WORK SESSION TEE CENTER CONTRACTS

COMMISSION CHAMBER October 3, 2012

PRESENT: Hons. Deke Copenhaver, Mayor; Guilfoyle, Smith, Hatney, Aitken, Johnson, Bowles and Brigham, members of Augusta Richmond County Commission. ABSENT: Hons. Lockett, Mason and Jackson, members of Augusta Richmond County Commission. Mr. Mayor: -- make any remarks? Mr. Brigham: Not particularly. I would like to hear from the Administrator and Mr. Simon and anybody else that would like to speak. Mr. Mayor: Mr. Administrator. Mr. Russell: Mr. Chairman, Mr. Mayor and members of the Commission, thank you for the opportunity to spend a few minutes today talking about the TEE Center agreement. As you know weve been working diligently on the building. Over the past several years weve made some agreements in 2009 that were following up on and all that is coming to fruition. I hope some of you at least had a chance to go through there. I know a couple of you have, I think, but I think youll be proud of what weve put together there. If you look at the impact that its going to have in our community with people coming and visiting the facility, I think for years to come its going to be a positive thing for our community here. What we did over the years past weve been working on the operational agreements. In 2009 you made the decision to let the Marriott deal with that and weve been working on that as we put the building together. In addition to that what we did is take the parking deck agreement and the issues and questions that arrived with that, we incorporated them into this agreement and that was noted, I think, in your marked up copy that we have. It is a fifteen year agreement due to the bonding that weve used on this as opposed to the longer term that was used for the Convention Center. I think the major issue becomes the cost that we had and that seems to be within reason when you look at other operations that are going on. Its about $128,000 total and that seems to be fairly reasonable when you look at the cost for other groups that manage similar sized facilities. As a matter of fact I think its probably on the lower end of the scale based on what we get as a product. I know some of you probably have specific questions about the document itself that youve had time to review. Mr. Simon has asked to say a few words and I will release the chair to him if thats permissible and then the attorneys are here that helped develop the document to answer specific questions. Thank you, Mr. Chairman. Mr. Mayor: Mr. Simon. Mr. Simon: Thank you, Mr. Mayor. Is the machine working now? The Clerk: It will be. Go ahead with your prepared statements. Were recording those.

Mr. Simon: Weve been working on this project now for seven or eight years. I feel like I was a little boy when we started its been so long but for the benefit of those who were not here, not involved in the earlier years, I would like to go back. Not all the way back to 07 and 06 and 05 when we were working on it, but back to December the 7th, 09 and at this point Id like to be able to show something on the wall, if I may. At that time at a called meeting of the Board of Commissions on December 7, 2009, the following action was taken and this is a copy of the resolution that was passed at the time. The resolution was offered by Don Grantham and was seconded by Dr. Hatney and it was a long, lengthy discussion and it was eleven pages of minutes that I have here and Im going to take some excerpts from some of them and show you what was voted on and what was agreed to at the time. At that meeting Fred Russell was authorized to issue bonds, acquire land, seek contract at risk, undertake such action as necessary to begin construction of the TEE Center and Parking Deck. Funding sources other than the bonds he was authorized to issue are listed in the resolution. Also at that meeting it was approved that execution by the Mayor and Clerk of Commission the TEE Center Management and Catering Agreement and the Core Agreement. Now let me stop right there because we were under the impression and still are that were under that contract, were operating under that contract and I would not have leased land for the city to build the Conference Center, the Convention Center on if we didnt think we had a contract. And so in 2010 we were asked to proceed to put the project on a fast track and we could not complete the documents because the survey hadnt been completed but as far as were concerned, the approvals were given at that time at that meeting and then let me read you some other information that occurred at that meeting because I think its important. And I have copies of that resolution if you like it but I would like to point out a few things that occurred during that meeting. Mr. Russell said, Were putting out some of the documents that were worked on. In other words he passed out, I was at the meeting, so was our lawyer Rand Hanna and at that meeting he passed out these documents that were now talking about. Also at that meeting he pointed out that we had changed the documents that we had initially agreed on because your tax lawyer would not allow us to have a fifty year agreement. So we agreed to reduce the agreement from fifty to fifteen. We also at that point, and its pointed out in these minutes, Fred and I negotiated over time and we agreed to a fixed fee, no profits for us because the tax lawyer wouldnt let us have it, we agreed to accept a fee to both operate the facility and to but we agreed, as I said, to a fee. The fees are stated in there back at the 09, theyre the same fees in the contracts that were talking with you about today. Those fees, it doesnt matter whether you have one event in there or whether you have a hundred events, we will get the same fee. But that fee, its $84,000 a year to manage the center. Its $48,000 a year to cater it. So if you have one event or ten events or a hundred events, it doesnt matter. Our fee is the same and you make the profits on the catering and on the rent from the center. Now that fee of 84 and 48 is less substantially, its about half, what the people get to operate the James Brown Arena. So the fees are very fair and as a matter of fact, theyre low. Okay. Also as I said Ive got copies of those minutes if you would like to proceed with them. So as I said, we were at the meeting. I thought Fred did a good job of explaining the details. This is a very complicated and complex transaction. Theres a lot of land transfers involved, a lot of easements involved, theres a lot of financial issues involved and I think theyve done a good job for you. So since then, since December of 09, as I said, Heery, your representative, and the architect asked us to lets put this on a fast track. You hired R. W. Allen to do it; we agreed to do it. By doing that we had to do a number of things. We had to allow you to break into our building, disrupt our business, so forth, all for the benefit of the community, all
