Macon, Georgia Mayor Suddenly Backs Away
from Controversial Convention Center
Hotel Deal with Noble Investment Group
|By Matt Barnwell, The Macon Telegraph,
Ga.McClatchy-Tribune Regional News
Oct. 11, 2007 - Macon Mayor Jack Ellis says he intends to walk away from plans to build a hotel in the parking lot next to the Wilson Convention Center and Macon Coliseum.
His sudden announcement stirred up City Hall on Wednesday. But his pledge to not sign documents that would secure bond financing for the hotel's construction is not enough in itself to kill the deal, the city attorney and Macon's outside legal counsel said, and the city appears poised to press forward.
Ellis made his comments on a local television call-in show late Tuesday night, and then again on the radio Wednesday morning.
"I think the next mayor and the next council should make the decision going forward," he said during the radio program. "As far as I'm concerned it's a dead deal."
Ellis was traveling Wednesday, and his spokesman said he was unreachable.
On the radio, Ellis said he had decided that the financial market was too unstable with unfavorably high interest rates. He said he didn't feel comfortable leaving the city with the debt that would be incurred when it contributes some $10 million in bonds to a $32 million hotel developed by Atlanta-based Noble Investment Group.
His office released an Oct. 4 document from Macon's financial consultant that indicates rising interest rates will increase the 25-year net debt service to $20.4 million. That's about $1.5 million more than an $18.9 million estimate given in May, a month before the City Council approved resolutions authorizing the hotel deal.
The debt is scheduled to be paid off with future hotel/motel taxes and payments from Noble in lieu of property taxes.
But council members in Ward I, where the hotel would be located, say the mayor is more concerned with trying to avenge the council's decision last week to restrict his discretionary spending than he is with the outcome of the hotel deal.
"I think it had to do with his perception that we are attacking him," said Councilwoman Elaine Lucas. "I think it's a personal kind of thing, a retaliation, and I'm pleased it's not going to succeed."
The Macon-Bibb County Convention and Visitors Bureau already is "aggressively" pre-marketing the hotel rooms, said CVB President Janice Marshall. Meeting planners have been "overwhelmingly pleased," she said by e-mail, adding that she hopes the project stays on course to avoid losing conventions to competitors.
Councilman Rick Hutto said investors and convention coordinators must be able to trust that they can deal with the city in good faith. The mayor's actions may affect the CVB's efforts, he said.
"It makes us look absolutely ridiculous, like we don't know what we're doing," said Hutto, who voted against the hotel deal in June but says now it is to late to stop the progress that has been made.
The council by resolution has directed Ellis to execute a deal with Noble. The bonds have been approved by the Macon-Bibb County Urban Development Authority and validated by Superior Court. But they have not yet been sold, and the contracts with Noble have not yet been physically signed.
Hutto, City Attorney Pope Langstaff and Atlanta attorney Sherman Golden said it doesn't matter if the documents go unsigned by the mayor, because a more than 30-year-old Georgia Supreme Court decision prevents Macon from walking away from the deal scot-free:
In 1974, the Atlanta City Council by resolution authorized then-Mayor Maynard Jackson to sign a contract with a company to construct a cargo building at Hartsfield International Airport. Jackson never signed the agreement, and the city later contracted with a second company at a lower price.
The first company sued Atlanta for breach of contract and won. The Supreme Court ruled that contractual obligations were created once the council authorized the resolution and Jackson declined to veto it.
"The mayor doesn't have a prayer on this issue," Hutto said.
Langstaff said the city charter requires Ellis to faithfully enact council resolutions. To stop the deal, the attorney said, Ellis would essentially have to find a legal opinion to rebut the city and tie the matter up in court.
"Regardless of what the mayor does right now, we have a binding contractual obligation to go through with this deal," Langstaff said.
If Macon ignores that obligation, Golden said the city would lose court challenges from Noble and any other firms -- including his own -- that have invested time and money in planning for the hotel.
"Best case scenario, they'll write $3 million worth of checks and not get a hotel," he said. "There is no good ending for the city if the deal doesn't go forward. It's either bad or worse."
If need be, City Council President Anita Ponder can sign the documents instead of the mayor, Langstaff and Ponder said. She has done that at least twice in the past, including the current agreement that divides sales tax proceeds between the city and Bibb County.
"I think we'll be OK," Ponder said.
The snag could come if Macon reaches the closing date and does not deliver its portion of the bonds. If the city doesn't come up with its share of the money it must pay up to $1.7 million of Noble's pre-development costs, according to the agreement authorized by the council. Langstaff said Noble's pegs its pre-development investment so far at about $750,000.
The company's director of development, Muarion Zimmerman, did not confirm those costs. But he said Noble is moving forward in its work with the city's negotiating team as attorneys continue to fine-tune the master development and funding agreement approved by the council.
Zimmerman said he had not talked to the mayor, and found out about Ellis' decision to abandon the deal through news media.
"We haven't officially heard anything from anyone," he said.
Noble hopes the deal can be closed sometime in November, although a date won't be set until the development agreement is finalized, Zimmerman said. He was optimistic that Ellis' remarks would not derail the hotel plans.
"Stranger things have happened during this process," he said.
Ellis' maneuvering, which seemed to have caught everyone associated with the deal by surprise, marks one more bizarre twist in what has become a long and convoluted attempt to bring a convention center hotel to east Macon.
The mayor started out backing a competing developer's proposal, which was also the choice of a blue-ribbon committee composed of several movers and shakers in town. He later switched sides after Noble's plan emerged as the one most palatable to city officials, but he maintained his personal preference for an alternate site on private property across the street from the convention center.
In recent months, plans had seemed on track for the hotel's construction in the parking lot: After two years of bitter debate, a divided City Council on June 19 authorized the mayor to sign a series of contracts with Noble. Ellis signed the legislation and returned it to the council two days later.
The Urban Development Authority in August agreed to issue bonds for the city. Bibb County Superior Court validated the financing shortly thereafter.
Councilwoman Nancy White, who has opposed Noble's hotel plan, said Ellis has made "a very prudent decision." At face value his action has merit, she said, regardless of whether its underlying motivations are political. If the deal were to keep moving forward, spiraling interest rates and other unknown costs could adversely affect city finances, she said.
"I hope this gives us a chance to get better financing," said White, who prefers creating a tax allocation district to pay for the hotel.
Councilman Ed DeFore, who also opposes Noble's hotel plan, said he plans to introduce a resolution asking Ponder not to sign the documents in place of the mayor. He has not seen a council president fill that role on such major legislation in his 36 years on the council, he said. And the majority of Macon residents don't want the city to proceed with Noble's plan anyway, he added.
"If she was to do it," he said, "her legacy would follow her to the grave."
To contact writer Matt Barnwell, call 744-4251.
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