WHY SHOULD CHATHAM COUNTY
BACK THE NEW TRADE CENTER EXPANSION & PRIVATE HOTEL?
- Q. Does Savannah need a dedicated convention center hotel?
- Yes, in order to maximize the Public’s investment in its Trade Center, the community needs a new convention hotel to help market to more and larger conventions. VisitSavannah (CVB) has undertaken numerous studies showing millions of dollars in lost business every year because we don’t have a dedicated convention center hotel. Prior to engagement with a Hotel Developer, GIMTCA expended tens of thousands of dollars on nationally-recognized independent consultant studies to confirm the need for this hotel.
- Q. Can this be done without the Public’s participation?
- No. Although the private sector will invest the large majority of the resources needed to take our convention business to the next level, the Public’s participation is needed to expand the meeting space available for the Trade Center and new hotel. GIMTCA and the Developer team have attracted the best possible Private sector contribution. The result obtained is a PRIVATE Hotel with PUBLIC Trade Center Expansion space.
- Q. Will the new development harm existing hotels or be unfair competition?
- Studies show that the opening of a Trade Center Hotel will have a marginal impact on the other hotels in the market, and only during the Hotel’s ramp-up period. A Private-Public partnership for the Trade Center Hotel and Trade Center Expansion will have an overall positive impact on other privately owned hotels in Savannah as the new PRIVATE Hotel’s mission is to attract larger and higher spending group demand. A formal hotel room block agreement at market driven “convention / meeting planner rates” rates will help our community attract bigger meetings than we can now. None of the existing hotels have either the space or the willingness to enter into this kind of agreement with the Trade Center. Therefore, the new Private Hotel will not directly compete with other hotels in Savannah. Instead, the new hotel will enable and attract highly desirable business away from other cities and counties and bring them to Chatham County and Savannah.
- Q. How much is being invested by the Private Sector and how much by the Public Sector?
- The financing plan anticipates the new hotel to be funded from Private sources ($115 million in private capital) with the role of Chatham County limited to funding only the Trade Center Expansion space with $30 million in incentive based financing and $20 million in incremental tax financing. Chatham County’s participation is repaid with future Private Hotel operating income, taxes, and charges; all of which will be generated at the property. Chatham County’s contribution will not come from taxpayers or the County’s general funds. The Private hotel will effectively lease the public space as a lease-purchase.
- Q. What is the public participation paying for?
- Chatham County’s participation is funding only the Trade Center Expansion space that can be used in conjunction with the new Private Hotel. The Trade Center Expansion space will include:
- 30,000 net square feet of total meeting and banquet space;
- 14,000 square feet of pre-function space;
- 2,600 square feet terrace;
- 11,154 square feet of back-of-house space;
- Future connections to Trade Center with intent to allow function space supported by both Hotel and Trade Center kitchen;
- Two sets of public men’s/women’s restrooms;
- Function space FF&E that includes carpet, wall covering, special lighting, A/V, seating, tables, furniture, kitchen equipment, linens, utensils, etc;
- Escalators and freight elevator serving Trade Center Expansion space only;
- 462 space parking deck with future expansion to 702 spaces. Parking deck accommodates future Trade Center expansions with direct connections to Trade Center and Private Hotel;
- Mechanical plant may involve expansion of Trade Center chillers to serve Trade Center, Private Hotel, and future Parcel 7 improvements. This facility is expected to result in considerable operational and energy efficiencies for both facilities;
- 13,000+ square feet of shell retail space at ground level will support Trade Center and other island businesses/residents;
- The porte cochere arrival canopy will allow for the function space (“Chatham Conference Center”) to have its separate identity by an exterior entryway connected by signage through the public area to the ballroom and meeting space.
- Potential bridge connections between the parking structure, the new space and the Trade Center.
- For two years and out, the CVB and Trade Center control up to 80% of the rooms for group meeting business in a formal “room block agreement”
Benefits to Investment in a Private-Public Partnership
for the Trade Center Hotel and Trade Center Expansion
1) Long-Term Benefits:
• Double Chatham County’s convention business
• Induce 83,000 new room nights in area hotels
• Create 1,170 new permanent jobs
• Add $83 million in visitors spending
• Provide $29 million in increased income earnings to the local economy
2) Job Creation and Local Economic Stimulus:
• Create 924 construction/supply jobs over 2 years
• Provide 250-300 permanent jobs at the Hotel
• Maximize builder impact on local subcontractor/supplier/employment
• Deliver extensive Local Economic Impact Plan with County M/WBE Staff
o Allows “Transfer of Technology” to participating local subcontractors
o Trains local subs in most sophisticated construction skills
o Maximizes local labor and subcontractor participation as a result of building
o Offers collaborative programs for local colleges and institutions to work with hotel operations. For example, Savannah Technical College, Savannah State, SCAD, Step Up Savannah all have tremendous potential opportunities to benefit from this project during development and ongoing.
3) Most Efficient Financing for the Trade Center Hotel and Trade Center Expansion through Private-Public Partnership:
• Total cost of the development is $130.5 million.
• Financing plan anticipates the Private Hotel to be funded from private sources ($115 million) and the role of Chatham County is limited to Public Trade Center Expansion space through a $30 million and a $20 million incremental tax financing, both paid for by incentives and revenues generated by the Private Hotel.
• Chatham County’s participation is repaid by the Private Hotel’s operating income, taxes, and charges.
• Proceeds from the County’s participation will be used to fund Public Trade Center Expansion, Parking and other improvements that are public in nature. The County would retain ownership of these improvements, leased to operations.
• The County funded elements are considered an enhancement and expansion of the Trade Center, consistent with expansion plans for convention center over 10 years .
This structure enables the Private Hotel Owner to guarantee a room block and meet other goals of the community, not to directly compete with other Private Hotels.
5) Poverty Reduction Initiative:
• The project would create an Opportunity Zone for employment targeted to elevate at least 200 households above poverty level with steady employment and with available health benefits.
6) County Security – The following revenues are available to secure the County’s participation:
• Annual Payments from Private Hotel Owner
An annual payment from the new Private Hotel’s net operating income will be delivered to the County.
• Site-Specific 2.0% Facility Charge
A self imposed sales tax charged against the Private Hotel’s patrons
• Tax incentives
The new development is eligible for Tax incentives. Monies are first used to repay the County’s debt.
• Site-specific Hotel/Motel Tax
Hotel/Motel Tax generated from the new Private Hotel only.
• Site-Specific Property Taxes
Incremental increase in property tax revenue generated by Private Hotel development pledged to County.
• Debt Service Reserve Funds
If they arise, revenue shortfalls will be funded from the Debt Service Reserve Fund. The reserve will be immediately replenished with funds from the new Private Hotel.
7) Private Sector Management:
• A Private Hotelier will be selected subject to a room block agreement that will position the Trade Center for larger and higher spending groups. The Private Hotelier will work with VisitSavannah staff to attract more conventions.