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Large losses projected at convention center

Monday, Oct. 15, 2012 9:31 PM
Last updated Tuesday, Oct. 16, 2012 12:25 AM
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Net operating losses are certain in the first few years the Augusta Convention Center is open, but an increase in events could reduce them, according to a new report.

Susan McCord
Government Reporter
Twitter: @reportr1
E-mail | 706-823-3215

Financial projections prepared by Augusta Riverfront LLC Presi­dent Paul Simon and released Mon­day by city officials show the soon-to-open convention center, also known as the TEE Center, with a projected operating loss of $887,203 in its first year, when only 13 events are booked.

Simon, whose company shares management with Morris Commu­ni­ca­tions Co., the owner of The Augusta Chronicle, provided the report in advance of Tuesday’s scheduled vote on several contracts and other legal documents governing operations at the convention center.

Augusta Riverfront, which has a 50-year contract to run the adjoining Marriott and conference center downtown, was designated by an Augusta Commission vote several years ago to operate the convention center.

Simon’s projections, which he characterizes as “conservative,” reflect just $67,125 in sales revenue from renting the hall and other services associated with the 13 events. That’s far less than the $359,422 in labor costs, $344,902 in utilities and $158,208 for insurance and operating and administrative fees.

All told, projections place gross operating profit at a loss of $730,994 for the year – a loss of $887,203 if insurance and fees are included.

A separate schedule of revenues from the sale of meals and food, also included in Simon’s report, reflects an operating loss of $24,308 from food sales at the 13 events.

As Simon and Augusta Conven­tion and Visitors Bureau officials have said, the benefits to the city don’t come from revenue from the center but from visitor spending. Simon’s report includes a CVB chart estimating $8.7 million in visitor spending in the first year from 13 conventions.

For comparison, Simon included a chart of operating results at Savannah’s Inter­national Trade and Convention Cen­ter. Even with rental revenue projections of $891,107 from July 2012 to June 2013, the chart shows Savannah projecting an operating loss of $912,478 during the 12-month period, though it will pay about $3.5 million in operating expenses to run the facility.

There is hope to earn revenue off Augusta’s center. Another report shows the city’s revenue from catering increasing to $146,612 if more events were held and banquet food sales doubled. Together with increased parking deck and center rental income, losses under that scenario would shrink to about $656,000, according to the report.

Saying “we’re too far down the path to be second-guessing things,” commission member Jer­ry Brigham said he was surprised at the cost to operate the center, which will be funded partly by the city’s general fund.

“Nobody really expected those kinds of losses, I don’t think,” he said.

Commissioner Wayne Guil­-
­foyle said he wanted to know where the revenue would come from to make up the losses, and he repeated a request for an operations manual. Simon said in his report that he was waiting on the contractor to turn over manuals from the center’s various systems.

Bill Lockett, a commissioner more skeptical about the project, has made a request to put management of the complex out for bids.

“My position has not changed; we are not getting the very best deal,” he
said. “I think we could go back with another (request for
proposals) and see what the other vendors are saying.”

In other business Tuesday, the commission will hold a 3:30 p.m. work session to review bids from possible third-party administrators if the city goes self-insured for employee health insurance. The commission is expected to vote later in the day on City Administrator Fred Russell’s recommendation about which to select.

Another matter on the agenda is to approve the refinancing of about $95 million in water and sewerage bonds.

The package might also include issuing about $30 million in bonds to complete renovations at the municipal building and construct a $7 million building for the information technology department nearby, according to Russell.

Lockett said he supported the remodeling project, with the $30 million in debt to be repaid from the city’s next special purpose local option sales tax package.

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Riverman1
106750
Points
Riverman1 10/16/12 - 11:40 am
3
1
Most conferences don't last

Most conferences don't last all week, by the way. The ones I go to are usually 3 days. I'm pretty sure some of these are one day affairs.

dichotomy
42003
Points
dichotomy 10/16/12 - 12:46 pm
3
2
I know now why they called it

I know now why they called it the TEE.

TERRIBLY EXPENSIVE ENTERPRISE

or should that be

TAXPAYER'S EXPENSIVE ENTERPRISE

Insider Information
4009
Points
Insider Information 10/16/12 - 01:05 pm
2
1
@ dichotomoy

TEE....

Taxed Enough.....Eventually

To quote Brigham, we're too far along to slow down now. Keep on dumping the money into the black hole. Eventually, we will fill 'er up.

willie7
1047
Points
willie7 10/16/12 - 01:32 pm
3
1
We taxpayers have given
Unpublished

We taxpayers have given Augusta Riverfront LLC a gold mine.
This is a case of the small government crew wants government for themselves. Augusta Riverfront will reap big profits, no losses from operations , use of equipment ,and hotel rooms rental.
IT IS A SHAME WE GAVE IT ALL AWAY!!!!!!!

burninater
10855
Points
burninater 10/16/12 - 01:57 pm
3
0
Augusta Riverfront, which has

Augusta Riverfront, which has a 50-year contract to run the adjoining Marriott and conference center downtown ....
--------
Wh-WHAT!? FIFTY-YEAR contract?!