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for the benefit of all of us, so were not complaining or objecting to that, were just telling you what happened. So as I say weve been working on that. During that time this man right here has spent every day over there helping make it happen. So has Bob Kuhar. Hes an architect with our company. Ive spent hours and hours and hours in committee meetings and so forth trying to help make the project a better project which I think weve done. I think we have an excellent project. Youve built an excellent project over there. Now, these documents, as Fred pointed out, have been changed. We were asked to change them, which we agreed to do. As far as were concerned, well operate under the present agreement or well change it. In changing them your tax lawyer asked us to make a few changes. Those are in there. Wayne asked to make some changes based on the parking agreement. We did that. So all those changes are in there. So we can either operate under the old system, old contract, or we agreed to these changes. And one other thing I wanted to say while Im up here is while Ive been accused of rushing you. Were not rushing you. You know the building is almost complete. We have entered into contracts in your behalf. The way this works, the CVB markets this facility. They let us know that theyve got this contact, then our folks enter into an arrangement or contract with the customer. These people have made commitments and so what Im worried about is not, you understand, we dont get anything out of it except the fee, so its not to our advantage necessarily to rush it except we want one, to do it right, and two, we want to protect our reputation. Let me point out another thing. This right here shows you the property that were giving to the city under this transaction. And, Dr. Hatney, this will be transferred once the contracts are assigned, the banks agreed to release it. If you notice the yellow on the map here, all the yellow is what we owned prior to this transfer that were about to do now. You can see the circle up there on your left, my left, it would be your right, I guess, but if Reynolds Street is down at the bottom, the left up there is circled in front of the hotels, the property on the right, over to the far right, yellow, is where the hotel is located. Thats the Suites Hotel on 9th Street but the property facing Reynolds Street and the property behind that part, thats exactly where the new Center sits, and were giving you that property. The property on my left that is on the corner of 10th and Reynolds Street, that piece of property were giving you the right of first refusal. So were giving you part of that property now where the Center is located. Now thats where the problem was in getting the exact location so that the surveyors could tell the lawyers where to draw the line. Thats whats taking so long. We now finally have that but you have a right of, if we decide to sell that property, you have a right of first refusal and that is in case you want to expand the Center. One other thing I want to say is that this Center, now remember you get the profits and youre responsible for the losses, this Center is most likely, and I want you to known Ive said this several times, and I want to say it again that it will most likely lose money for several years. This is a big operation and it takes a lot of money to operate this Center. We have determined, not exactly because we dont know until we get some experience at it, but the utility cost over there will be $350,000 a year for all the utilities, thats lights, water, gas, so forth. But if you compare these centers, and weve done some of that, we know its expensive but the value comes to the city and thats the reason Athens did it, thats the reason Savannnahs done it, thats the reason Macon has done it, Columbus, Columbia. Value comes to the city because of the economic benefits by visitors coming to the city, not profits from the center itself. Now the terms of this agreement provide that the CVB will market the facility. You will need to provide funding for that purpose and the marketing effort by the CVB will directly determine the success of the facility. So the more they do, the better job they do, one thing in my judgment they need to do is get away from the TEE Center. You cant market this as a TEE Center. Its a
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Convention Center and thats the way it needs to be marketed. Now Ill be here to answer any questions that I could answer for you. We have our attorney here who will also help and of course Jim Plunkett will have some comments to make. But once again I thank you for your support and I ask that you vote in favor of our relationship. Thank you. Mr. Mayor: Thank you, sir. Fred, did you want to say something? Mr. Administrator: I would suggest that you get Jim up here if you have specific questions about the document itself and then we can deal with that. Mr. Hatney: My first question may be the only one. You mentioned you cant market as a TEE Center, youve got to market it as a convention center. I was under the impression that the second floor already was designated a convention center so what are you doing, swapping spaces? Mr. Russell: What weve got is the Marriott itself, weve got the Convention Center Mr. Hatney: When you say weve got the Marriott, what do you mean by that? Mr. Russell: City and the Marriott are in a joint project operating the convention space, the conference space itself, the rooms that are there that they entered into an agreement several years ago or a long time before I got here, several years ago basically so thats the conference space thats there that the city owns and the Marriott operates. Youve got the Trade Center that weve developed and the open space there for additional space that goes together with that and would complement that, allow us to expand the operation and allow the flat floor open space, conference stuff that we have not ever been able to have before to attract a different level of groups that come in that need space like at the GMA or the ACCG where all those booths are set up and stuff, that would be what that would be used for there. In addition its multipurpose where you could actually have banquets there and those kinds of things as you go down the line. Mr. Hatney: You didnt have to go that far. My question was are you including now used to be called TEE Center now into the Convention Center which is already there on the second floor to (inaudible) a question on the corner of 9th and Reynolds Street the name is Augusta Convention Center? Mr. Russell: Right and what I was getting to is youve got the convention space, the TEE Center space that joins together to form the convention space so weve become a bigger target to deal with. Paul and I disagree on the marketing of the TEE Center. I think that thats a nice approach to take for that particular space but what youre actually doing is not just marketing the Conference Center that was there in the past or the open space but the combination of that which creates a venue that has a whole lot greater appeal.
Mr. Simon: Could I add something to that to answer your question? If you notice what we had before was a Convention Center, I mean a conference center between the two hotels. We have a long term agreement with you to operate that and so forth. Now, youve never at that point over time, the Citys never been able to promote the fact that its yours. Now you have the full Convention Center 4

which faces Reynolds Street on the corner of 9th and then all that to the river actually belongs to the city

and the Marriott which we pay a fee, every hotel room thats rented over there, we pay the Marriott a marketing fee and a marketing of this convention space now would be total. In other words,
theyd be marketing the hotel and convention space but not just the 9th Street space, all of it because people who come there, and this guy can tell you more than I can because he runs it, but we have people who want to use all of it, we have people who only want to use parts of it and so thats the way you try to market it all and get as many people here as you can. We had the Ironman here last weekend, right. You know, they come to town and they spend a lot of money in Augusta. Next year, thats been in the conference space, am I right, Darryl, thatll be moved over to the new what yall call the TEE Center on the corner. That activity will be moved over there. That revenue will come to you so thats the way these kind of things work and what his job will be, based upon this agreement, is dividing those businesses where theyre supposed to go and he and the CVB together will be marketing it. When I said you couldnt market it as a TEE Center, you can do it that way but in my judgment youd be better off to follow what the Marriott does and that is market the whole facility because youre trying to get as many people to Augusta. You dont care why theyre coming, you want them to come and use those facilities over there.

