|By G.G. Rigsby, Savannah Morning News,
Ga.McClatchy-Tribune Regional News
Feb. 20, 2011--Saying trust had been lost, the authority that oversees the Savannah trade and convention center voted unanimously Friday to terminate its contract with hotel consultant Hospitality Real Estate Counselors.
The Georgia International and Maritime Trade Center Authority paid the company $160,000 over two years to help the authority and interested parties explore the possibility of building a 500-room convention center hotel on Hutchinson Island.
If a hotel is financed within 24 months, the company still will receive a "transaction fee," paid from the proceeds of the hotel financing transaction, said Bob Coffey, general manager of the trade and convention center.
The amount of the fee would depend on whether the financing is public or private and the amount financed, but if the amount financed were $151 million, the fee would range from $906,000 to $1.4 million.
The chairman of the trade center authority, Mark Smith, hopes to set up a meeting between authority members and the preferred developer of the hotel, a company named Journeyman Austin. The point of the meeting will be to clarify "numerous matters." Smith hopes the workshop will be held before the authority's next regular meeting, which is March 9
Meanwhile, the Chatham County commission seems likely to heed the authority's request to delay action on proposed financing for the project until after the March 9 meeting. The issue is on the agenda for the county commission's Feb. 25 meeting but likely will be tabled without discussion, said Assistant County Manager Pat Monahan.
Nine members of the authority attended the specially called meeting Friday to discuss the hotel project.
Board member and treasurer Henry Monsees said the original request for proposals asked for minimal public involvement, but the package being floated before the county asks for the project to be paid for with $151 million in government-backed bonds.
"I don't like the way it's headed," Monsees said. "This just isn't what we agreed to."
Monsees made a motion to suspend the authority's agreement with the consultant. J. Mark Tobin, principal of the company, said he'd rather the agreement be terminated than suspended.
Tobin said there was no sense in having an agreement with the board if he'd lost trust with them. Tobin said recent e-mail exchanges with the board had been "negative and accusatory."
Monsees changed his motion from suspending the agreement to terminating it and the item passed unanimously.
Tobin declined to answer questions after the meeting.
Ruben Rodriguez, a principal of Journeyman Austin, said Hospitality Real Estate Counselors is a good firm and he suspects there was a personality clash. He said their departure should not hinder ongoing efforts to hammer out a hotel deal.
Rodriguez said the original proposal before the county calls for Hilton, the preferred hotel operator, to make a private investment by purchasing $15 million of the bonds, which would be issued by the Savannah Economic Development Authority and backed by Chatham County.
If the hotel doesn't make enough to pay debt service, the Hilton money would be used before taxpayers were tapped, he said.
Additional layers of protection are included in the proposal and supporters say performance projections could be off by more than 40 percent before the county's guarantee would be needed.
Government-backed bonds are the most efficient way to finance the project, Rodriguez said, and offer the community the chance to own the hotel, which gives the public control as well as the ability to sell the asset down the road.
In cases where more private money is used for such a project, the investors typically insist on owning and controlling the asset, he said.
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