Posted on Fri, Apr. 02, 2004


City’s new direction on hotel might save taxpayers millions



COLUMBIA CITY COUNCIL is right to set reasonable minimum standards for the kind of hotel it expects private developers to build to serve the Columbia Metropolitan Convention Center.

After making the wise decision to back away from a proposal to build a city-financed hotel, council members unanimously agreed to criteria that would be used to request proposals from private firms. It is encouraging to see the council start this process in unison.

The city will request bids on a hotel with at least 200 rooms available for convention guests. There must be catering services and ample meeting space. Some developers have said they would like to build fewer rooms or omit catering or some other feature the city wants. The council said all proposals are welcome, but it will view those that do not meet the minimum standards less favorably. That makes sense; the city does need this hotel to have certain characteristics.

The bids must be for a hotel with a nationally recognized brand and reservations system, such as Hilton, Marriot or Sheraton. Once the request goes out, developers will have 30 days to respond. A committee of business and tourism leaders will review the requests and make recommendations to the council, which will make the final decision.

Our hope is that the idea of a publicly owned hotel is dead; the city should not be in the hotel business. It certainly would help if several solid proposals that could potentially meet the city’s needs come through.

Until recently, Columbia seemed destined to build a city-financed facility. It has delayed action on a contract with Edens & Avant Real Estate Services to develop a 300-room Hilton Hotel. The idea was to finance the deal with $69.9 million in bonds backed by taxpayers.

The council will make another attempt at finding a private developer because of public resistance to that plan.

If Columbia officials have doubts about the renewed plans to seek a private developer to build a convention center hotel, they should consider the route Myrtle Beach must take to keep its city-funded facility afloat.

Myrtle Beach will take on more debt to help cover losses by its city-financed Radisson Plaza Hotel. On Tuesday, the Myrtle Beach City Council voted to issue $47.7 million in bonds for the hotel, which defaulted on its existing debt Thursday.

The city had to dip into its reserves to make a $2.6 million payment. The hotel simply has not made enough money since opening in January 2003. Bookings are improving. Still, the $40 million hotel has had few profitable months.

In refinancing the bonds on the hotel, Myrtle Beach will create a 32-year debt it will back with hospitality fee revenues, which would be used if the hotel cannot pay its bills. The $47.7 million will cover the hotel’s first-year losses and pay for street improvements.

Things may well turn around for Myrtle Beach. But any time that hotel has financial problems, officials once again will have to use city resources to bail it out.

That is not the kind of risk cities ought to take. It is best when private investors — who, for the most part, use their own money — build hotels.

Columbia will spare taxpayers a lot of sleepless nights by allowing a private developer to build its hotel. This process still needs close scrutiny, but residents should be pleased with the council’s current direction.





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