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Columbia, South Carolina
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August 21, 2003     The Columbia Star
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o!., 1 1 LU M BA STAR -- S C AUGUST 2 1 . 200, ' ; John Tem feasibility study in questiol, An analysis of Columbia's Convention Hotel is tough enough, is a positive financial fea- party at an arm's of Columbia is in the with its con- aarters hotel which is the city's direction and g. This has been but only now do we feasibility study from at an arm's length. As you a few readings and we have feasibility study City Council over a a little on the sloppy side, was mainly due to the it was developed. rush? The decision to been made, and the Sector competitor, hotel Hammons, sounded like regardless. If John for a financial feasibility his mind, why should Came about because the really wanted to see something that said doable and, therefore, salable.In late 1987, six city accepted developers' a Combined hotel/convention shown financial feasibility consultant The city that, but the city dropped 1990, about the same was kicked Robert D. Coble, now KPMG/Peat Marwick crank out another feasibil- center. In the study disclosed all conclusions aimed at hustling their support taxes. of 1999, Edens & worked with of Atlanta to produce "City of Columbia: Strategic Plan for Midlands Regional Convention Center." This study began to hint strongly that the city might want to go public all the way and develop the convention center head- quarters hotel itself with Lumpkin, of course. The expected annual deficit for the convention center was set for $500,000 and the "extra marketing" was recom- mended at another $500,000, dropping $1,000,000 together even before the hotel numbers came in. A year or so ago, Salomon Smith Barney, the bondsmen for the headquar- ters hotel, put out a feasibility study for the hotel with help from Hilton, the man- agement team for the same hotel. The numbers looked good, real good, and the project moved forward over the last hur- dle, the private sector competition. Well-tracked hotelier John Q. Hammons (the Embassy Suites is his chain, for instance) said he would build the headquarters hotel with his own money, and he would pay taxes, too. A $60 million property is good for over $1.2 mil- lion in taxes annually to city and county forever. A public non-profit property is not good for any property taxes, ever, unless it sells to a private owner. The city said no thanks because Hammons's idea of diver- sity was the salad bar fixings, while the city's idea of diversity was to throw the money around the well-connected and still not connect with market discipline. Hammons may be insensitive, but we could use that $1.2 million every year we miss it. Since we rejected Hammons' offer to build another one of his hotels, and we accepted Lumpkin's development of his first hotel, the bond underwriters were asking for substance, proof of rosy projec- tions. In April of this year, finally, the city called for a financial feasibility study and Atlanta's PKF Consulting delivered, much to the satisfaction of the bond market and particularly Salomon Smith Barney. After a few careful 'readings of PKF's hotel financial feasibility report, I offer these observations: i. Koger Center, USC Arena, and Coliseum - No mention is found anywhere about occupancy rates and ticket sales and how many out-of-town visitors need hotel rooms. 2. Interstates 20, 26, 77 -- Columbia's position at the confluence is highlighted three times to sell the hotel idea. 3. PKF cited roughly the same macroeconomics optimism five times: "...however, prospects for an economic recovery are good because the conflict in Iraq is over, SARS is reportedlyqa conquer- able epidemic, and the stock market has risen consistently since late March 2003." 4. Tom Sponseller, director of the SC Hospitality Association, quoted Smith Travel Research recent downtown hotel occupancy rates to city council, talking in terms of the "low 60s range," while in the same week PKF projected rates above 70%. 5. The proposed ll8-room Courtyard by Marriott near the Hampton Inn is in PKF's report as something significant once it comes on line in July 2005, concurrent with the city's hotel. The National Advocacy Center's expansion on Pendleton Street, the 120-room USC Inn by Bert Pooser, is noted but dismissed. About 80 rooms are reserved downtown four nights a week by the NAC but those 80 are planned for the USC Inn, and the other 40 rooms will be on the open market, but on weekends all 120 will be available. That's a big bite, a 40,000+ room-nights bite out of the downtown hotels, soon to include the city's headquarters hotel. But, some- how it doesn't matter, according to PKF's report. 6. The NAC matriculates 20,000 stu- dents a year, not the 10,000 PKF counts in its report. 7. Reading PKF's numbers can get confusing because of the crossover between "operating income" and "cash flows." Operating income is found in the income statement, and cash flows are found in the statement of cash flows. They're different, but PKF uses them interchangeably. And maybe in the lan- guage of financial feasibility studies for a city built hotel, it really doesn't matter. 