Denley: Arguments for airport hotel’s tax break show what a weak idea it is

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The building of a new hotel at the Ottawa airport is a matter well outside the core responsibilities of municipal government, and yet councillors are being asked to give the hotel a $13-million property tax break. For that to make sense, it would have to deliver some pretty fantastic benefits to Ottawans.

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The arguments in favour of the tax break show what a weak idea it is.

City support for the planned hotel, which would reduce property taxes for 25 years, is meant to boost the Ottawa International Airport. The problem at the airport is a lack of flights, not a lack of hotels. Adding one hotel to the others already located nearby seems unlikely to produce an increase in passenger volume, unless you think people will fly to the airport to stay at the hotel.

City councillors who support the tax break argue that without it, the hotel will not be built and the city will not get any property tax at all. While the plan gives away most of the property tax revenue the new hotel would generate, it would still leave the city with $4.3 million over 25 years. The weakness in the argument is that it could be made for any new development anywhere in the city. There is nothing special about the airport site in that regard.

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There is a fairness argument in favour of the tax deal. Last summer, the city designated the airport as an area that is eligible for those kinds of arrangements. The airport and the hotel company have pursued their request in good faith, following the rules in place. It’s important to note, though, that designation of the area for possible tax incentives doesn’t guarantee the approval of any particular deal. That’s up to council.

The fairness argument cuts two ways. Those starting a business in other areas of the city and those who have run a business here for years don’t get a tax reduction. Why should someone new? The unfairness would be particularly acute for hotels already located in close proximity to the airport.

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Ottawa Mayor Mark Sutcliffe is not in favour of designating particular areas for special tax help, although many of his colleagues are. The concept is being reviewed, and so it should be.

One of the favourite fantasies of those in government is that they can successfully manipulate the economy with your money. The big player is the federal government, which recently promised $16.4 billion in clean tech tax credits over five years. That’s just one program, of course. The Ontario government has been throwing millions at anything to do with electric cars and their batteries.

The city government doesn’t have that kind of money. In fact, it doesn’t really have enough money to do a good job of meeting its basic responsibilities. Still, it’s so much fun to put your hands on the economic levers that councillors can be tempted.

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If Ottawa councillors want to help the local airport, and it really could use some help, they should be talking to their counterparts on Parliament Hill. It was the federal government that killed international flights into Ottawa during the pandemic, when it deemed they could only land in four cities, ours not being one of them.

The federal government does the Canadian airline industry a giant favour by protecting it from foreign competition in Canada. Would it be too much to ask those airlines if they could provide some service so that people can fly internationally from the country’s capital?

The recent announcement that Air France will offer some flights to Paris offers local passengers some hope, but the continuation of the service after a trial period depends on demand. What a concept.

The City of Ottawa has a lot of problems to deal with. It would be nice if business picked up at the airport, but it’s not the city’s job to make it so.

Randall Denley is an Ottawa political commentator and author. Contact him at [email protected]\