603 First Street sold to developers looking to build hotel

By Jessie Weisner
April 15, 2019 - 9:08pm Updated: April 16, 2019 - 6:54pm


MEDICINE HAT, AB -- An empty piece of land in the heart of downtown could have a boutique hotel on it by next year.

City Council approved the sale of 603 First St SE during their regular meeting on Monday.

Mayor Ted Clugston says this sale is incredibly exciting for the city.

“I don’t want to crack the champagne quite yet because there’s still processes,” says Clugston. “But I was joking upstairs, today's my birthday, and this is one of the best birthday presents I’ve had in a long time.”

Spero Hydrocarbons Ltd. has purchased the land for $364,500 with intention to build a 60,000 sq. ft, five storey, 60 room boutique hotel. It will include 6,000 sq. ft. of main floor commercial space on the west side of the lot, and surface parking on the east.

A second phase of the project may see a residential building with a parkade on the first two floors built on the east side as well.

However, the property needs a lot of work. According to an environmental assessment in 2010, there’s known hydrocarbon contamination in the groundwater which may require work during construction.

“You could even argue the properties worth less than a dollar,” says Clugston. “There was times we would say it was worth negative $500,000 because of all the work you had to put into it just to get it up to develop able shape.”

Typical to other land sales, Spero Hydrocarbons Ltd. will acquire the land on an ‘as is, where is’ basis, and will assume environmental liabilities once the sale concludes.

The buyer is also required to pay for the development permit and any environmental or geotechnical assessments. The city will pay to remove barricades separating the two parking lots on the property.

As of now, the area is used for 74 parking spaces, a mix of two hour free and permit parking.

City administration is concerned about the loss of parking space, but is in the process of engaging downtown stakeholders to gauge the issue, and come up with solutions.

“I drove by today, that lot was only half full, so it’s not fully utilized most days,” says Clugston. “I challenge you to go to any other downtown in Alberta and see if the parking is worse than in Medicine Hat, because it’s not.”

The sale is largely attributed to a new Brownfield Tax Incentive which was also approved Monday. It will be applied to the property.

The incentive offers multi-year property tax breaks to attract purchasers of properties in rough condition.

The incentive is one of the first of its kind in Alberta, and currently only applies to two properties within the city, 603 First St SE and the former Medicine Hat Arena.

Clugston says some new information about the arena should be out soon.

The sale closes on September 30, 2019. The buyer is required to begin construction on the site within 18 months. If that doesn’t happen, the city has the option to buy back the property for 90% of the original price.

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