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. |