Minutes 07/22/2008 - Laserfiche WebLink

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July 22. 2008 These Empowerment Bonds do not expire for another 16 months. Therefore at this time I will not encumber potential funds available to both Portsmouth and Norfolk to a proposed development that does not have all of the pieces yet in place. To the investors, I would say - bring me a commitment letter from a lender that's capable of "doing this deal" and you'll have my attention and probably my support. Let these EZ Bonds "seal the deal", not "lead the deal". Until that time - I am reluctant to ignore the hard learned lessons that we have witnessed in Norfolk - who after all, is our partner in these bonds. I am not prepared to vote favorably at this point on what appears to be speculation. Therefore, I will have to vote against items 08-331 and 08-332 tonight." '" The following statement was read by Councilman Douglas L. Smith: "In 1996 The City Council of Portsmouth made the development of a full service hotel and conference center on the downtown waterfront their number one economic development priority within Vision 2005. That project became the Renaissance Portsmouth Hotel and Waterfront Conference Center. When the Victory Conference Center Hotel evolved from a meeting hall with an adjoining fitness center and lounge into a 250 room hotel and adjoining conference center I began to have concerns about the appropriateness of this project at this time. Our citizens own the Renaissance conference center and parking garage and made an investment in the Renaissance hotel in order to raise the level of the project beyond that which normal market conditions warranted. To that end the Portsmouth Industrial Development Authority issued $39M in revenue bonds. According to the public finance plan project revenues would not cover total debt service for 20 years. Local governments usually look for a three to seven year payback for economic development, project investments, however, the City leadership was willing to stretch out the payback on this project because they recognized the tremendous overall impact this project would have on their local economy and their image and they wanted Portsmouth citizens to have a gathering place for social and civic events. What has changed relative to demand generators to now say Portsmouth can sustain two 250 room high end hotels with significant meeting space? Several weeks ago when this project came back before us after six months of very little discussion, we asked the City Manager to reach out to Crestline - the group that manages our conference center, our parking garage and our investment in the hotel. We wanted to hear their position on this project and how the market has changed since 2001. The response we received was firm and concise - "The presence of another full service hotel property, with even remotely comparable meeting facilities, would be a devastating blow to the Renaissances' future prospects" One might say well heck "They" just fear competition. I do not think that is the case. Their supporting data was convincing. However, please remember - THEY is WE. Our private partners invested approximately $15M in the project. The Citizens of Portsmouth invested $40M. That was not an allocation of bonds, that was cash generated through debt. Our ultimate repayment will be approximately $70M. We should not be party to a project that puts that investment at risk. Good government is saying NO at the right time. When the room is filled with speakers on a project it is important that we weigh that public opinion, but we cannot simply count noses. We must also represent the best interests of the silent majority. The citizens of Portsmouth trust us to protect their fiscal interests.