Five years after starting to pay off its share of the Vancouver Convention Centre, Tourism Vancouver is $19 million deeper in debt than when it started, new documents show.
The tourism agency began in 2008 to pay $89 million it owed the province for its share of the $883.2-million Vancouver Convention and Exhibition Centre expansion project on the city’s downtown waterfront. But the repayment amounts were so low that they were outpaced by the government’s interest rate, and so the tourism agency has slid deeper into debt, according to a response to a freedom of information request.
The tourism agency’s total debt ballooned to about $108.4 million in July 2013, the government wrote in an Oct. 4 FOI response letter.
Tourism Vancouver CEO Rick Antonson said his organization has been making all its required monthly payments.
The money comes as part of an agreement where the B.C. government takes a share of the revenue generated by a two per cent additional local hotel tax.
The government’s take of the hotel tax revenue started at 2.45 per cent in 2008, hit 30.1 per cent this fiscal year and rises to 42.5 after 2020 until the debt is repaid, documents show.
“It’s been escalating,” Antonson said of Tourism Vancouver’s payments.
“It’s a situation where the interest rate accrues on a regular basis, and if the payments aren’t in the early years as significant as the interest rate accumulated, then the amount nudges up.”
The government’s effective annual interest rate is 6.1 per cent annually.
Meanwhile, there’s confusion over who is actually paying the bill.
“The Province agreed to pay Tourism Vancouver’s contribution payments for Fiscal Year 2013,” the Finance Ministry said in its FOI response letter.
An accompanying ministry chart showed $1.28 million paid by the government (essentially to itself) to cover Tourism Vancouver’s convention centre obligations between April and July 2013.
Those figures were a mistake, the Finance Ministry said Tuesday.
The hotel tax revenue goes directly to government and so it can’t actually be withheld by Tourism Vancouver, the government said.
The numbers were confused by a one-time $3.25-million government grant to help Tourism Vancouver’s marketing budget, the ministry said.
“Tourism Vancouver has expressed concerns about budget challenges, and the province has been working with them to address these challenges,” the Finance Ministry said in a statement.
The government grant was needed to “offset the pressure” of convention- centre payments, and stay competitive with other tourism agencies, Antonson said.
Both sides said they’re working to find a long-term solution to the budget challenge.
NDP critic Lana Popham quizzed Jobs, Tourism and Skills Training Minister Shirley Bond about Tourism Vancouver’s payments during the summer session of the legislature.
“It’s our intent that the agreement be honoured,” Bond told the legislature.
“There has been a consistent discussion with the board. Tourism Vancouver understands the obligation. We’re not going to speculate about it not being repaid.”
Tourism Vancouver’s repayment is scheduled for as long as 30 years, depending on the tax revenue generated by Vancouver’s hotel industry.