Regarding your recent column, "Developer seeks City bond issue to build hotel garage":
A developer with over 40 years’ experience and hundreds of expensive successful projects must have had financing in place for the entire project. After all the detailed planning it is inconceivable this $235 million project is now contingent on public financing.
Let’s review the bond and 48 month guarantee. The monthly payment will be approximately $139,129.00. The developer said he would pay $100,000 per year which equates to approximately 21 days of payments on the bond.
On the 49th month the remaining balance will be approximately $30.1 million. The four-year personal guarantee from the developer will cover only $750,000 or 2% of the bond, then the burden is shifted to the City of Savannah.
In the May 15, 2015 city council meeting Mary Ellen Sprague asked the developer “If the city does not provide access will access still be provided?” The answer was “access will be provided.” Since that meeting the city has committed $14,000,000 for that access that the developer represented that he would be responsible for.
Also the State of Georgia has made available $10,000,000 in marketable tax credits (basically cash) and the federal government will provide approximately $16,000,000 tax credits (again basically cash). This totals approximately $40,000,000 in non-reimbursable cash toward the project.
I believe the best way to look into the future is to review the past. In 2012 we were in a recession, it was rough for everyone.
Per the Savannah Chamber of Commerce, the average occupancy rate for Savannah was 63.7%, the average room rate was $91.38, and the effective room rate was $58.20. I had guests stay in a lovely room at the Mansion on Forsyth during this time for $99.00 per night.
In the legal section of the Savannah Morning News May 25, 2012 parcel # 20004-07001, 102 W. Bay Street (The Bohemian) was scheduled for real estate tax sale June 5, 2012. Could we have another recession within the next 30 years (length of bond)? Absolutely.
I think when it is obvious private funds are available for this project the city should not put the taxpayers at risk for a private development. Someone who also agrees with this is State Representative David Stover who stated about this project “I can’t stand to see the state invest tax dollars in private entities. This is something we are seeing happen over and over again because, quite frankly we don’t have the backbone to say no.”
Also Senate Majority leader Bill Cowsert said of the project “It was such a lavish project but it seemed obvious to me that the developers could afford this project… without $10 million from the state.”
Let’s wish Mr. Kessler all the best and sincerely hope for a very successful venture and let him do what he knows how to do so successfully, but let’s keep the citizens' money out of risk for any private project.
We all remember August 2013 the failure of Savannah River Landing by Ambling Development and what it cost the citizens of Savannah. Let’s think of the many needed improvements all the citizens of Savannah could enjoy with the $33,000,000.
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