Concerns raised over hotel's early revenue flow

Questions were raised Thursday in the provincial legislature over how money has flowed through the new Holman Grand Hotel in Charlottetown, P.E.I.

The Opposition raised questions Thursday in the provincial legislature over how money has flowed through the new Holman Grand Hotel in Charlottetown, P.E.I.

There are questions about how revenue was handled when the Holman Grand Hotel first opened in August. (CBC)

The company that owns the new Charlottetown hotel is currently in creditor protection and the man behind the hotel, real estate mogul Richard Homburg, is in a battle with some of his companies.

Thursday at the provincial legislature, Opposition Leader Olive Crane said when the hotel first opened in August, all revenue coming into the hotel was then directed to a Nova Scotia company.

She said $215,000 of revenue should come back to P.E.I. to pay contractors who are still waiting to be paid for work they did on the hotel's construction.

"This is a serious issue that the court-appointed monitor pointed out: that the revenue from the Holman Grand was actually going off-Island to another Homburg company," said Crane. "In fact, the court-appointed monitor went so far as to say that money has to come back."

Premier Robert Ghiz admitted he was also concerned when he saw money leaving the province. But he said when the hotel first opened, its credit card processing equipment wasn't working. So he says charges went through the Dundee Arms, which is owned by a Nova Scotia company connected to the Holman Hotel.

Olive Crane wants to know how contractors are going to get paid. (CBC)

"When the hotel first opened, they did not have their Visa and Mastercard and everything in place," said Ghiz.

"So, Mr. Homburg also owns the Dundee in Charlottetown, so they used that company's information to operate for the first few weeks under their Visa and Mastercard.

Ghiz said all the money is now back on the Island and in a hotel account.

"And it is obviously going to go to the operations of the hotel," he said.

Crane also asked what the government is doing to make sure the contractors receive what's owing to them.

"Many contractors and subcontractors, they worked really hard and in good faith to build the Holman Grand. They're very worried. So would the premier please tell these companies what specifically he's doing for them right now?" she questioned.

Ghiz said the matter is now being handled by the courts.

He pointed out taxpayers have a guarantee on the loan government gave to help finance the hotel, unlike the previous Tory government that had no security on the Ocean Choice plant in Souris.

Premier Robert Ghiz says the money is in an account on P.E.I.

"Why doesn't the leader of the opposition turn around, look at her members straight behind her and say, 'Sorry, we didn't do that for the Ocean Choice deal and that's why the Conservative Party of Prince Edward Island closed down that plant in Souris.'"

Ghiz was referring to Colin LaVie, the new Tory MLA for the Souris area.

Ghiz argued Crane can't have it both ways, and said if he had stepped in to help contractors, Crane would be yelling at him for interfering.

The premier said he won't interfere in the creditor protection process and that the courts will decide if and when people are paid for the work they did.

Crane also asked about the province's millions of dollars worth of loans to Homburg-related companies, including $16 million to Homburg Invest for the Holman Grand.

The premier said if the company defaults on the loan, the province would take over the hotel and re-sell it.