[CHARLOTTETOWN, PE] — The City of Charlottetown is owed more than $400,000 by Homburg Invest for an agreement struck with the city for parking spaces for the Holman Grand Hotel.
But Charlottetown Mayor Clifford Lee says he is confident money for the parking spaces will materialize either from the court-appointed monitor or from any potential new hotel owners.
When the hotel was being built, the city waived a bylaw requirement for the hotel to build new 175 parking spaces, agreeing instead to accept between $400,000 and $500,000 to do the work itself.
The money was to be paid once the city began construction on the new parking spaces. That work has not yet begun, so the money isn't technically outstanding yet, Lee said.
Nonetheless, the city has filed a claim to court-appointed monitor Deloitte & Touche and is waiting, alongside 29 other P.E.I. businesses and the provincial government also owed money, to find out how and when the funds will be paid out.
But Lee says he isn't worried the money will not come through.
That's because, even if the hotel eventually ends up under new ownership, the city will require the new owners to meet zoning clearance requirements for the building, which would mean a new owner would have to either build the necessary 175 parking spaces or pay the city the $400,000.
"We anticipate that we will receive the money, it is a question of when we will receive the money," Lee said Wednesday.
In the meantime, given the current financial state of Homburg Invest, Lee says the city does not plan to move forward on any parking construction until officials have received confirmation the money is forthcoming.
"We're not going to go out there and commit the city to this expenditure until we know where the money is coming from — is it coming through the receivership or is it coming from a new owner of the hotel?" Lee said.
That leaves the city in limbo as the monitor continues to work with Homburg Invest on restructuring.
While he is confident the city will get the money it needs, Lee said he is concerned about the many Island businesses that helped construct the hotel who are still owed money.
"These businesses provide a lot of very valuable employment to people in this province and that is concerning to me. How long can these companies hold on without getting paid?"
That's something Opposition Innovation critic Hal Perry believes Premier Robert Ghiz should be working to ease.
He believes Ghiz should convene a meeting of all the Island creditors and tell them what he intends to do to make sure they get paid.
"He got into this mess himself by loaning taxpayers' money to this company, so he should help come up with a plan to pay back the creditors," Perry said.
He pointed to a payment made by the province to the monitor of $1.5 million in September to pay back some creditors. This money was part of a $16.3-million provincial loan to Homburg Invest for the hotel, held in reserve for just such a scenario.
Perry believes more needs to be found to help pay back the money owed to the Island businesses still waiting for their cheques.
"If they're going to jump in and help an off-Island business, they've also got to help the people and businesses of P.E.I.," Perry said. "It's time for the government to step up and take care of these creditors."
Last September, Homburg Invest Inc., which owns the Holman Grand Hotel in Charlottetown, applied for creditor protection to help restructure its finances.