Hecla resort in receivership

WINNIPEG – Manitoba Premier Greg Selinger says he doesn’t know how much the province may recover from the $5.5 million it loaned a hotel in a provincial park that is now in receivership.

The Business Development Bank of Canada loaned $8.5 million to the developers of the Radisson Hecla Resort in Grindstone Provincial Park and it placed the hotel in receivership.

"Both of those loans have not yet been resolved in terms of the role of the receiver, and the receiver will handle the windup and it’s too early to tell how much recovery will occur on that," Selinger said in the legislature Friday.

The hotel’s developers are suing the province for roadblocks they say prevented the construction of condominiums, villas and time-share properties that would have increased revenue.

The Paletta Group, a well-known Winnipeg family in the hotel business, took over the aging resort in 2005 and after extensive remodelling reopened it in 2008.

Despite the lawsuit, Selinger noted the large investment made to redevelop the hotel and said it was unfortunate there was a downturn in tourism caused by the recession.

"The Paletta Group has dramatically improved the quality of this asset."

The resort and an 18-hole golf course were originally built by the province on Hecla Island in Lake Winnipeg more than 30 years ago.

One of the long-standing problems with the facility has been its location. While picturesque, it is a two-hour drive north of Winnipeg and it has had trouble attracting winter business.

It had already closed for the season this year, although there were plans to reopen in the spring.

Conservative Leader Hugh McFadyen said the NDP government and Selinger have a poor record with bankrolled projects and this one is no exception.

"All of the predictions and the wildly optimistic statements at the time (the project was announced) have been proven to be false," said McFadyen.

"It’s starting to look like everything he touches fails."