A developer with plans to build a boutique hotel in a long vacant space at 603 First St. SE has backed out of the deal, the mayor confirmed at Monday evening's city council meeting.--NEWS FILE PHOTO
cgallant@medicinehatnews.com@CollinGallant
The developer behind plans to build a boutique hotel on a downtown parking lot has backed out of the project, Mayor Ted Clugston confirmed Monday.
The city-owned lot that sits kitty-corner from city hall on First Street has been subject to four proposals in 15 years that have all now fallen through.
Clugston – and local landlord and developer Aaron Burghardt when reached by the News – pointed to general economic conditions before declining further comment.
A letter sent last week rescinds the conditional offer to buy the lot toward building the 80-suite, five-storey “Iron River Hotel,” first proposed last fall.
It also puts the land’s future back in limbo, though Clugston said the long-held position of needing a “landmark building” there has softened.
“Without giving too much away, we are going to open it up,” said Clugston, who said more details could be forthcoming at the council’s Oct. 5 meeting.
“After 42 years – my belief has always been to get the best, highest use out of the at land, and that’s mixed-use commercial-residential – that just might not happen,” he said.
Hatters could see the new marketing strategy for the land, which would be brought forward by the city’s Invest Medicine Hat unit, which now handles real estate, in early October.
Previously, the land was marketed as a potential driver toward overall downtown redevelopment.
Clugston said that will still be a consideration, but details are forthcoming.
Also on Oct. 5, council will hold a public hearing over changes for the city’s long-term Municipal Development Plan.
One key element is the creation of a “river front district” that would focus development efforts from the former Medicine Hat Arena to the lot at 603 First St.
Both The Arena and the downtown lot received property tax concessions from the city under a new provincial program to help developers recoup costs at difficult to sell brownfield sites.
The sale price of the land was $364,000 but came with property tax incentives totalling $400,000 over four years to help offset development costs.
In early April, council approved the general outline of a development permit for the hotel – a required step due to the lot’s “direct control” land zoning.
At that time, at the beginning of the pandemic lockdown, Burghardt said, “We’re trying to navigate the obvious challenges that every one is facing right now. But we’re not facing any hurdles from the city.”
Three previous attempts to build major residential or commercial properties at the site fell through when private developers said they couldn’t capture rents high enough to recover their costs.
A city-driven proposal to go ahead with development was also shelved in 2016.
Clugston said that despite the cancelled sale, the city’s real estate endeavours are actually doing well despite slower economic conditions.
He expects new offers on the lot.
“There are always people kicking tires on that land … it’s not going to be a convenience store,” said Clugston.
