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It’s easier to dream big with O.P.M.

Believe it or not, I don’t have a big problem with the planned Foxhall Resort development. I am not as negative about it as some of my friends, or my husband, who think it’s completely preposterous to locate a resort property in Douglas County, Georgia. I do think it’s a very risky venture, and that a market that can sustain it will have to be created because that, I will agree with naysayers, is not there right now. Foxhall sits in the midst of a gorgeous swath of land. It seems a world away from both the city and the ‘burbs, but it’s actually very convenient to the airport. You know, for all those jet-setters they hope will fly in from around the world. It’s easy to imagine the equestrian set at home there, or, more likely, at their “country home.” As nice as Foxhall currently is, however, it’s a long way from W. Harrison Merrill’s complete vision. U.S. currency icon

Merrill needs us to help him build his dream. More specifically, he needs the Board of Commissioners to agree to back $39 million in bonds. In exchange, we’ll get a shiny new conference center, and we won’t have to manage it because Westin will do that for us. We’ll also own an exhibition center. This is where Merrill’s grand plan breaks down for me. I would be a big cheerleader were it not for them committing taxpayer funds to back bonds, or selling the County a conference center it could do without. Could this magnificent vision come to fruition? Sure. Will it? In my opinion, probably not fully – at least not in the hoped-for timeframe. Could it all implode, leaving someone holding the bag for the bond issue, and with the property at some semi-developed stage? You betcha. Merrill’s done it before. The Board of Commissioners knows this. The Development Authority sure as hell knows it, and feels they’ve put the County in the most insulated position possible that will allow them to still get this deal done. But it just boggles my mind that absolutely none of them on the BoC or the Development Authority see a problem with us financing Merrill and getting conference and exposition centers when we have a county loaded to the gills with broke-ass people, and we’re already far too heavily weighted in the service sector of the jobs market. They delight in the positives and seem to gloss over the negatives. Here’s the video from the meeting. Citizen comments are near the beginning. I’m told the audio from the Foxhall discussion drops out, so if you want to hear that you’ll have to contend with another ghetto-style camera video. http://vimeo.com/76057364 In today’s Sentinel, there’s a quote from County attorney Ken Bernard, asking something I and others have been wondering:

Bernard said the county is going to look at all of the ways to reduce or eliminate the risk of the bond repayment falling back on taxpayers. But he expressed some skepticism that the hotel operator or any other entity could guarantee to pay back the bonds if tax revenues come up short. “If GM was not too big to fail, and you look at their bond holders and ask them what they got out of GM’s bankruptcy, you’ll find that they weren’t made whole,” Bernard said. “I think it’s going to be very difficult for us to put a package together that puts 100 percent of the insurance on third parties and their ability to perform… “The question becomes, if the private sector’s willing to put money on the sidelines to back the insurance, then why wouldn’t they just put it in the deal? Those things have to be worked out.”

Why indeed. Chris PumphreyI have exchanged e-mails with Commissioner Mike Mulcare, spoken briefly with Commissioners Kelly Robinson and Ann Jones Guider, and talked at length with Douglas County Development Authority Executive Director Chris Pumphrey and Chairman of the Board Ron Wilson. I don’t want to put words in anyone’s mouth or get anything wrong, so I’ll just post what I’ve gathered from these conversations and encourage you to contact the commissioners as well as the Development Authority and put your questions to them. If you learn anything that conflicts with the information I’ve provided, please leave a comment and tell me. My understanding:

  1. The Development Authority wants the County to provide financing for part of the project. There are some contingencies, but we would back $38.9 million in bonds as it stands now.
  2. Yesterday’s resolution gave permission to BoC Chairman Tom Worthan to officially discuss the financing with the Development Authority.
  3. As it’s currently proposed, the County would back the bonds and would, in exchange, own the conference and exposition center. Westin would manage both.
  4. The County expects to be able to collect enough in tax revenue to pay for this. Here is where I do not completely understand the structure of the deal, e.g., what is the term of the bonds, how the Board and Development Authority think we can come up with an extra $39 million or so on top of what we’re doing now without increasing the budget.
  5. There is a verbal agreement from Merrill that any shortfall in revenue must come from the project’s investors and operators. A verbal agreement is worthless, of course, and the Board will seek to put this in writing. But one of my fears about this – aside from the fact that the County is getting involved in it at all – is that Merrill has more than once left people holding the bag for millions. His word, even on paper, is as worthless to me as a mere verbal agreement. I’m sure they will have to get Westin to buy into, if necessary, bailing out the whole thing should the County find itself unable to raise all the money it needs through taxation.
  6. Sky Valley resort maintenance worker Francisco Olvera shovels snow away from time share units

    A group of Georgia investors…bought Sky Valley Resort & Golf Club out of foreclosure…The acquisition includes the 18-hole golf course, unfinished clubhouse and outdoor pavilion…The club was previously owned by Merrill Trust but was foreclosed by BB&T in 2008.

