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.”