MB council to consider Radisson plan

Myrtle Beach City Council will consider a plan next week that would increase its financial backing of the city-financed Radisson Plaza Hotel, a move that might delay other city big-ticket projects.

The plan to buy out some current bond holders and reissue $40 million in bonds is intended to ease financial woes at the hotel, which must get the city's help to ensure it can make bond payments after a lackluster first year.

The city shouldn't have to use property taxes, officials said, but some proposed parks, bike paths and other projects might be delayed because more of the city's debt load would be taken up by the hotel's guarantee. The city can only take on so much debt.

The Hotel Board Corp., which oversees the Radisson's finances to protect the city, has been working since November to come up with a plan that would give the hotel long-term relief. The board will present the option to City Council on Thursday.

The board is negotiating with bond holders to buy out $40.3 million in bonds, called Series A and uninsured, and reissue them with the city's guarantee. The second set of bonds - worth $22 million and already backed by the city - wouldn't be changed.

If the city decides not to reissue the bonds, it must provide certain securities to the Series A bondholders that would include some type of added guarantee.

The rating on those Series A bonds dropped earlier this year because of the hotel's performance.

"[A bond reissue is] a good strategy. It absolutely makes sense," Radisson General Manager Mike Roddy said.

The council will have to decide which of its big-ticket projects to delay. The stormwater projects and the construction of a fire station on 38th Avenue North will proceed on schedule, city Budget Director Mike Shelton said.

"The verdict is out for everything else," he said.

That includes downtown redevelopment, parks, bike paths and a performing arts center.

The proposal would give the hotel the flexibility it needs to pay off the debt and keep the city's promise not to use taxpayers' money, said Walt Standish, chairman of the Hotel Board.

"We don't think the city will have to pay more money," he said. "It gives us the time and takes the pressure off the '05 calendar payment. I think we will get there, and it will all be fine."

Enough money is in reserves to cover the next debt payment, due in April. Officials aim to have the bonds in place by spring.

The Radisson expects to nearly double its first-year revenue during its second budget year, which starts April 1. Leaders predict the Radisson will end its next budget year with a nearly $2 million profit - compared with a $2 million loss that has accumulated during the past 10 months. Room, food, beverage and other revenue are expected to hit $15.2 million by the end of the 2004-05 budget year. That's nearly double what the hotel took in during the past 10 months.

Departmental profits are predicted to jump by $3.5 million, and overhead expenses should stay steady, said Roddy, general manager since January.

Bookings for future business have gotten stronger in recent months. The bookings represent room reservations for groups coming between now and 2009 and offer a gauge of revenue to come.

Officials expect the Radisson sales team, which added a seventh person last week, to secure 6,800 room night reservations each month.

"Everything's turning around," consultant Jeff Sachs said. "We finally have the right people in place."