Whenever Paul Simon, president of Augusta Riverfront LLC, presents a proposal to the city of Augusta, he never expects it to be easy.
In fact, Simon says he has become accustomed to preparing for an uphill battle.
But the one thing the 84-year-old businessman does ask for when pitching a proposal before the Augusta Commission is a fair shake.
That’s why after reading an Insider column called “The Return of Paul Simon” published by the Metro Spirit a few weeks ago discussing his new proposal to expand the Augusta Common and build a new 130-room hotel, Simon requested a meeting to set the record straight.
Simon insisted that he wanted to correct what he strongly believed were “misleading” and “inaccurate” statements in the Insider about previous deals between the city and Augusta Riverfront LLC, a company owned by William S. Morris III, publisher of The Augusta Chronicle.
“This story right here would lead people to say, ‘Lookout. Here he comes. He has another pitch. You better watch him,’” Simon said, referring to the July 25 column. “Well, I’m not that kind of person. I’ve done deals all over the country with all kinds of people and I would say to you, there will be no criticism of me. They will say I negotiate hard, which I do. But I’m not going to lie, I’m not going to cheat and I’m not going to steal. That’s for sure.”
As Augusta natives, Simon said he and Morris only want what is best for Augusta-Richmond County.
“I was born and raised here in Augusta. My career was built here in Augusta,” Simon said. “Billy Morris was also born here. We love Augusta and we want the best for Augusta. We want to see Augusta to continue to grow.”
While Simon wanted to discuss his new proposal to expand the Augusta Common, he also wanted to specifically address the details surrounding the partnership that was formed in 1989 between the city of Augusta and Augusta Riverfront.
In a two-hour meeting with Simon, he went through stacks of paperwork relating to the more than 25-year-old partnership that developed the original $43 million Augusta Riverfront Center along the Savannah River.
Simon explained that, in the late 1980s, then-Augusta Mayor Charles DeVaney, along with Augusta Tomorrow and Monty Osteen from Bankers First, put together a team to build a hotel, conference center and office building on the river.
The city managed to obtain a $7.56 million Urban Development Action Grant (UDAG) from the federal government that could be used as a 30-year, non-interest loan for a project to create jobs.
“In 1988, Mayor Charles DeVaney asked us to come to a meeting, Billy Morris and myself,” Simon said, adding that DeVaney presented them with the plan to building the hotel and conference center. “Well, we were not in the hotel business. We didn’t have any interest in that. But they asked us to come to a meeting and, at that point, they had put together a group of businesspeople, Monty Osteen and some others, and they had a city planner, an advisor and a developer out of Atlanta.”
Back in 1988, Simon said receiving any kind of financing from banks for hotel projects was extremely difficult.
During that meeting with DeVaney, Simon said they were told the city was in danger of losing the UDAG loan due to lack of sufficient funding for the project. If the city lost the UDAG, the proposal for the hotel and conference center project would have to be dropped.
“UDAG was a federal program and it was one of the last ones that was obtained by a city,” Simon said. “It was a federal program to loan the city money if they were going to do something with a project to create jobs. The city asked us to get involved because they were going to lose the UDAG grant and they couldn’t make their plan work. We got involved and came up with a different approach.”
This approach included pre-leasing most of the 140,000-square-foot office building along the river and offering partnership interest in the project, Simon said.
“Billy Morris agreed to take 40,000 square feet of office space that we didn’t even need,” Simon said. “So, with the pre-leasing of over 100,000 square feet in this building, including the city of Augusta, that made the hotel work,” Simon said. “We had to use the power of our bank accounts to get the bank to loan us $17 million. That’s how we put the project together. The city put up $9.9 million, the UDAG grant put up $7.5 million, the partners — which I brought some other partners into the deal — they put up a total of $9 million.”
That deal made the construction of the hotel, conference center and office building along the river possible, Simon said.
“The total project was about $43 million,” Simon said, adding that the conference center, which is actually attached to the Marriott, is owned by the city. “When you walk into the hotel and go upstairs and start walking through the hall, you’ll pass a door and a firewall. That’s where the city’s property starts. The city was responsible to build a conference center and the parking underneath.”
Simon insists that he and Morris weren’t sure how they would fare in the deal.
“We had never been in the hotel business,” said Simon, who is the former president of Morris Communications Co. “We were in the newspaper and the media business. We didn’t know how it was all going to work out. But it turned out, we were successful with it.”
By 1999, Simon said it was time for Augusta Riverfront to consider building another hotel and looking into expanding the city’s conference center.
The Metro Spirit’s Insider column stated Simon asked the city to “forgive” Augusta Riverfront of the $7.56 million UDAG loan in order to construct a new hotel and extend the city’s conference center.
Simon said that was not the case at all.
“We agreed we would prepay the UDAG,” Simon said. “What we said to the city was, ‘We would like to add another hotel, which increases your hotel/motel taxes and your property taxes. In exchange for that, we want you to expand your conference space. Now, I know you don’t have the money, but we will provide the funds to pay for that. The way we will do that is we will prepay the 30-year commitment on the UDAG grant.’”
In 1999, Simon said that Augusta Riverfront had 23 years remaining to pay off the loan.
“So then the question became: What is the value of the UDAG?” Simon said. “It is not $7.5 million if you understand present value of dollars, right?”
Augusta Riverfront negotiated with the city of Augusta and agreed to pay $3.25 million in order to prepay the UDAG loan. Since those funds had been held in escrow and gained interest, the city received a total of $3.63 million.
However, that money was reinvested to expand the city’s conference center attached to the Marriott.