    Even if Douglas taxpayers were 100% safe from being on the hook for the $39 million – and I don’t believe we can be – there is the matter of conference and exposition centers out at Foxhall. If they’re wildly successful and Westin never, ever sells them or otherwise walks away from them then we may have less to worry about. But those are pretty big ‘ifs.’ If the venues turn out to be less profitable than Westin likes, or if it simply wants to free up some cash, it could sell at any point. They said a couple of years ago that they like to keep their portfolio “asset light.” If there’s a new owner, then what? The County seems to be doing everything in its power to be a partner without shouldering risk or responsibility, but the entire project is by nature, filled with both. Is it not a bit like Joe and Jane average deciding to have a baby but planning to never endure a sleepless night? Unrealistic, is what I’m thinking.

  7. Getting the hotel/motel tax increased is a key component; not sure if that is a done deal or another political football. But a lower hotel/motel tax means less tax revenue and, well, you know what that mean$.
  8. Property and sales taxes from the resort are also key to it all working. I’m not sure how those projections were done; hopefully with a complete absence of rosy optimism.
  9. Commissioner Ann Jones Guider likes the project because of the jobs aspect, as does Commissioner Mike Mulcare. The fact that they’d be largely service jobs is less concerning to them.
  10. Commissioner Kelly Robinson has mentioned the project shifting the balance of the tax base from residential to business. I should ask if anyone’s figured out how much of an impact it would actually have.
  11. Chris Pumphrey and Mike Mulcare are of the opinion that the new conference center would serve a completely different market than the new Douglasville Conference center. I disagree. I think that the Foxhall center will have much broader capabilities, hosting everything the Douglasville center could handle and far more. I don’t think this market can sustain two conference facilities, and I believe the Douglasville center will lose. Probably big time. Even though I am not a City resident and I thought the decision to build the Douglasville conference center was a foolish one, I would hate causing City taxpayers to feel even more sharply the fallout from that decision. Then again, maybe it will prompt them to revisit the choices they made the last time they were at the voting machine.

Inconsequential but amusing

Chris Pumphrey asked if I’d be interested in helping to write copy for the Development Authority’s new website. A libertarian writing for the Development Authority? I just smiled. Ann Jones Guider wanted me to know that even though there were more than 14 pages of foreclosures in last week’s paper, that was great because it used to be 30! I did not join in her enthusiasm. Ron Wilson, Chairman of the Development Authority, thinks the downtown Douglasville conference center was a terrible idea, and also that the City of Douglasville’s Development Authority should be dissolved. At least we agree on something.

1 thought on “It’s easier to dream big with O.P.M.”

  1. Found your blog because I was Googling “Foxhall Westin” after reading another article in the Sentinel. I am very strong supporter of this idea – even with our tax dollars at work.

    I am a county resident and feel like I don’t see much return for my current tax dollars out where I live (near Foxhall): the roads suck, congestion closer to the mall etc are awful, and there isn’t a very nice park infrastructure in my area.

    I agree with about Foxhall bringing mainly service jobs to the area, but isn’t that better than nothing? I also believe the resort has a potential to spur off other commercial and residential building in the area and will create more jobs and higher property values.

    The downtown conference center is a joke. I see it as more of a place for community meetings and small events but the resort is different. My corporation rents out a resort and the associated hotel for leadership offsite meetings a few times a year in different places. That couldn’t be done downtown – where would everyone stay? What else is there to do in the area? The traffic is bad, etc. A resort based conference center allows for large corporate events to take place, outdoorsy events (could compete with Serenbe events), as well as get-away type wedding events.

    I have been in this area 12 years now. I feel like there is so much potential out here but there is poor planning, infrastructure, and no representation for the area….that a bet with some tax money has the potential to kick things off in the area. Like you said – 30 minutes from the airport; 40 from downtown…it’s convenient.

    I am not associated with Foxhall in anyway. I have been to a few events there but think they need to restructure their ideas for residential development because the membership fees are ludicrous and the house prices are insane (they seem to still think it’s 2004-05!)

    Good blog, I’ll keep reading! By the way, how did you feel about the “River City” initiative a few months ago?

    Like

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