News for the Hospitality Executive
|By Dawn Bryant, The Sun News, Myrtle Beach, S.C.
Knight Ridder/Tribune Business News
Mar. 17, 2004 - Nearly a six-hour meeting, two closed sessions and several harsh exchanges brought the Myrtle Beach City Council a little closer Tuesday to finding a bail-out plan for the struggling Radisson Plaza Hotel.
But council members still are divided on two main options with time running out for them to decide.
They are considering refinancing the bonds or getting a five-year loan. Both would ease initial payments and give the Radisson some time to turn around its lagging revenues.
The council did not talk in the open about what effect the options would have on the city's credit rating or whether other big-ticket city projects, such as parks and a performing arts center, would be delayed.
They will talk again about the options Thursday, with a vote possible at next week's council's meeting.
The city needs to decide what to do by April 1 when the next $2.6 million debt payment is due. Money is in reserves to cover that payment. But using that set-aside account would put the bonds in technical default, giving the bondholders the option of taking over the hotel's operation.
"We are split down the middle," Councilwoman Judy Rodman said of the council.
Mayor Mark McBride once again said he wanted another independent opinion on what the city should do. He didn't get the needed backing from the council to hire a firm. Jeff Sachs of the Strategic Advisory Group is the city's hotel consultant.
"The hotel has failed miserably," McBride said. "And we're just throwing money at the problem without knowing if it will make any difference." Last week, the council gave the first of two required approvals to refinance up to $50 million in bonds, earmarking hospitality fee revenue as back up. Not all council members want that option, but gave it an initial nod to allow enough time for a second reading before April 1.
"I think we made some progress [Tuesday]. These are business decisions that have to be conducted on that plane," Councilman Phil Render said.
As they did last week, council members bickered Tuesday about whether to hear the options in the open or behind closed doors, which City Manager Tom Leath and City Attorney Tom Ellenburg have strongly suggested. Tuesday's meeting was the second one in 10 days the council has called to talk specifically about the hotel.
Last week's special meeting ended abruptly after two members threatened to walk out rather than talk about the bond negotiations in public, leaving the council without enough members at the table to legally continue.
"I can't imagine what the secrecy is. Throw it on the table," said McBride, who arrived late to Tuesday's meeting and refused to join council in a closed session regarding legal issues. He did participate in the day's second, much longer closed meeting about the hotel.
Without a signed agreement with the bondholders, the city shouldn't talk about a pending deal with others around, Leath said. It took months to track down the 300 bondholders, Sachs said.
"This thing could blow up at any point," Leath said. "You are talking about a business deal. You are trying to negotiate in public. You are going to end up hurting your position."
Sachs gave the council a brief overview of the two main options before the group went behind closed doors for nearly five hours, citing contractual issues as the reason for the closed session.
They spent more than two hours with Sachs, bond attorneys and Walt Standish, chairman of the city's Hotel Board Corp. Then each bank, Wachovia and Bank of America, spent about an hour with the council in private.
McBride objected to the city hand-picking those two banks instead of using the formal request-for-bids process it usually follows.
City officials explored options and brought the best ones to the council, Leath said.
"We are trying to fix it. We called everybody under the sun to get ideas," Sachs said.
Rodman questioned why McBride had details on Wachovia's proposal, which surfaced less than two weeks ago, that other council members didn't.
"The mayor is one person on this council. How did he even get in that loop without the rest of us being informed?" Rodman said. "I resent that." McBride said he is the mayor and some residents call him before council members.
"I hadn't negotiated anything," McBride said. "I didn't go looking for them. They called and said they wanted to provide an option." That exchange occurred after McBride chastised the council for starting the meeting without him and voting immediately to go into a closed session, which McBride generally hasn't supported relating to the hotel.
Rodman convened the meeting before McBride showed up about five minutes late.
"This is ridiculous," McBride said after arriving to a nearly empty meeting room. "These people think this is a game." When the council returned, Rodman told McBride it was a consensus that the meeting start without him.
Leath told McBride: "It certainly was not directed at you personally."
Councilman Chuck Martino missed the meeting because of a recent death in his family.
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(c) 2004, The Sun News, Myrtle Beach, S.C. Distributed by Knight Ridder/Tribune Business News. WB, BAC,