Mr. Mayor: Which prior to recognizing Commissioner Guilfoyle, I did want to recognize that, speaking of the Ironman, Commissioner Joe Bowles is now the local governmental champion of that with a time of six hours, three minutes and twelve seconds. And I will say that that event has grown and will grow with the new Convention Center, this new space. Part of the reason that grows, though, is that they love Augusta. They love the welcome they receive here. This is the Ironmans favorite event so we know that we can market the city, we can bring in these events and this facility is definitely going to help us do that. State of the art blows anything else in the state away. Commissioner Guilfoyle. Mr. Guilfoyle: Thank you, Mr. Mayor. Mr. Simon, you was talking about use the term rushing, that youre not rushing us, but the way I look at it this dealing has been going on for nine years. I guess for the past nine months, our in-house, our attorney here as well as your attorney has been working on it. Well, we received this contract nine days ago and to be truthful we have not had ample time to go through it. So I know you want a vote on it, its just that I dont think todays, or, I wont be here next week, is the right time to vote on it until we have ample time because you definitely have been through this. As far as Mr. Plunkett, Mr. Plunkett, I know in order to come up with this agreement I think that Mr. Simons attorneys had came up with this and you critiqued it. Mr. Plunkett: Yes, sir, there were some initial drafts as you know from our discussions on the Reynolds Street Parking Deck. There were some initial drafts and theres been edits back and forth for some great time. I think this is probably the sixteenth version of this document so its been edited numerous times. Mr. Guilfoyle: Have we looked at to see what other cities has done when it comes to an agreement like this? For example Douglasville, Georgia had modeled their agreement after the Georgia International Center actually in Haitsville, Georgia and they were attached to two Marriotts. Have we looked at that to see a comparison because right now the only things were
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looking at is a contract between the Augusta Richmond County and the management company, Riverfront? Mr. Plunkett: We came into a deal after the deal had been struck in 2007 what the terms and what the management philosophy was going to be at that point in time so I did not use other templates for contract form. We used the points that were to be incorporated by virtue of what Commission approved in 07 and dealt with those terms from there. From that point we looked at other issues in terms of how it would work with the flow from finance and the reporting issues. We looked at some of the concerns that the Commission had voiced in the past in terms of accountability, audits and things of that nature so what we took was an overall idea of management. We had a conference center, now that weve got convention and conference but we had a conference center management agreement that was already in place for Augusta as a jumping off point and then from that you take in concerns of the Commission and edit that to come up with an agreement that we felt would be appropriate for this body. The short answer is that we didnt, the long answer is that we already had templates in place from the conference center as well as the concerns that the Commission set. Mr. Guilfoyle: I dont know if you can answer this. As far as the management staff of the TEE Center, due to we have no annual plan at this time or budget, no procedure manual at this time, how are they going to staff the Conference Center? Is that a question for you or Mr. Simon? Mr. Plunkett: I think its a question for both. As a practical matter I think what youre looking at is an overall management issue. This is the agreement. The details of those operational plans and things of that nature would be the responsibility of the manager to provide that to this body to approve via the annual plan. Annual plans incorporate a lot of information. As you know in the Reynolds Street Parking Deck we kind of addressed some new issues in there that would not have been there to begin with. What youre looking for is a budget that could be produced very quickly, I believe, but youre also looking at a document that hasnt been approved, but you wouldnt have a person drafting a plan until all the details of what theyre supposed to put in there has been accomplished so this is a kind of a, you know, the cart, I shouldnt say the cart and the horse but you agree to this part, the management agreement, then they come up with the annual plan and once you approve that annual plan, they become actively managing. So you kind of get the template over and then the details. Mr. Guilfoyle: Wouldnt you have it coincide where you would have a business plan, where you know what youre fixing to have to employ, how much, per se, budget? Mr. Plunkett: Well, the business plan is the annual plan. Whether or not youre going to go into business is the first question. So this is going into business. The business plan is the annual plan and that needs to be provided to you and it has a time frame in here to provide it at that point in time. We have talked a little bit about some of the staffing issues in terms of like the temporary staffing and issues of that nature but I think Mr. Simon could probably when he would have the annual plan available for you and the policy manual, when that would be available for you to review but Im concerned about the overall management of the facility and if you want Paul to address
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Mr. Guilfoyle: Yes, please. Mr. Simon: First of all, Id like to say what Jim says that the city decided to go into this business a long time ago. So then its a matter of deciding how youre going to manage it. Some cities have managers themselves but we find that thats not the best way to do it or we dont think it is and so the city decided some time ago that we, our company, would manage it. Then if you look at that itself, is it advantageous to the city because this guy will divide and use some of the same people for his other operations. So the city has a less cost because of sharing employees than it would otherwise. If you had it down the street where you had to hire a manager, a chef, a sous chef, everything that you would need to operate on a stand-alone basis, your cost would be substantially more than it will be with us so it is an advantage to you. Its also an advantage to us too. Mr. Guilfoyle: Thats the reason I was asking this one question because we only have 13 rentals for this coming year and my whole question is are we going to have full time staff operating a empty box for forty something weeks out of the year? Mr. Simon: No, most of the employees, we have determined that it will take about seven or eight full time people. Thats like an engineer, different people who have to be there whether the Center is used or not and so if you just shut it down, unless you just want your asset to deteriorate, youve got to have certain people there. But all the other employees will be a shared employee and most employees will be hired on a temporary basis through a company that we use to provide waiters and bartenders and things like that. Mr. Plunkett: I think the other question was when would your annual plan be available and how long from now Mr. Simon: Once the contract is signed then well, now weve already started working on it but we cant get it done before we get the contract all in place. Mr. Plunkett: Is it a ten-day process or a twenty-day process to get that finalized once, I think thats fundamentally what youre asking Mr. Guilfoyle: Right. Mr. Simon: Thirty days, I think, we could have one. Mr. Guilfoyle: Okay. I think this is a Mr. Plunkett question, Mr. Mayor, if Im taking up too much time from my other colleagues Ill stand down and let them ask questions. Mr. Mayor: No time limit in work session. Mr. Guilfoyle: All right, thank you so much. In the original contract who was supposed to supply the kitchen equipment?

