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Convention center has city officials in a quagmire

Sunday, Nov. 4, 2012 8:20 PM
Last updated Monday, Nov. 5, 2012 1:17 AM
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Forgotten costs and unforeseen complexities continue to delay the opening of Augusta’s convention center.

The issues reached a tipping point Oct. 29, when the first convention, a four-day gathering of Georgia law enforcement officials set for January, canceled because the Augusta Commission and the facility’s intended operator have not agreed on management details.

Reports of the cancellation ran led Mayor Deke Copenhaver to call off an Oct. 31 workshop to avoid further negative press, which he said could ruin the city’s reputation before the facility, also known as the TEE Center, even opens.

Copenhaver asked that commissioners meet behind closed doors, and three met Friday with Jim Plunkett, an outside city attorney hired in 2009 to negotiate and develop the management agreements and Rand Hanna, an attorney for hotel operator Augusta River­front LLC, which shares management with Morris Communications Co., owner of The Augusta Chronicle.

After a prolonged debate, the commission voted 7-1-1 in 2009 to build the convention center adjoining the Marriott that Augusta Riverfront has operated for 23 years. The deal also diverted millions in hotel-motel tax dollars to the redevelopment of the Laney-Walker and Bethlehem communities, two historically black, blighted neighborhoods where redevelopment is under way.

An Oct. 22 commission motion to approve the management agreement failed by one vote. Several commissioners have pointed to the small window of time they were given to approve the complex operating agreements with Augusta Riverfront.

“Less than five weeks ago, we got a copy of this,” Commis­sioner Joe Jackson said Thursday. “I’m not faulting anybody, but when you look at this, is it a perfect deal? No.”

Mayor Pro Tem Joe Bowles,
an accountant and one of three term-limited commissioners leaving office at the end of the year, detailed his concerns about the documents Wednesday in an e-mail to city officials.

Bowles cited his surprise Sept. 28 when commissioners learned that a 2009 annual appropriation of $350,000 in hotel-motel taxes to cover the center’s operating and capital costs was unavailable because of IRS regulations regarding tax-exempt bonds used to build a facility more costly than the $20 million one voters approved in 2005.

That leaves the city on the hook for operating costs, and for losses Augusta Riverfront President Paul Simon estimated could exceed $800,000 in 2013. Simon told commissioners six years ago that the losses could reach $500,000, according to a Sept. 23, 2006, Chronicle report.

Such losses are not uncommon among convention centers. A fiscal 2013 profit-and-loss statement for the larger Savannah Interna­tional Trade and Convention Cen­ter shows an operating loss of $912,478, despite projected operating revenue of $2.4 million for the year.

Jackson said Thursday that he was willing to raise Augusta’s hotel-motel tax from 6 percent to 7 percent to cover the losses.

Bowles’ e-mail detailed concerns about the management agreements, which provide that the city pay Augusta Riverfront an annual fee of $84,000 to run the center and $44,000 to cater events.

Many concerns stem from the fact the city built a convention center and kitchen onto the Marriott complex already run by Augusta Riverfront. The entire complex, including the convention center, has 100,000 square feet of meeting space, according to Marriott. The Augusta Convention and Visitors Bureau, granted $350,000 to market the convention center, lists only the 38,000-square-foot open meeting hall, the “TEE Center,” in marketing materials.
Bowles questioned how meals prepared for the hotel would be kept separate from those prepared for the convention center, which would get the kitchen and its equipment should Augusta terminate the management agreement, and who is responsible for utility bills arising from use of the shared kitchen.

He also suggested eliminating employee bonuses, requested by Augusta River­front, in the start-up phase, reducing fees until losses are reduced or profits are made, and shortening the 15-year agreement to five years.

Bowles was among the five commissioners – with Jackson, Jerry Brigham, Matt Aitken and Grady Smith – who voted in favor of the agreements Oct. 22. Commissioners Corey Johnson and Wayne Guilfoyle favored an agreement that allowed them to review progress after a year and possibly tweak it. Copenhaver and City Administrator Fred Russell said the hotel operator was unlikely to consent to such a short-term deal.