“Augusta Riverfront constructed, on behalf of the city, an expansion to the city’s conference center, which was completed in 2001, at a total cost of $6,051,000,” Simon said. “The conference center expansion was funded by the city with $3,630,000. So the remaining $2,421,000 in construction cost was funded by our company. So my commitment to the city was it won’t cost you more than the money we are prepaying for UDAG. We spent the additional $2.4 million for the expansion. So this business about us getting the UDAG free is totally wrong.”
Back in 2005, about $20 million in funding for the convention center was approved by voters in a Special Purpose Local Option Tax referendum.
But plans were delayed for years after an analysis revealed $20 million in initial funding put in place through a SPLOST program was nowhere near enough to fund the construction costs of the facility.
It wasn’t until February 2013 that the city finally held its grand opening of the $50 million center on Reynolds Street.
The convention center, which is managed by Augusta Riverfront, features 38,000 square feet of exhibit space and 49,000 square feet of adjoining meeting space.
The city’s 15-year management agreement with Augusta Riverfront authorized the private company to receive $84,000 a year as a management fee and $48,000 a year for catering.
“It took us about eight years to end up with what we’ve got over there now,” Simon said of the convention center and parking deck. “And it’s been a success.”
In its first year, the city lost approximately $535,000 in the convention center, but it made a profit on the two parking decks of almost $130,000.
Therefore, the city ending up losing about $400,000, Simon said.
In comparison, Athens’ Classic Center costs its city nearly $1.5 million each year, said Darryl Leech, the general manager of the Augusta Marriott at the Convention Center.
“We had told the city that it was going to lose probably $900,000 that first year,” Simon said. “So we did much better than we thought.”
However, in exchange for that loss, the city received an economic benefit of more than $10 million in the convention center’s first year, Simon said.
“That is huge when it comes to the city,” Simon said. “That is a success story.”
Leech said more recent numbers show that the convention center, with more than 44 events last year, had an economic impact of $11 million in 2014.
“So, now we feel it is time again to expand,” Simon said.
After reviewing its options, Augusta Riverfront came up with the idea of extending the Augusta Common from the Savannah River to Ellis Street and building a 130-room hotel at the former site of the Augusta Police Department and city jail building along Reynolds Street. The property is owned by local businessman Barry Storey of BLS Holdings Group LLC.
“Now, we don’t have to put a new hotel here,” Simon said, pointing to a map featuring the old jail property on Reynolds Street. “Daryl (Leech) wants to put it up on property we own along the Riverwalk because then the hotel has a view of the river. But I want to put it at the old jail. Why? I want to use the hotel to clean up more of downtown Augusta. This is a one-time opportunity to do it. If we don’t do it now, I can’t guarantee that this property would ever be available.”
But along with August Riverfront agreeing to construct a new hotel, Simon is asking for the city to use SPLOST funds to expand the Augusta Common from the river to Ellis Street and perhaps purchase the Kress Building owned by local businesswoman Bonnie Ruben.
Simon said it would be ideal if the Augusta Common is extended and Augusta Riverfront could eventually develop a new Morris Museum of Art at one end near the Savannah River and the city could build a museum to honor the “Godfather of Soul,” James Brown, at the other end.
“In the proposal I made to the city, we want to get money from the SPLOST, not to pay us anything, but to develop the river, the landscaping and use some of the money to buy Bonnie Ruben’s Kress Building,” he said. “All that open space would be wonderful for Augusta.”
Simon is also requesting that the city agree to expand the existing parking deck and build two elevated pedestrian bridges connecting the garage to the new hotel and the convention center.
“The expansion of the parking deck and the crosswalk would be bonded,” Simon said. “And we would commit to 50 parking spaces every day, which means we would be paying $150,000 a year in parking.”
Again, Simon insisted that this proposal was not to benefit Morris or Augusta Riverfront, but to improve downtown Augusta and help make crossing over to the convention center much safer for pedestrians.
“We are taking the risk,” Simon said of the hotel project. “We don’t know if that is going to work. But we think it will.”
Simon said this proposal is like many of the other ventures that Morris and/or Augusta Riverfront have developed in Augusta over the years.
“Billy Morris is criticized a lot, but the company and Billy Morris have given more to this community than anybody else,” Simon said, adding that he has personally chaired campaigns for Augusta State University, Historic Augusta, the former Georgia Golf Hall of Fame, The First Tee of Augusta and the former National Science Center that raised millions of dollars for those projects and entities. “We bought the former mall (along the Riverwalk) for $2.2 million, raised about $5 million and got the state to give $10 million for the exhibits in Fort Discovery. The company, Billy Morris, gave that property to the National Science Center. But he doesn’t get credit for that and it’s too bad.”
“The company and Billy Morris has really given back to the community,” he added. “However, they don’t get the credit.”
But the truth is, if the city and the community don’t support such projects, they can’t last, Simon said.
“The National Science Center was a wonderful thing for kids,” Simon said. “The Georgia Golf and Gardens was beautiful. But we lost all of it. And it’s a shame because if you go anywhere in Europe, there are gardens all over the place. And here we are the Garden City and now those gardens are gone.”
Several years ago, the company also encouraged the city to possibly build a new civic center at the former Regency Mall location in south Augusta, Simon said.
“The company even bought the hockey team,” Simon said, chuckling. “We weren’t interested in hockey. Good gracious. I didn’t know anything about it. But we bought the hockey team, ran it and lost money, all because we hoped that a new civic center would work. But we couldn’t get the traction we needed to make it happen.”
In the end, Simon said the city needs to look at the big picture and consider this new proposal as another opportunity to expand and improve downtown Augusta.
“This is a good proposal,” Simon said. “I’m 84 years old and I want to get this project done at least during my lifetime. I got one more deal in me, so let’s do it.”