Mr. Plunkett: In the original agreement it was going to be, the management agreement, Augusta Riverfront. I believe in the 07 agreement. Mr. Simon: When you go back to the fifty year agreement we signed 20 years ago, at that time we entered into an agreement with the city that the city would build the Conference Center if we gave the land and wed build the hotel. That was one hotel at the time. So we did that. The city put up $9 million dollars; we put up about that much plus we borrowed $17 million, had the UDAG grant and so forth. But anyway, at that time the kitchen was furnished by the city; they paid for it. We took the responsibility of maintaining the full facility; that is, anything that happened to the Conference Center was our responsibility including the kitchen. When we got to this project then we put on the table, we were asked to participate in this by the way. We came to meetings, the Mayor back then appointed a committee. The city hired consultants. They did surveys and determined that the best place to put the center was where its going. Mr. Guilfoyle: The CVB, wasnt it? Mr. Simon: Well, the CVB was involved but we had a company they hired, a consultant out of town that came in and recommended that site. They looked at different sites. They looked at putting it over here at the James Brown Arena. They looked at putting it down at the railroad property but anyway, it was decided that it should go where it went. Then when we got to this level, the CVB came to us and I started meeting with this committee, the consultants. I was not on the committee, there was an accountant, one of the CPAs on the committee, several people were there. Joe was on the committee I think. Mr. Bowles: Myself, Barry White, Abram Serotta, Robert Munger from Heery, Fred Russell and Betty Beard. Mr. Simon: Thats right. I met with Serotta several times and Barry White and so forth and we came up with a hotel agreement that yall get so many rooms at certain times of the year and so forth. Thats part of this deal. But at that point then once we knew we were going to go forward with the center, as a matter of fact it was voted in the SPLOST and you got $20 million dollars to build it and the site was selected by the consultant. Then I put together whats called a term sheet and that term sheet specified what the city was to do and what we were to do. That was passed in 2007 by the Commission at that time and that says that you will build a kitchen and later on it says that you would be furnishing funds of $350,000. $100,000 to go into capital and $250,000 to go to operations and it specifically says that the operations in the future, not the building of it, youve got to build a kitchen if you build this facility. We already have a kitchen. That kitchen is overtaxed for what we already have. So we couldnt take over this new center anyway. So the city had to build a kitchen. So what Im saying to the city in this term sheet well give you land. Now what are we getting back for our land? Were getting the kitchen. The only thing were getting out of operating is were doing the work for a fee. Now well get some hotel rooms, yes, but well get the hotel rooms whether you build it at James Brown or down the street, not as many maybe, but anywhere in this proximity we would get the benefit of the hotel rooms anyway. Our position was and still is that you promised a kitchen in exchange for us giving you the land. Thats in the document.
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Mr. Guilfoyle: Fully equipped, right? Mr. Simon: Yes. The proof of that is that once the architects and engineers started drawing the plans, they included a kitchen, they had two little funds in there, they had about $700,000, $800,000, but they didnt have the consultant on board to say what kind of kitchen you should have. So a consultant was brought in and he recommended everything thats in this kitchen and so thats what happened and thats what the facts are. Mr. Guilfoyle: All right. As far as the kitchen Mr. Plunkett: May I add one more thing to that? Mr. Guilfoyle: Yes, sir. Mr. Plunkett: One of the issues that has kind of fundamentally changed is that previously this was going to be an amendment to the Conference Center lease, that agreement, and because of, and that had a profit sharing component to it, because of the debt service the way we did it for taxes and financing, that was no longer available so historically there were potential profits going to Augusta Riverfront. That was no longer available so some of the maintenance issues that were in the original term sheet were modified because theyre a manager. There was no way for them to profit from this to pay for any expenses so thats why theres a little bit of derivation from the term sheet in terms of losses and this management agreement. Mr. Guilfoyle: Since we bought all this equipment and naturally what happened in 2007 with us having to pay a catering agreement, management agreement, are we going to be, get reimbursed for any use of this kitchen equipment? I know it shows to maintain Mr. Plunkett: No. The expense of the kitchen is an expense of the TEE Center. The maintenance of that facility, this equipment, is being shared basically between the Conference Center, the TEE Center and the hotels proportionate based on plates. Mr. Guilfoyle: So the catering could go outside of the new TEE Center? Mr. Plunkett: It would not go outside of the Convention Center. So if a person came out of Atlanta and came here and they had a meal in the TEE Center open space, they had a catered lunch in the Conference Center and they had room service, its coming out of the same kitchen. If they went to the restaurant at Augustinos, its coming out of the Augustino kitchen there but on the other hand, its not the ability to pack up food and take it off site to other things because theres a prohibition on using outside of the Conference Center property. Mr. Guilfoyle: Okay, theres a prohibition on that. All right. Mr. Simon: When we changed the deal, that is, the tax lawyer said, Yall cant do it this way. Well, that was a big change for us because we had agreed that there was going to be a

fifty year contract. Now when you give away a piece of land, you expect to have some value back for that land, right? Mr. Guilfoyle: Yes, sir. Mr. Simon: So reducing it to fifteen was a substantial change. It was. Number two, we gave up the right to have the profits from the center. Now as I told you, youll have the losses too but we were taking that risk, the losses, wed have the profits. And you agreeing at that time to fund the first $250,000 in losses and $100,000 going to capital. Thats where the 350 came from. When we made the change in the deal, the city decided to leave that 350 there as a mechanism for funding but it doesnt solve all the funding. Now if it doesnt take 250, it doesnt cost you 250. If it takes 350, it costs 350. If it takes 5, it costs you 5. At some point in time, in my opinion, its going to be profitable. Thats the reason we wanted to do it the other way because we thought it was going to be profitable. Your tax lawyer said you couldnt do it that way so you did it the other way. Now let me point out one other thing that you need to keep in mind though. Youll have the losses, okay, but you saved $1.7 million in interest costs on issuing those kinds of bonds. Had they issued the bonds differently and we kept the losses, then you wouldnt have saved $1.7 million. And I think another thing that needs to be kept in mind when yall asked us to put it on a fast track and lets go ahead and build it even though we havent transferred the land and all yet, lets do it because you saved a substantial amount of money. The construction business was bad at that time, the way you went about it, the cost, when you do it the way you did it, theres no plans. Youve got a basic plan but you