Guilfoyle, who attended the Friday meeting with Jackson, Johnson and businessmen Brad Owens and Al Gray, said “a lot of questions got answered” during the nearly four-hour session. The group proposed making several adjustments and will “have to see if Mr. Simon would accept,” he said.

Simon did not immediately return a phone call requesting comment.

Smith, who along with Guilfoyle faced the project upon taking office last year, said it was frustrating to make such difficult decisions under the threat of losing business.

“I’m disappointed to see we’re down here at the ninth inning, waiting until the ninth hour to decide who’s going to run the damn place,” Smith said.

He disagreed with Com­mis­sioner Bill Lockett’s proposal to toss the agreements out and seek competitive bids. He believes that after a year the commission can revisit the agreements, review actual performance and make changes, if necessary.

“It’s several people with egos, and everybody’s trying to prove that the left hand doesn’t know what the right hand is doing,” Smith said. “Sure, this first year might not be exactly what we want. Right now let’s finish off this TEE Center on a positive note, rather than with egg on our face.”

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Insider Information
4009
Points
Insider Information 11/04/12 - 10:19 pm
5
0
It cost $50 million to buy

It cost $50 million to buy the magic seventh vote to build the TEE Center.

How much will it cost to buy the seventh vote to operate it?

By the way, why does Deke prefer to operate behind closed doors rather than in public? Isn't he a public servant?

my.voice
4731
Points
my.voice 11/04/12 - 10:50 pm
3
0
Augusta Richmond County is

Augusta Richmond County is the most mismanaged place on the planet. We commit to things then figure out we can't live by the terms. This isn't leadership folks. Between this and Azziz I'm ready to relocate. It just makes me want to sit and cry.

dichotomy
32150
Points
dichotomy 11/05/12 - 12:01 am
6
2
More bad news.

I think this is the first I have heard about not being able to use the $350,000 from the hotel-motel tax toward operating expenses. Can there be any MORE bad news about the deal our glorious leaders have gotten us into?

Well, they've moved into the backroom now. This is where the bribery and blackmail come into play and our money starts getting thrown around like M&M's. There should be something illegal about them discussing this in a secret meeting somethwhere. We have the right to know who is saying what and how much bribery money is being spread around. I am truly sick and tired of these people and how they treat us. They act like this is THEIR county and THEIR money and we are just the slaves that have to pay for their screw-ups, poor planning, and deceit.

dichotomy
32150
Points
dichotomy 11/05/12 - 12:01 am
4
1
More bad news.

I think this is the first I have heard about not being able to use the $350,000 from the hotel-motel tax toward operating expenses. Can there be any MORE bad news about the deal our glorious leaders have gotten us into?

Well, they've moved into the backroom now. This is where the bribery and blackmail come into play and our money starts getting thrown around like M&M's. There should be something illegal about them discussing this in a secret meeting somethwhere. We have the right to know who is saying what and how much bribery money is being spread around. I am truly sick and tired of these people and how they treat us. They act like this is THEIR county and THEIR money and we are just the slaves that have to pay for their screw-ups, poor planning, and deceit.

Riverman1
82445
Points
Riverman1 11/05/12 - 05:20 am
5
1
How to Pay Losses

“Jackson said Thursday that he was willing to raise Augusta’s hotel-motel tax from 6 percent to 7 percent to cover the losses.”

Is that even possible if IRS regulations regarding tax-exempt bonds that Bowles brought up don’t allow such payments?

soapy_725
43676
Points
soapy_725 11/05/12 - 07:33 am
1
0
Not mistakes, not over estimates
Unpublished

These CBD projects are not decided by commissioners. The commissioners are simple told how to vote. The commissioners do not need to read contracts, if the can read. The so called lawyers the city uses belong to the money men and could not handled a single family home closing with title search that could be counted on. Thus you pay the lawyer to do the title search and then pay insurance to cover his incompetence.

The whole county belongs to the "money men" and the citizens are just there to pay for their pleasure.

soapy_725
43676
Points
soapy_725 11/05/12 - 07:41 am
1
0
The black community was blamed for ARC
Unpublished

not moving forward. Blamed for not being progressive. Blamed for voicing concerns that said progress would leave most ARC citizens unreserved.

