The $7,000 monthly fee that Augusta will pay a firm to cater events at the new downtown convention center is nominal and less than the city pays another company to provide concessions at James Brown Arena, the Augusta Commission was told at a work session Wednesday.
The fee is part of a catering agreement that had thrown some commissioners off guard when it appeared in a package of documents that govern operations at Augusta Convention Center, also known as the TEE Center. Mayor Pro Tem Joe Bowles requested the work session on the document.
Commissioners and some taxpayers question where the city stands to make money in the deal, which places convention center management and convention catering into the hands of Augusta Riverfront LLC, a firm that shares management with Morris Communications Co., the owner of The Augusta Chronicle.
The new agreements, originally an extension of a 50-year contract between Augusta Riverfront and the city to run the adjoining Augusta Marriott, changed radically when Augusta issued tax-exempt bonds to pay for construction.
Not only did the city’s Atlanta bond counsel insist on a shorter, 15-year term, Riverfront LLC President Paul Simon said, but lawyers also said the firm can’t make a profit. All profits or losses, including those from catering, will be the city’s, said Simon and Jim Plunkett, the special city outside counsel for the deal.
Losses at the center are almost certain, particularly in the center’s early years, Simon said.
“As I’ve said from day one, going back seven or eight years, this center is going to lose money” as convention centers in Savannah, Athens and Macon have, he said.
Instead, the city gains sales tax and other benefits from thousands of visitors attending conventions at the center, he said.
“We’re going to get a bang for our buck with the people coming to our city,” he said. “We get it back maybe two times in economic impact.”