dont have final plans, you dont know where the footprint is going or any of that because the contractor gets involved with the architect to say, wait a minute, youre specifying this wood but if you use this other wood and it looks just like it and its just as good, we can save you some money. You have to keep those savings in mind. As to the kitchen equipment, our deal was that we traded with you. We gave you land, you built us a kitchen and then we share the cost of maintaining it in the future. It has nothing to do with what happened twenty years ago. Mr. Guilfoyle: Yes, sir. Would you give me copies of the documentation where, no different from Paul when he first came on where he showed the minutes from Don Grantham as well as the agreement where we had actually entered to do the kitchen equipment? Mr. Plunkett: Would it be best if I e-mailed that to the body or is everybody wanting that? Mr. Mayor: That works. Mr. Plunkett: Ill send it to Ms. Bonner and she can just (inaudible), Ill send you a direct copy. Mr. Mayor: Commissioner Hatney. Mr. Hatney: Yes, Mr. Simon mentioned that the land was donated and all these things that happened. One of the things thats kind of concerning me still is that every time we ask for some specific document it cannot be gotten until after this is done. For instance, youre
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suggesting to us that you dont really know how much its going to cost to operate this thing because you have not put that together. Yet you said thats contingent on whether or not we get this signed. When we talked about the land being released, it was contingent on whether or not we get this signed so it looks like, see and when we started this thing out, it was to be two kitchens, not one but two, at the Convention Center, it was the one they had already and there was to be one within the confines of the TEE Center area and I think you said you, somebody made a decision to come up with one. Okay. My concern is that it seems as though the lien portion that was on the land under the new building, some stuff I read sounds like that may be transferred to the Conference Center. Its got some language in here suggesting that that could be a possibility. It doesnt have to be. Maybe its just worded wrong but thats what it seems like I read. Mr. Plunkett: If I can address those in some order, Mr. Hatney. As to specific documents, unfortunately Im not necessarily sure what documents the bodys going to ask for at a particular meeting. As to the annual plan and that type of document being placed, it was contemplated in 07 that that plan would be provided after certain documents were done. We had a comment today that the plan would be available in thirty days. As to the combined kitchen or two separate kitchens, in 2007 the body acted and said that it would be modified in order to have a single kitchen providing catering services to both. As to a may or shall or will convey the documents or the real property, the short answer is that this is the deed. Just like the Reynolds Street Parking Deck, you were very diligent in making sure that was done. Documents arent transferred. They dont manage until we get everything were supposed to get. We dont necessarily bring that out and tout it every day but we had documents and we didnt record them until everything was proper. There will be a conveyance of the land or they dont manage. So thats just the way it is. I dont know in advance whats going to be asked. If I knew or had a correspondence from this body in advance Id be happy to bring things to you. It is not an intentional act of not being prepared; its just not knowing whats going to be asked for. There will be a deed, it will be signed, it will be recorded before anything else takes place, until everything is finalized and contracts are exchanged. Thats just part of it, exactly how we did it with the parking deck. Mr. Hatney: And Im not doubting that but my heartburn still is is that this thing has been changed 60% around what they started from and in some instances, maybe more than that and yet we still are asking for documents from a laymans perspective should have already been put in place and might not have been signed but to me all these documents should have been signed at the same time. Everything should have been signed all at the same time because all of it is contingent on one thing or the other so everything that needs to be signed is going to be contingent on this being signed. From my perspective it would have made my heart feel a lot better if everything was there at the same time. I know how yall operate kind of strange and thats your business, but it doesnt make me feel any better. Mr. Plunkett: It doesnt make me feel any better either. If I had had a choice between fast tracking and doing things in a more traditional and conservative manner, we would have done it that way. It wouldnt be ready to open but we would have done it that way. We had a directive of this body to do it as quickly as possible to make cost savings if at all possible and we did it to the best we could. There are certain conditions preceding or things that happened in
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certain orders getting through certain documents and being finalized and approved and then other things happened along the way. Its painful and in most transactions I dont think it is, you dont see quite as much as we refer to the sausage making but this one, yall have been in plant from day one and its uncomfortable and its like, why do we do this, why do we do this, why cant we get this done, why isnt everything done? Unfortunately, its a process and it is a very unattractive process and when we try to fast track it, we have to deal with it on the things that we come up. I regret the way this was handled. If I knew that this was going to be handled and questioned and everything else, I would have suggested to this body to do all your documents in advance, lose the $2 million, you know, the money that we have for the bridge, that money would have been wasted. Mr. Hatney: You said for the what? Mr. Plunkett: The bridge that goes from the parking deck Mr. Hatney: It would have been wasted? Mr. Plunkett: It wouldnt have been available. Mr. Hatney: Okay. I was fixing to tell you its still going to be wasted. Go ahead. Mr. Plunkett: Maybe not wasted, I apologize, but it would not have been available because of the delay. So it was a balancing act. Weve done everything we could to balance it well. Mr. Hatney: The reason its kind of unnerving is that many statements that have been made about what happened back in 07, what happened in 09, but I do notice that nobody ever made the statement that in December 7, 07 that there was a called meeting where we were assured that we would own that land that the parking decks on to learn three years later that thats not the case. Thats the kind of stuff that creates ill will for me. Thank you. Mr. Mayor: Mr. Bowles. Mr. Bowles: Thank you, Mr. Mayor. Jim, a few questions. Under the rights and obligations following termination, it says the manager has the right, but not obligation at its expense, to physically separate the Conference Center and the Conference Center annex. Do we reserve the same right? Mr. Plunkett: We dont. We could but the reason why is that, the net result of it is that you have a kitchen and you have a catering obligation, operation out of that. If you were to sever the kitchen, Im sorry, what you dont want to do is to have two caterers working out of one kitchen at the same time in inconsistency. So the severing of that from the annex to the Conference Center is to say that its a separate facility and we wont be utilizing that kitchen. If we from time to time want to, can have the ability to use it, they dont have an event there, theres not a lot of reason to sever it permanently.

