New plans move the entrance of the hotel to Grafton Street from Queen Street. (CBC)

Charlottetown city council granted Homburg Investments two exceptions to bylaws Thursday in approving plans for a 10-storey downtown hotel.

The new hotel, to be built on top of the Confederation Court Mall, will be 38.7 metres high, more than triple the 12-metre limit set in the city's bylaws.

"Height is a big issue, particularly in the older part of the city," said Coun. Kim Devine, head of the city planning committee.

"You always have to look at ways of incorporating the new with the old."

The city also waived a requirement that the hotel build one new parking space for each of the 82 rooms in the hotel. The city accepted cash instead, $4,500 each.

It plans to use the money to expand the parkade on Pownal Street. Parking had been a stumbling block for the project as plans proceeded in recent months.

Empty buildings causing grief

This is not the only downtown Charlottetown project planned by the Halifax-based Homburg, which owns Confederation Court Mall. It is also building an office tower on Fitzroy Street.

'This investment by Homburg has reignited the issue.'— Coun. Rob Lantz

Council vote unanimously to allow the exceptions, but other problems threatening the success of the two projects will not be so easy — in particular, the number of vacant buildings downtown.

"This investment by Homburg has reignited the issue," said Coun. Rob Lantz, "when they're willing to invest this kind of money in our downtown, and when we've got such a significant issue with vacant properties that's been undealt with the better part of a decade."

David MacDonald, new chairman of the city's economic development committee, has pledged to do what's necessary to reopen the downtown's shuttered buildings.

In the meantime, Homburg has taken matters into its own hands. It has launched a $5-million lawsuit against Chris Tweel and three family-related companies.

It alleges they have allowed their properties to become derelict, dilapidated and in non-compliance with city bylaws, diminishing the market value of nearby properties.

Homburg's dispute with Tweel has already led the company to reconfigure the hotel so its entrance is on Grafton Street. The original plan called for an entrance on a vacant lot owned by Tweel on Queen Street.