Mike Klein Online

Should Washington Gamble $17 Million on Hotel and Conference Center?

A citizens group that established its own Facebook page is clashing with city leaders in rural Washington, Georgia over a proposed multi-million dollar hotel that would be financed by selling municipal revenue bonds.  The hotel would operate in direct competition to an existing small stock of hotel, historic inn and bed-and-breakfast businesses. City officials see their project as the catalyst that will cause other spending to happen in and around the community.

Washington city officials say millions of dollars in bond debt would be retired by revenue from the hotel – conference center.  Opponents say the project will not break even, the city’s general fund will be stuck with the bill, and they believe that means taxpayers will get the short end.

Hundreds of citizens packed his court last week when Concerned People of Washington asked Superior Court Judge Harold Hinesley to stop or at least slow down the project.  His ruling is possible this week.  An appeal is almost certain as both sides seem determined to prevail.

If you’ve never been there, Washington is an idyllic town whose fine collection of historic homes seem made for postcards and movies.  This is where Confederate President Jefferson Davis held the last Cabinet meeting before his capture by Union soldiers. This is where Georgia secessionist Robert Toombs made his home and it is equally rich in Revolutionary War history.

Despite its undeniable antebellum charm, modern Washington fights to survive.  The tax base is small with barely 4,000 residents.  Unemployment is 12% and new business finds the location debatable.  Washington is 100 miles east of Atlanta, 40 miles southeast of Athens, 50 miles northwest of Augusta and 20 miles from the closest Interstate highway.  Really, Washington is close to nothing. You have to want to be there.

Judy Anderson is executive director of the Washington-Wilkes Chamber of Commerce.   “We are heavily dependent on tourists. If tourists are not here you are not getting the business you need because the local population is not large enough,” Anderson said.  “It’s not that the locals do not support the businesses. That’s not what I am saying.  There are not enough of them.”

Two years ago Washington city officials began to consider construction of a new hotel alongside the underused Pope Center about one mile outside town.  Pope is a former rundown community center since renovated into a venue for small meetings and conferences.  The problem with Pope is people; there are not enough of them to make the center a viable business entity.

“Every day there are conferences around the state, small-and-medium sized conferences,” said city attorney Barry Fleming. “There is a market. The question is, can Washington bring it here?”

The city wants to sell $8.1 million in bonds to fund hotel construction, transfer the Pope Center to Washington’s Urban Redevelopment Authority and pay for a new business marketing plan. Bond repayment would cost Washington some $17.7 million over 30 years.

City attorney Fleming conceded the existing Pope Center does not earn enough revenue to pay for itself, and he said studies indicate the problem is local lodging, or a lack thereof.   He also conceded, “There is concern obviously that this is too big a project for the city to bite off.”

Fleming said several hotel management groups have inquired about Washington.  The Pope Center hotel would be operated as a LaQuinta Inn.  Washington currently has a Jameson Inn, the historic Fitzpatrick Hotel and a small number of other motels and bed-and-breakfast inns.  City consultants predict the new hotel would have a 65% occupancy rate.

Atlanta attorney David Walbert was retained by Concerned People of Washington.  Walbert said the city’s 65% predicted hotel occupancy rate is “an arbitrary assumption.  Realistic ones get pretty ugly.  To your question about revenue, it’s more a question of the whole project being justified by really wildly optimistic (predictions), the build it and they will come philosophy.”  Walbert described the project as a possible “30-year lodestone around the community’s neck.”

Mike Todd is an Athens-based contractor who specializes in historic renovations.  Todd and his wife Christy bought the 17-room Fitzpatrick Hotel nine years ago.  Renovations to the 1898-era building cost $1.5 million before they opened in 2002 just as the last recession began to wane.

Todd said Fitzpatrick Hotel occupancy rates were never better than 35% during the past eight years.   “The last couple years it’s been considerably lower,” he added. This summer they changed the business model.  The Fitzpatrick is now open only on weekends, or by request.

Todd said he understands why Washington wants to try something bold, but he still needs to be convinced that a Pope Center hotel-conference combo is the best idea in a downturn economy.

“Washington is a dynamic little town,” Todd said. “People down there work hard. There are a lot of good things happening. But if you came to me and asked me to build that hotel, there would be no way I could consider it. The economics would not work for me.”

Mike Klein is Editor at the Georgia Public Policy Foundation.

October 19, 2010 - Posted by | Uncategorized | , , , , ,

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