between government and citizens. When an issue like this is discussed with the press all the details need to come out if city staff want to be trusted. If all details don’t come out then it looks like something is being hidden.

    On the local economic development issue (is a hotel the best thing) we need a champion for new ideas and different way of doing things that is more citizen (rather than developer) oriented. To get into all the reasons for why things happen the way they do seems like a justification for the status quo. We need to look at what is the best way to proceed and then tackle the challenges to getting there as they come. With an educated public willing to put pressure on government structures and procedures anything can happen.

    Garth

    • leahlevac September 2, 2012 at 12:51 pm #

      Garth,

      Again, I note that you don’t feel that the information available is clear. This is an ongoing topic of discussion (in terms of how to improve citizens’ access to information). It is also the case that some pieces of information are protected by privacy legislation (including some components of real estate transactions because of related legal matters), which indeed causes some gaps in the publicly available information. I understand that you may well interpret these as excuses, but I don’t know what else to say.

      I agree that we need champions for new ideas and different ways of doing things that are more citizen oriented. I am working in this regard, within the scope of what I see as being both possible and optimal. I’m sorry that you find my explanation to be an excuse. It seems that my attempt to provide some information about the ways in which I am finding this to be very complex was not helpful. This is why I suggest conversations.

      Leah

  4. Roy September 11, 2012 at 2:49 pm #

    Leah,

    I’ve been away and am just now catching up on this thread. I do share Garth’s lack of conviction on transparency and have an almost non-existent expectation anything other than a depressing square box will be erected on this sight. At least the existing building have yet to be demolished and we are not left with a gaping hole while the hunt for a new project takes place.

    If I read the above thread correctly, we, the people, have made DPM whole on their acquisition costs of the property now they have concluded the hotel project was not a good business decision for them. Why did the City step-in to purchase the property rather than leave DPM to find its own buyer in the market? Had the developer been guaranteed this out in the original purchase? [Based recent sales prices of other properties downtown, are we certain 800K is in-line with what the developer could have obtained in a private real-estate sale? Unless there was a first refusal clause in the contract, one is left to assume the developer sold to the City because it was improbable they could obtain the same price privately.

    I totally understand the City being involved with land purchase and development in the case of public facilities (arenas, pools, concert halls, libraries, etc), but hotels and convention centres are a bit of a walk from public facilities.

    Now that we own this property, there is a fiscal concern that, in the near future, the City may feel compelled to (re)sell the property at a loss to attract a development project.

    Roy

    • leahlevac September 11, 2012 at 4:11 pm #

      Hi Roy,

      I don’t know the answers to all of your specific questions about the history of the transaction, the original agreement, etc., but will ask. In terms of the decision to move forward on the purchase, our discussion at the council table (that prompted the decision) was based on making the process move quickly, rather than waiting for DPM to move forward (either by selling the property or developing a hotel on it).

      I agree that we should ask for something more than a status quo hotel, and feel that we should not sell the property at a loss. I have asked that the RFP invite a ‘progressive’ application. I am ambivalent about whether or not convention centres can be thought of as meaningful public facilities. However, given that the convention centre is ours, and here to stay, I think it is now incumbent on us to try and ensure that it does provide public good.

      In terms of yours and Garth’s concerns about transparency, I am open to suggestions about improving the availability of information. It is a topic of constant discussion, and I am still trying to navigate what’s important, how to ensure that the context of information is clear, and so on. Efforts are being made towards changing the way information is communicated with residents. Specific suggestions for improvement are much easier for me to pass on/work on. I’d be happy to talk about this further.

      Leah

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s