Editor's Note: Arena project’s trickle-down cost

LAST MONTH during a budget discussion, City Council was told point-blank, by several knowledgeable sources including City Manager Pat Monahan himself, that the City of Savannah is spending more money than it is taking in.

“The revenue base is not growing as fast as the expenditure base,” City Budget Director Melissa Carter told them. (I think that’s bureaucrat-ese for “We’re screwed.”)

Last week, here’s how your City Council responded to that bleak news:

• Voted to begin paying over $700,000 a year to lease the main parking lot for the new Arena – a lot which won’t be needed for another few years, while the Arena is being built.

• Voted to issue $55 million in new bonds to pay for extra costs associated with the Arena and with the Plant Riverside development on West River Street.

• Voted to continue paying the for-profit Savannah Rock ‘n’ Roll Marathon to come to town. (By far the cheapest expenditure on the list at $75,000 for three years, but arguably indicative of mindset.)

A prudent argument can be made that the 2500 spaces in the Arena parking area, which will remain the property of the Tenenbaum family of Chatham Steel fame, needed to be locked up now rather than risk losing the key resource later.

Probably true. But the real issue is:

Why wasn’t parking considered much sooner in the Arena process, when everyone knows parking will probably be the number-one major issue and headache?

Mayor Eddie DeLoach alluded to this during the discussion, when he said probably what was really needed for the Arena was a new parking garage, but that the cost of such a garage is simply not feasible now.

(Perhaps because we’re already borrowing to build two other parking garages, the aforementioned Plant Riverside garage and one at Eastern Wharf.)

So the stopgap solution is to pay $3.5 million over five years, for a parking lot that conceivably might not be used once the entire time, if Arena construction meets serious slowdowns.

What kind of slowdowns, you ask? At this late date, the design of the Arena has already gone back to the drawing board for minor changes, even though groundbreaking is scheduled in two weeks.

That’s right — we technically don’t even have a final design for the Arena. But we do have a parking lot!

The lack of funds right now for an Arena parking garage shouldn’t deceive you into thinking you won’t eventually pay for one.

Such a garage could be added to the project list for the next round of SPLOST (Special Purpose Local Option Sales Tax), the funding mechanism for the brick-and-mortar Arena itself.

The next round of SPLOST wouldn’t come up for a vote for another six years — which only sounds like a long time until you consider that with cost and schedule overruns the Arena may conceivably still be under construction at that time.

Or, the City could just issue more bonds at some point in the future.

Either way, as the Mayor himself pointed out, the Arena is on track for additional significant cost overruns.

Savannah is going to see and feel the true cost of poor planning.

In an accurate but hardly comforting analogy, DeLoach compared Arena cost overruns to the overruns involved with building the Trade Center on Hutchinson Island, which was planned while DeLoach served as a Chatham County Commissioner.

“We budgeted $52 million on that job, and then that $52 million got soaked up to $115 million,” he said.

In answering Alderman Tony Thomas’s complaints about the lack of planning, DeLoach directed it back to Thomas, who’s been on Council far longer than the Mayor:

“It is going to cost at least $165 million to do the Arena. That did not include any parking when y’all did this, y’all had no clue about parking or anything else,” the Mayor scolded Thomas.

Alluding to the fact that two previous mayoral administrations backed the Arena project, DeLoach bluntly said, “Mayor Johnson, and Edna, and now us — we’re all in this together.”

Mayor DeLoach’s stance — that Savannah is simply too financially and politically committed to the Arena project to back out now, no matter the cost — might be realistic, but it’s not very reassuring.

The issue of the Rock ‘n’ Roll Marathon, while paling in comparison cost-wise, is symbolic of growing mistrust of City government with regards to financial stewardship.

The Marathon is said to bring in at least a million dollars a year to Savannah, mostly in the form of increased hotel business (and increased revenue from the hotel/motel tax, which among other things funds the operations of Visit Savannah).

At issue last week was the comparatively small annual payment of $25,000 from City taxpayers to the for-profit Marathon. To be fair, this is down from the original $50,000 per year taxpayers originally awarded the Marathon.

It’s a drop in the bucket compared to what the Arena is costing. But some citizens, and a couple of City Council members, object to the idea of paying Marathon organizers when police and public safety expenses for the weekend are already 100 percent on the backs of taxpayers.

“I cannot support this and will not go for it,” said Alderman Bill Durrence, who ended up being the only no vote on the three-year contract extension for bringing the Marathon here, through 2021.

While the annual payment is more of a symbolic burden than a significant expense, the larger issue with the Marathon — as City Council members said — has to do with the fact that the event was brought here originally to jump-start hotel occupancy in November during the depth of the great recession.

A decade later, with tourism booming and the highly successful SCAD Savannah Film Festival usually happening the same weekend as the Marathon, some are wondering if the original rationale is sound.

In any case, we know the Marathon will be in Savannah for at least another three years.

But we still don’t really know if the Arena will even be in existence then —though we’ll continue to pay for it the whole time.


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