Wow. No offense y'all, but business predators in Augusta, working the angles to get public dollars poured straight into their private pockets, must think that fleecing Augusta is like shooting fish in a barrel.

Just because it wears a fancy suit and goes to the right church doesn't make it any less of a wolf.

Riverman1
106750
Points
Riverman1 10/16/12 - 02:20 pm
3
1
Burn, exactly, that 50 year

Burn, exactly, that 50 year contract has enhanced the value of the Marriott tremendously. That's what this has always been about.

OpenCurtain
10054
Points
OpenCurtain 10/16/12 - 03:14 pm
2
0
Riverman1 - Ira Davis

Sorry Riverman1 was working Fed / DOD jobs out of town during that period. I haven't seen Ira since around 1984-87, when he and a local reporter went after a county dept. He died back June/July 2011 correct ?

Loss of a good county government waste hunter.

BTW I enjoyed re-reading all the original warnings on TEE Ctr that went unheeded

http://chronicle.augusta.com/opinion/opinion-columns/2009-10-18/question...

Nice to read the early warning the the Politicians just decided to disregard and they should ne held accountable.

Quoted from the article "First, the story cries out for full disclosure. The CVB is a private corporation. The members are not elected, nor are they appointed by elected officials. "

If they had only listened to the voters and not the power brokers.
Think of the $millions the taxpayers would have saved.

Riverman1
106750
Points
Riverman1 10/16/12 - 03:52 pm
3
1
Old Comments

Open Curtain, ha, nice to see my comments back then....and those of others. Really, does anyone remember how some of us ranted about what was GOING TO HAPPEN? Thanks for the link to the Ira Davis lawsuit.

Riverman1
106750
Points
Riverman1 10/16/12 - 04:22 pm
1
1
Deke is probably still

Deke is probably still swimming in the current and getting tangled up in the aquatic weeds. Useless weeds and mayor.

specsta
7848
Points
specsta 10/16/12 - 05:10 pm
2
1
And This Is A Shock?

What did you guys expect when the decision was made to build such a drab-looking, tiny "convention center"? What was Augusta offering that couldn't be filled by much larger cities such as Atlanta, Jacksonville, Orlando, etc.? Access to a muddy river a block over? The Georgia World Congress Center in Atlanta has almost 50 events booked, just for the remainder of 2012. Orlando has over 40 events for the rest of the year. Augusta has 13 - for a whole year?

Face it folks, Augusta does not have the name recognition that Augustans think it does. Heck, I was even watching an episode of "Cash Cab" and the question came up about "what is the name of the city near Atlanta that hosts a golf event called the Masters?" - and the two New York City cab riders had no clue.

Augusta thinks small and gets small results. What else is new? Mediocrity rules.

countyman
22728
Points
countyman 10/16/12 - 05:22 pm
1
3
ten of the thirteen

The Laney Walker/Bethlehem is the best thing to ever happen to Augusta in decades. The numerous statewide/national recognition, lower crime rate, increased stability, attracting private investment, and the additional tax base prove that.

Due to lack of space ten of the thirteen events listed didn't come to Augusta. Most of the events haven't been here before, or used existing venues.

Can somebody name one successful city without an convention center?

I know the developer of the construction at 901 Broad street($1.2 million project, Holiday Inn Express($5 million), etc are related to the TEE construction. Read the quote from the owner of New Moon Cafe.

''Allewelt is relocating New Moon Cafe to the old J.B. Whites building. There are luxury condos upstairs.'' "This is a great opportunity. We need more space," she said. "And there is a conference center about to open a couple of blocks away. That is a no-brainer."

OpenCurtain
10054
Points
OpenCurtain 10/16/12 - 07:02 pm
2
0
2 Purely self serving questions.

#1 What has or will the TEE center do for the South Side?

Answer: Nothing

#2 What will it cost the South Side?

Answer: Over 1/2 of the total taxpayer money used each year will be paid by the South Side.

I feel so equally consolidated.

Riverman1
106750
Points
Riverman1 10/16/12 - 07:54 pm
0
1
Countyman said, "The Laney

Countyman said, "The Laney Walker/Bethlehem is the best thing to ever happen to Augusta in decades. "

Well, yeah, cleaning up a slum area is never a bad thing. When you take the motel tax from all over the county to do it, don't expect those people in the outlying county not to be upset.

countyman
22728
Points
countyman 10/16/12 - 09:38 pm
0
1
The top hotels(Marriott) are

The top hotels(Marriott) are located in the CBD downtown.. The other nicer hotels can be found in West Augusta.. The hotel/motel tax is really coming from specific areas of Richmond County.

Riverman1
106750
Points
Riverman1 10/17/12 - 11:19 am
0
2
Most hotels are around the

Most hotels are around the I-20 Washington Rd. interchange. More motels are popping up around 520-Gordon Hwy. They are certainly not near Laney Walker or the downtown area.

F4therTime
4656
Points
F4therTime 10/17/12 - 04:48 pm
0
0
Better question?
Unpublished

County man asked, "Can somebody name one successful city without an convention center?" I want to know, can somebody name one successful convention center in any city?

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