by Joe Sullivan
On its face, Franklin Haney's proposal for a convention headquarters hotel looks good.
Proposed acquisition and conversion of the state office building that abuts the Holiday Inn into a 110-room addition to the hotel would give it the 400-plus rooms that the city's hotel consultant insists are needed for a headquarters hotel adjacent to the city's new convention center.
Qualitatively, as well, the Haney proposal seems appealing. Both the exterior and interior of the buildings would be refurbished to bring them up to what the controversial Holiday Inn owner claims are four-star standards. The façade of the state office building would become a stone and glass "mirror image" of the main entrance to the convention center just across Clinch Avenue. A new coat of reddish brown plaster and blue awnings on all windows would add luster to the rest of the hotel's exterior, which is anything but lustrous now.
After several false starts, Haney insists work is underway on a $10.7 million refurbishing of the existing hotel's 297 guestrooms and its public areas. That upgrade is due to be completed by year's end at Haney's expense, regardless of whether the city provides the assistance he is seeking for the 110-room addition that also includes meeting areas, shops, and an atrium.
To help cover the financing cost of a $20 million addition, Haney wants $1.1 million a year in tax abatements and also tax-exempt borrowing authority that the city can bestow without itself being obligated on the bonds. But wait: the $20 million budget doesn't include anything for acquisition of the state's office building. Moreover, tax abatements wouldn't begin to cover the debt service on the bonds, let alone the 1.5 "coverage ratio" that's typically needed to make hotel revenue bonds saleable.
So how does Haney propose to swing all of this? Out of his own pocket or at his own risk, if he's to be believed.
As for the cost of the office building, which Haney places at between $3 million and $5 million, "I just figured we'd have to pay for that by equity or plain-old write a check for it," he says. Bond buyers aren't going to touch a $20 million bond issue, let alone a bigger one, secured solely by the hotel's revenues or even a mortgage on the property, he reckons. "So I'm going to have to guarantee the bonds myself, just as the city will have to guarantee the bonds on the $60 million new hotel it's proposing," he says.
If all of this sounds too good to be true, Haney goes one better when it comes to providing convention center parking. Instead of the $15 million, city-funded garage that's contemplated in connection with the city's new hotel proposal, Haney proposes to build a $10 million, 600-space garage at no cost to the city.
"Just let me have a $1-a-year lease on the old convention/exposition center which has had it, and I'll convert it into three levels of parking that would be ideally located to meet the convention center's needs," he says (Haney stresses that the Holiday Inn's existing 400-space garage is already sufficient for the hotel's own needs.) So how would he finance the garage, and what's in it for him?
"As with the hotel, I'd have to guarantee the bonds, but I believe the garage can be profitable in the long run, and I believe that private enterprise can do it better than the city," Haney says.
So is the man to be believed? Mayor Victor Ashe says no: "His credibility is zilch." There's a long history of disputation between the two men, and Ashe has tried to exclude Haney from the convention hotel developer-selection process now underway by limiting it to proposals for a new hotel on the Supreme Court site. But Haney's fighting back with a lawsuit contending that the exclusion constitutes an illegal restraint of trade.
Four developers have submitted proposals to the city's Industrial Development Board for hotels on the designated site. While their details have not been made public, there's a widespread belief that it will take more than the $20 million in contemplated city funding to make a new 400-room hotel financially feasible. The $20 million would include $15 million for an 800-space garage and $5 million for acquisition of the site.
Another developer that's seeking consideration, Portman Properties of Atlanta, shares Haney's view that a new 400-room hotel is beyond the realm for now. Instead, Portman is proposing a $16 million, 100-room addition to the downtown Hilton Hotel that's a block away from the convention center with a view toward building another 300-room hotel on the adjacent Supreme Court site at a later date.
Some of the assumptions on which Haney's proposal is based appear a little shaky. For one, he presumes that the state is more than ready to dispose of its office building and could readily relocate the workers who are there. The assistant commissioner of the state Department of Finance & Administration, Larry Kirk, says, "We want to do what's in the best interest of the city." But he cautions that, "there's some overcrowding in the Henley Street building," and any plans for its disposition would entail "a new office solution" for which no planning has been done.
Where the old convention/exposition center is concerned, there are many other potential uses for a renovated facility, including a museum or a tourist attraction, to name just two. Any consideration of converting it to a garage should be part of a comprehensive planning process in which the public is involved.
Haney has gained a reputation as a wheeler-dealer in many quarters, and his hotel proposal certainly represents a deal with a lot of spin on it. Still, he didn't get to be a megamillionare for nothing. His plans for meeting the city's convention center needs in considerable part at his own expense deserve consideration before the city starts spending many millions of taxpayer dollars.
July 31, 2003 * Vol. 13, No. 31
© 2003 Metro Pulse
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