8. In the population statistics, the city gets no mention. 9. The top employers listing is based on numbers gathered almost four years ago, about the same time the report's average annual earnings were compiled. 10. The unemployment rates for Richland County are not current. 11. "USC is purportedly the oldest public university in the U.S." No, we're in the running among the first few, but we're not the first. 12. Seven pages are dedicated to USC, replete with statistics and student counts, but PKF claims allhat business taken by the USC Inn won't matter. 13. The Sheraton has "an ll,000-square-foot conference center and a 3,720-square-foot ballroom." No, it has an 11,000-square-foot grand ballroom, a 3,720-square-foot junior ballroom, and 21,000 square feet of meeting space. 14. At the presentation before city council, PKF said that after ten years the city hotel could be sold and get a "terminal capitalization rate of 13%" City council- man Papadea and I heard a bit too much optimism and we asked, "13% terminal cap rate?" Yes," we were told again, "13%" The published rate in the report is 10.5%. (Next week: Trouble with city-financed hotel at Myrtle Beach) John Temple Llgon mander speaks the Iraqi war Richard Rotary on the He mr Both recently cnbat over of the ' tnd later Noble Medal 18 the " covamand. 169th I hy being a of Citadel. s, a JAG of Fred :atfairs corn- get and it of the In aly 10% of preci- in Iraqi Colonel Richard Noble that experience and prac- tice, the next generation of precision guided weapons will include a 250-pound bomb that can decide which table to hit, Noble said as he looked out among 350 listeners scattered among tables for six. This time around, unlike Desert Storm, the Iraqis chose not to fly one mission against the Coalition Forces. The Iraqi air defense was pretty much devastated the first time, and since then they have been under constant surveil- lance. They were com- pletely overwhelmed, even to the point the Republican Guards never stood for a fight. The USA sent over 1800 to and the British sent 130, while the Australians sent just one squadron. Altogether there were 24,000 missions flown by Coalition planes. The total troop strength from the USA was impressive: 233,000 Army, 74,000 Marines, 65,000 Navy, and 54,000 Air Force. And what was equally impressive but less understood was all the back-up, the logistics and the tanker missions, and the other unseen activities that made it work. Optimistic about our future, Noble shared his appreciation for the train- ing, the coordinating and the planning that shows in victory, and he pledged even more. I I II I I I I " Richland County Unemployment Jumps 20%. Lexington, 16%. According to the SC Employment Security Commission, Richland County's unemployment rate for July '02 was 4% and for this July was 4.8%, and that difference amounted to a 20% jump. Lexington County's unemployment went from 3.1% to 3.6% for the same time, which was a 16% increase. Considering all of SC's 46 counties, Lexington is number 45 and Richland is tied with Dorchester and Greenville for number 41 in unem- ployment. Number 46, the lowest rank in unemployment at 3.2%, is Beaufort County. Number one, the highest rank in unemployment at 21.3%, is Marlboro County. Overall, SC's unemployment rate was 5.8% a year ago, and now it's 7.0%, while the labor force swelled over 5,900 to 2,036,827, the highest level in histo- ry. Affinity Down for the Count Columbia-based Affinity Technology Group reported revenues of $4,212 for the second quarter of this year, leaving them with losses of $197,487. The SC Supreme Court denied - an appeal from Affinity and foundnlg CEO Jeff Norris. Affinity and Norris don't want to go back to trial against John Temple Ligon (the same). Ligon won in court against Norris and Affinity in July, 1998, but the dam- ages award was unacceptable, according to Ligon. Trial Judge Cayce Manning called for a new trial . I I IlIII I I II I I II I I I II I I I II II I I by John Temple Ligon because there was nothing in the trial that justified the jury's award. The SC Court of Appeals agreed and the SC Supreme Court denied Norris and Affinity, giving Ligon the go-ahead to return to trial for his claim. Taking the legal interest rate, actual damages are now over $10 million. Groundbreaking for New West Columbia City Hall Last week West Columbia held a groundbreaking for its new munici- pal complex to be built at the corner of 12th and Jarvis Klapman Boulevard. The 35,280-square-foot building should be complete by August, 2004, at a cost of $4.53 mil- lion. Hendley Homes Planning Process Continues Forward The Columbia Housing Authority (CHA) will continue to solicit public input on the Hendley Homes redevelopment plan during a third public workshop on Thursday, August 21, at 6 pm at Rosewood Baptist Church, 2901 Rosewood Drive. Space for this workshop is limited, so please call 254-3886 (ext. 225) to reserve a space. The purpose of Workshop 3 is to gather ideas on the development character and design details for the Hendley site and the surrounding area. Participants will have the opportunity to express opinions on what the new development should look like and which public improve- ments are the most urgent.