Well, ARC had its political coup and is moving forward. ARC is progressive. ARC is 21st century. Who gets the blame now? More change you can believe in from the CBD and it money changers.

BE careful what you pray for and who you vote for.

soapy_725
43676
Points
soapy_725 11/05/12 - 07:47 am
1
0
The vision for Augusta begins
Unpublished

at the country club. Passes through the "first" church chatter. Fred is given the plan privately. Then it is given to select commissioners in private. Then is is given to the whole commission (if they chose to attend) for approval in public.. Then the cost of the vision is passed to the taxpayers.

seenitB4
85801
Points
seenitB4 11/05/12 - 08:09 am
2
0
Quagmire

Quagmire or fracas...I kinda like fracas better...

OpenCurtain
10049
Points
OpenCurtain 11/05/12 - 08:48 am
1
0
Info to be proposed

will not be a total win. But, better on several Key Agreement items now in hot contention.

Look for a better alternative Catering Equipment agreement, regarding ownership and maintenance to be proposed.

Look for changes in the years and duration agreement to be proposed.

Look for some rewording of the business terms and legal terms to seriously be proposed.

Look for the Get out of Jail clauses to be fixed, and to have clear limitations to protect the taxpayers exposure.

In retrospect:
Remember, this deal was concocted and passed between 200?-2009. It was passed the last year for those headed out the door. What do you think their motivation was on leaving?

It is clear the former and most of the hold over commissioners, took the taxpayers for a costly and messy ride. As we now see they used "provided" projection figures and negotiated a deal that never had the county taxpayer interests in mind. It was Downtown, Downtown what can we do now for Downtown?

While I have read numerous comments on the Laney Walker voting deal, it was still interesting to note that the article clearly states Hotel SPLOST Funds were redirected.

An YES, look for US, the South Side, to still have to pay our share for yet another Downtown deal gone bad.

Personally I Feel
Com­mis­sioner Bill Lockett’s proposal to toss the agreements out and seek competitive bids is the best legal and fair solution, IF it is possible.

Little Lamb
45379
Points
Little Lamb 11/05/12 - 08:49 am
2
0
Food

From the story:

The management agreements . . . provide that the city pay Augusta Riverfront an annual fee of . . . $44,000 to cater events.

Let's get our heads on straight and deep six Riverfront's sales pitch. There is no reason for Augusta taxpayers to pay Riverfront to cater events. Instead, conventiongoers should pay for their own food. Augusta has dozens, if not a hundred, of catering companies eager to feed conventiongoers. There is not one good reason to award Riverfront an exclusive franchise to feed the conventiongoers.

Instead, have convention organizers choose their caterer and pay them. The city nor Riverfront should interfere in whom conventiongoers choose to feed them. The city should charge a fair rental fee for the building, but we do not need to enter into this shady deal with Riverfront to gouge conventiongoers for food.

OpenCurtain
10049
Points
OpenCurtain 11/05/12 - 08:54 am
2
1
500 rm Hotel and Convention Center to be built by Diamond Lakes

Sounds stupid doesn't it?

That the difference between downtown and the South Side.

What conventions would we book?
(this topic could be fun)

Little Lamb
45379
Points
Little Lamb 11/05/12 - 09:00 am
2
0
Marriott

From the story:

The management agreements . . . provide that the city pay Augusta Riverfront an annual fee of $84,000 to run the center.

This $84,000 is just the tip of the iceberg. The management agreements allow Riverfront to hire employees to serve conventiongoers. The costs of salaries and benefits are to be paid by Augusta taxpayers, but Riverfront does the hiring and sets the salaries. Hence, Augusta taxpayers are subsidizing Marriott employees. How corrupt is that?

loblolly
469
Points
loblolly 11/05/12 - 09:46 am
1
2
Confirmation
Unpublished

that Azziz has been right about Augusta all along, that is is not sophisticated enough to understand growth and business. Azziz should actually be brought in as a consultnt to solve this mess, as he seems to be the only one who can make decisions based upon good business rahter than emotion.

Little Lamb
45379
Points
Little Lamb 11/05/12 - 09:50 am
3
0
Growth & Business?