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Mr. Bowles: But this doesnt talk about the kitchen, it talks about the TEE Center and the TEE Center annex. Mr. Plunkett: The annex is for all intensive purposes is the kitchen. Mr. Bowles: Its not the new, so youre not separating the TEE Center from the Conference Center? Because we own both and thats my concern. Mr. Plunkett: Im clearly not an architect. Mr. Kuhar may not like this. If this is the TEE Center here, the kitchen is here and its kind of in both spaces and this is the Conference Center. Mr. Bowles: Okay. Mr. Plunkett: The (inaudible) is is that if the catering is no longer to be done by Augusta Riverfront. We want them to manage the TEE Center but we dont want them to do the catering because the food is not good. They could come in and close off an opening and this would be the new building. Mr. Bowles: So they could close off the connection of the conference rooms from the TEE Center. Mr. Plunkett: Yes. Mr. Bowles: I really dont like that personally. I could understand the kitchen but not the two different conference centers. I dont see where that makes sense considering taxpayers own both the Conference Center and the TEE Center. Mr. Plunkett: From a workshop situation let me come up with a response. Mr. Bowles: It could be 35 years down the road. They dont have the Convention Center contract or the TEE Center contract so why would we want a wall between the two? You see where Im going? Mr. Plunkett: Yes, sir and let me get a response back to you. Mr. Bowles: The last one is that we deposit the $250,000 in the operating account and $100,000 in the capital improvements account. If they lose $200,000 the first year, where is that $200,000 coming from? Mr. Plunkett: Augusta. Mr. Bowles: Specifically where is that $200,000 coming from? General fund? Are we trying to get it from alcohol sales tax? Mr. Plunkett: I dont know that answer. I can talk to Finance to see
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Mr. Bowles: Fred. Mr. Russell: The initial response would be General Fund (inaudible) Mr. Bowles: Youve got an optimistic outlook for next year. Much more optimistic than I do. How much money are we giving to the CVB for marketing because it almost sounds like weve got two groups marketing and those funds could theoretically be used to offset the losses and thats where Im going with that. Mr. Plunkett: The issue with that is that there was a debate for lack of a better word over whether it would be appropriate for CVB or the Marriott group to market and it was decided that it would be better for the CVB to do the marketing. That is something that could change over the life of the annual plan. If it was determined that theres losses, you could change who did the marketing of that. Thats why we have the flexibility of the annual plan to allow for things of that nature. Im going to put down as a second question is sources of covering any losses. Mr. Bowles: And the last question is is the room block agreement, Ive been told thats now a separate document? Mr. Plunkett: We can, basically in the annual plan, at the 07 agreement there was to be a room block agreement. That would typically be a contract between the manager and the CVB as opposed to Augusta. It is something that if this body feels that it should be, I dont think its a problem adding this to the management agreement but it was a contract, it would be one of the contracts that the manager would sign relative to the operation of that. Again, its a fifteen year agreement that could roll up to 45 years whether or not 30 years from now room block agreements are (inaudible) or not it was to allow the flexibility to have it or have it not but if the CVB or this body feels that it needs to be in the agreement, I think we could put that into the document if you want it to be in there. Mr. Bowles: I remember it being vital in the discussions four years ago. Mr. Plunkett: It has never been off the table. Its always been part of the obligations under the 07 agreement. Mr. Bowles: All right. Thats it. Mr. Plunkett: Is it a directive to put it in the agreement? Mr. Bowles: No, just to keep it on your mind because it might be something that might need to be added. Mr. Plunkett: What well probably do is provide a copy of the room block agreement to the body as well. Mr. Bowles: Okay.
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Mr. Hatney: On Article 9 it talks about insurance and the combined single limit per occurrence on the $3 million dollars and with the facility that could hold that number of people, $3 million dollars is not that much money in view of the fact that this body has the liability. Thats a small amount of coverage for that amount Mr. Plunkett: I can certainly ask Risk Management what they think is the appropriate number. Mr. Hatney: Okay, I appreciate that. $3 million dollars aint no money for that kind of stuff. Mr. Aitken: The marketing component of this, it seems like there is kind of a little disagreement on what, on how we should market this as far as naming. What are we going to do to come to terms and what we should do and how we should do it because I think marketing is one of the tools that weve got to Mr. Plunkett: You have a conference center, you have a big block facility that we refer to as the TEE Center, altogether is a convention center. How that is put out there on the market, in other words if I type in I need a convention center, would TEE Center show up? Theres obviously a branding issue. Columbus has a name for theirs. Athens has Classic Center but its not marketed as the Classic Center, its the Athens Clark County Convention Center. I think thats the fundamental issue. Mr. Russell: I think what youve got is a continuing discussion but I think youve got a targeted market there basically. It seems to me that the Marriotts advertising in their worldwide brochures of our convention center is going to attract a certain amount of people. In addition to that my general explanation of that is when you go fishing you take several kinds of bait with you. I think if this CVB markets the big box in a certain form everything comes with it together. The real issue in my mind is getting these two people to agree that their marketing strategies are complementary and not contradictory. Weve got a great facility, weve got different aspects there and at the end of the day, were marketing the total package. Very few people are going to come just for the big box. Some might and we need to be able to attract those. But hopefully theyre going to come for the big box, the conference space that goes with it and the hotel rooms that are not only going to be at the Marriott but other facilities in our city. A fine example again is the Ironman we just had. That did not just fill up the Marriott. It filled up lots of hotels in our city. The conversation I had with the people that did that are excited when they look at that new space because the first thing they told me was we can double the amount of vendors if we get here because weve got space to put them. So I think we need to make sure that is complementary and it would seem to me that at the end of the day this body or if directed by this body I would be the arbitrator of how that discussion goes. Mr. Aitken: Ive got one last question for Darryl too. Mr. Simon: Ive got something for what he just said. The Marriott wont market this as a Trade Center. Its not in the way they do things.
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Mr. Aitken: Thats what Im trying to see how do we get that Mr. Darryl Leach: Its kind of a long story so just give me a couple of minutes. It was nice to build this thing under the acronym TEE Center and Golf and Masters Golf kind of made sense to everybody local. People that buy convention space understand convention space. They dont understand TEE Center. When I got involved with the Marriott officials, Bob Jones, Barry White and myself, Bob Jones said Marriott will not support the name TEE Center. We wont use any of our marketing ability to support it. So we had to officially change our name at the time, two years ago, to Augusta Marriott at the Convention Center because they told Barry and me that they would support the convention center. And I would think we would want Marriotts support because theyre the ninth largest retail website in the world. They have 35 million Marriott rewards members and they have 3900 properties worldwide and I think its a mistake or misdirection to say that Marriott for 80 years has spent hundreds of millions of dollars on hotel rooms and convention space and were going to take it and try a new brand called TEE Center. I dont think thats a good direction; I think thats a waste of money. I think if we channel the money through the Marriott system and through us and we have been your partner for 20 years and weve given you more than a reasonable return on your investment as Paul has shown you several times. I think this is really the strategy we need to adopt and Im open for questions. Mr. Mayor: So youre saying rather than use the CVB for marketing, use the Marriott for the total marketing plan? Mr. Leach: Weve done it for twenty years. I dont know why we changed that strategy but we did. Mr. Hatney: This is kind of unique because I think this is the second or third time weve gotten out here in this and then all of a sudden we are bound to do something different because of the Marriott. A good example was the space that we would increase all of that, it was all because of the Marriott. My concern is if yall have been doing business this long, look like somebody could have brought that forward early on. Then we wouldnt be asking all these questions because you sit there and tell us what the Marriott was doing for eighty years, it doesnt mean nothing to me, not when somebody, you already knew this and allowed us to go ahead on with that, thats my concern. When you talked about that air space or whatever that was and it met the Georgia Code but it didnt meet Marriotts code, it looks like to me somebody should have found all that out before it came to us. Mr. Leach: That information has been available for over a year and a half. Thats not new information. The CVB had that Mr. Hatney: Well, its new to me. It might not be new to the rest of yall. Thank you. Mr. Aitken: Mr. Mayor, with this being a new center, youre more the grass roots guy up here because you deal with people every day in the business aspect of it, I always thought that this would make Augusta competitive in some of the opportunities that we havent had in the past. What is your take on where were going and with the market? We know its soft right now
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but there are other ways and this is going to be a draw for Augusta because I know its going to impact our downtown merchants. Mr. Leach: Well, actually its not soft and quite to the contrary, we have fifteen booked events and we have an enormous amount of people that are interested in it. I think when you take a Half Ironman like we just had and they came through and they said Wow, this space is terrific. This is exactly what were looking for. And like Fred said, they had dollars signs in their mind. They can double the vendors. We can increase the participation and its already the largest in the world. Were going to do a Mary Kay show thats very big and several others that are on the books. This is only going to help the city. The economic impact that this center will have in this community, I think, is going to be significant. As far as the naming goes, if I could just touch on that for one second, you know, weve grown as a city and weve grown as a product. Conference center in our business terms means this. Convention center means this. So it makes sense for the term conference center to go away, which weve done internally and in all of our documentation, our signage and our naming. We only refer to ourselves as the Augusta Marriott at the Convention Center because convention center is a big box marketing opportunity and in fact, we have a regional sales guy from Marriott here today touring the center. We gave him a tour before this meeting and hes extremely impressed and now we can use that ninth largest retail website muscle to help us go get new business. I think we can all come to terms of that s what it is, thats the name on the building, lets move forward. Well sell it. Mr. Aitken: With that being said, where do we go from here, Fred? How do we figure this out and this is the point where we need to move forward and how do we come together on what we need to do? How do all the parties agree to that is we promote our city in a way thats going to bring us to a lot more economic stability for the city? Mr. Leach: I think that I made the case pretty fairly. We know what we are. We know what we sell and we know what our customers buy and thats where were at. If the CVB wants to change direction or change strategy, try to rebrand it, thats certainly the citys decision if they want to do that. To me it doesnt make a lot of good sense but thats where were at. Mr. Russell: I think Darryl summed it up fairly well. Thats your decision. I think we tried to walk a line between the two agencies as I do on a fairly regular basis. I walk between two disagreeing points but at some point, Im not as convinced as Darryl is that theres a market outside of the TEE Center nomenclature that they could attract. I am fully convinced that we need to use the convention name to make sure that we take full advantage of the Marriott opportunity, the brand and whatever. Thats going to get us in a lot of different stuff that locally we will never be able to touch. We couldnt afford how much thats going to bring us basically. If this group wants to decide that thats the focus that the CVB takes, thats something that you share with me and well be more than happy to tell them that. I think if they were here, they would have a valid argument that the local people and the local community have heard about TEE Center for the last seven years or so and youre going to get some local stuff out of that. When the rubber meets the road, youve got to look at whats going to bring us the most business and how you channel those dollars. The decision that was made several years ago to let the CVB do that, theyve walked down a path but generally speaking and as Dr. Hatney has said on more than one occasion at the end of the day its yours so you get to call it what we want to call it but