The TEE Center management agreements are not about growth. They are, however, about business. To be more precise, they are about crony capitalism, i.e., about giving a blank check to one company from the city treasury to hire permanent employees to run a convention center. The money drain will all be one way — from the taxpayer to the Marriott. I don't think Azziz would fix it.

loblolly
469
Points
loblolly 11/05/12 - 10:12 am
1
3
The point is
Unpublished

it certainly is about growth. The TEE Center was built for the purpose of bringing growth and vitality to downtown businesses. The comments I read are about emotion and not based upon good business practices. I hate to be the one to spread reality, but cronyism is not relegated to Augusta Richmond COunty, but is throughout this entire country, and is part of business. To be upset about it is useless.

Little Lamb
45379
Points
Little Lamb 11/05/12 - 10:17 am
3
0
Cronies

For governments to transfer taxpayer money to selected businesses without competitive bidding on a fair, impartial basis is wrong no matter whether the business is Solyndra or Riverfront, LLC.

Brad Owens
4290
Points
Brad Owens 11/05/12 - 12:25 pm
3
0
Dichotomy...

I was at the meeting and there certainly was no "bribes" or "blackmail" used or implied nor was anyone's money being thrown around like M&Ms either.

This meeting was held at the request of certain commissioners and it was an honest effort to reach a acceptable agreement. It was about clarifications and working through common sense modifications on behalf of the tax payer and the county commission.

Nothing devious just honest work to try to move forward on a very complicated deal.

Brad

Little Lamb
45379
Points
Little Lamb 11/05/12 - 01:00 pm
3
0
Competition

Thanks for posting, Brad. I would like to know why the commission does not put this managment contract out for competitive bids. And why do they want monopoly power on catering?

Brad Owens
4290
Points
Brad Owens 11/05/12 - 02:17 pm
2
0
LL..

That might be an option if this deal falls through. The reason they cannot do this at this point is because the original plans were all done with a partnership in mind, a JV in fact, but due to the tax free bonds, it cannot be a JV.

It is fair to try to work this one out, but there are 100s of pages of legal documents related to this deal and it would be very hard to untangle it. Mostly due to easement and cross easement agreements, and the money already spent with the management contract in mind.

However, if a deal is not reached, I would look to see a temp management company being brought in until final decisions have been made, and if no deal can be had then, you might see an RFP being drafted and released seeking bids.

All of this is based on if the RF LLC folks can accept the clarifications and additions, and if six commissioners are willing to commit.

Brad

Little Lamb
45379
Points
Little Lamb 11/05/12 - 03:30 pm
2
0
This does not make sense

From the story: “Commissioner Joe Bowles cited his surprise Sept. 28 when commissioners learned that a 2009 annual appropriation of $350,000 in hotel-motel taxes to cover the center’s operating and capital costs was unavailable because of IRS regulations regarding tax-exempt bonds used to build a facility more costly than the $20 million one voters approved in 2005.

Commissioner Joe Jackson said Thursday that he was willing to raise Augusta’s hotel-motel tax from 6 percent to 7 percent to cover the losses.”
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
If they cannot use the hotel tax money at 6 percent to shore up the losses, how can raising it to 7 percent make it any more legal?

Why don't they raise the hotel tax to twenty-five or thirty percent and roll back some of our property tax millage?

Riverman1
82445
Points
Riverman1 11/05/12 - 03:46 pm
3
1
LL, I saw the same thing, but

LL, I saw the same thing, but say they can raise the hotel room tax, it's not fair to tax the rest of the county hotels guests more to pay for this downtown project that mainly benefits the Marriott.

OpenCurtain
10049
Points
OpenCurtain 11/05/12 - 03:59 pm
3
0
Important to remember.

The TEE Center Agreement and Operational Figures were NOT in the commissioners hands until 16 days before the scheduled vote. This despite months of asking for them. A request date that even preceded the Parking Deck Folly.

So next time a downtown commissioner, or the Mayor whines about how long this deal is taking. Everyone should ask them. Why were the facts and 200-300% losses to the taxpayers hidden so long also?

Remember those that have been looking after the taxpayers vs. those downtown that tried to fast track this messy deal.

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