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we need to make sure that we take full advantage of all the opportunities there and to move away from the convention name and I think wed be just slamming the door that we dont want to slam. I think thats the way we need to go. The TEE Center, I think its got a slot too but if I was going to have $10.00 Id put less in marketing the TEE Center and more in marketing the Convention Center itself simply because once you get past our newspaper area, once you get past that its cute but the guy in Dallas is looking for a convention and when he types in that, he gets three reams of conversation about what we want to do as opposed to what they can actually put there. Mr. Mayor: We have not been good in this community about compromising, about give and take and about playing well in the sandbox together. I think it holds the community back. Weve got to compromise. It is not us and them, its all us and it behooves us to work together in situations and not have it be all or none, lets come up with some compromises and move forward and my personal opinion, whats best for the city overall. Corey. Mr. Johnson: Fred, I would just like to reiterate on that. I think we all know where we want to go and I think we all have the same concept of how to get there. Why is it seeming impossible for the, and Im on the board of the Convention & Visitors Bureau, I dont think it is farfetched for them to say, yeah, we can market the Convention Center versus the TEE Center because the TEE Center, it is a notion that some people are not familiar with. It makes better sense to say Convention Center versus TEE Center so have yall had any dialogue? From what I understand I dont think they have any issue with that. Why cant we just let them market from the same perspective as the Marriott is doing it because I dont think they need not to do any marketing from the, thats their job to make sure that they show what the city have to offer and thats one of the entities that we have to offer and our newest asset but why is it farfetched for them to come to an agreement? Mr. Russell: I think that they as a group have hung their hat on the word TEE Center for a long time. Weve done that and you know how hesitant we are to change anything around here. Thats what was built and thats what we talked about for years and years and years. There comes a time to make a decision and maybe thats a conversation that you as our representative and Jerry on the CVB board need to bring forward to them. I think youve got to look at the totality of what were doing here and the open box part will forever be known locally as the TEE Center. Theres no doubt in my mind. Even despite Pauls wishes, he calls it that every time he talks about it. Even though he bites his tongue every time he does it after it comes out. At the end of the day were marketing something that is bigger than the open box. Were marketing something that is bigger than the old conference space and were marketing something that is bigger than the hotel itself and thats an opportunity for people to come to Augusta that couldnt come before because now we have a resource thats better to meet their needs. Mr. Mayor: And Ill just say that we have been a city thats had a reputation for infighting which I say has held us back. Were the second largest city in Georgia and we need to act like it. Mr. Guilfoyle: Mr. Plunkett, in the contract it clearly states that by the 15th of each month the government, Augusta Richmond County is required to make payment to the
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management company and to the catering. It also states that it will be the revenues funds will be put in either one or more checking accounts. Now, as far as the checking account, will it be in Augusta Richmond Countys name or will it be in the management? Mr. Plunkett: It will be in the name of the management, my understanding, Im not an accountant, but it involves the audit issues if its in Augustas name and the audit requirements that oppose that because its rolling into their name. The practical thing is there would be a check cut by the manager to themselves for their management fee for the month so its not, its kind of a back and forth at the end of the day if theres money in the checking account to write the check, they do. If theres not money in the checking account, Augusta has to shore it up. Mr. Guilfoyle: Well, you would hope it would be putting in $350,000 a year. Mr. Plunkett: Well, its $250 and a hundred, theres two different funds there. Part of that is the idea with capital accounts not be funded such that when it comes time to do something to upgrade, theres no money available. Thats why thats there. Mr. Guilfoyle: I appreciate you answering that one question. In the contract were doing an annual report and this government body had just sent out an RFP on a golf course and in it it clearly states monthly reporting. Naturally I wouldnt want to do a monthly report and no different from my business, I do a quarterly report and just to see where Im standing and if I need to make any adjustments that are necessary, I could do it. Is there any problem about having that implemented in? I guess that would be a Paul and Rand question. Mr. Plunkett: I was thinking it was quarterly. Mr. Guilfoyle: It is quarterly? Mr. Plunkett: 7.7B. Mr. Guilfoyle: Okay. I knew when I was coming to this meeting I only had the time just to proofread it, it would get me in trouble. Mr. Plunkett: As far as the management agreement its the same as the parking deck except for the areas that were highlighted. Mr. Guilfoyle: The only other thing I need from you is the original TEE Center agreement, core agreement and you can e-mail that to my colleagues and me and Im done. Mr. Plunkett: If I can address the TEE Center core agreement. The TEE Center core agreement was adopted in 09. It really addressed the issues of how to build the facility and some reciprocal easements. For some reason that document is not in the body of the Clerks Office. I dont know why it was distributed out but its not there. To avoid any suspicion or whatever that why that didnt happen, if you look at the TEE Center reciprocal easement agreement, it addresses all of the pertinent long-term issues that were in the core agreement. I will provide you a copy of it but that document supersedes the core agreement and this way we
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have reciprocal easements, reciprocal supporting easements and maintenance issues and one new document that would be recorded. So that way there wasnt other, some hanky panky or anything thats being changed hands. Theres a cleaner document that just addresses postconstruction status and thats what this other document that you would have seen, this document here. This is the document that supersedes the core agreement. Ill be happy to distribute it out so that you can see the two documents. Mr. Guilfoyle: Thank you. Mr. Brigham: Mr. Mayor, I think this has been beneficial and I think most of my questions have already been answered. Mr. Mayor: Anybody else? Okay, gentlemen, thank you for taking the time today and commissioners, thank you for your questions. I think we moved the ball down the court and I think this was a very good work session, very productive. Thanks, everybody. ADJOURNMENT: There being no further business, the meeting was adjourned. Lena J. Bonner Clerk of Commission

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