Commissioners discuss financial backing for convention center hotel

Notes

Scene

The meeting was held, as it is normally, in Room 603 at the Todd B. Portune Center for County Government, 138 E. Court St., in downtown Cincinnati. Spectators and presenters were in attendance, as were the three commissioners, an assistant county prosecutor, county administrator, assistant commission clerk and chief clerk. The commission’s YouTube feed began at approximately 10:04 a.m. The meeting adjourned at 10:45 a.m.

Commissioners present

• Denise Driehaus, commissioner
• Stephanie Summerow Dumas, president
• Alicia Reece, vice president (running late)
• Jeff Aluotto, county administrator
• A representative from the prosecuting attorney’s office

Approximate time spent during the meeting 

• 41   minutes:  Headquarters Hotel Update (Convention Center)

Summerow Dumas opened the meeting by asking the room to join her in a moment of silence to recognize the Rev. Jesse Jackson, 84, who died Tuesday morning in Chicago.

Agenda

The agenda featured one item:

ITEM 1. Headquarters Hotel Update (Convention Center)

Paula Boggs-Muething, 3CDC chief operating officer, came before the commissioners’ staff meeting to ask the commission, at its regular meeting Feb. 26, to approve the following:

• An exemption and pledge of County Transient Occupancy Tax (TOT)
• Authorization of the Hotel Development Agreement
• Authorization of the Cooperative Agreement between the Port Authority, City of Cincinnati, and Hamilton County for the issuance and sale of revenue bonds

Boggs-Muething said 3CDC oversight of the general contractor helped produce $14 million in savings on convention center construction costs (projected to be $264,069,362) – $10 million of which will be committed to the 700-room Marriott convention headquarters hotel (projected cost: $499.5 million) planned for 2028 on Fourth Street, just south of the First Financial Convention Center, and $4 million to the renovated convention center garage (projected cost: $28.21 million) to the east of the hotel.

The $14 million in savings will release the county from an annual $275,000 commitment over the life of the project, Boggs-Muething said.

Driehaus said she is grateful 3CDC recognizes the importance of including minority and women business enterprises in the hotel project — MBE (20%) and WBE (10%) – with an aspirational goal of 25% MBE and 15% WBE. “[The] hotel developer will use best efforts to include minority and women investors for the equity portion of financing for the hotel project,” according to a digital presentation shown during the staff meeting.

“That was important to me as we talked about who would be working on the convention center and the headquarters hotel . . . ,” Driehaus said. “We are trying to hit a couple of different goals here . . . . We want to make sure the people that are building that hotel and working in that hotel are reflective of the community, and so the goals are important.”

Reece, when asked for her reaction to 3CDC’s request, said she is concerned the hotel now seems to no longer be a priority.

The county is not making any money on the site of the former 800-room Millennium Hotel on Elm Street that was razed (the county spent $53 million on the tear down), she said, because it will be replaced with the 700-room Marriott on a different site. She also has issues with a document from FIFA officials, signed by the county administrator, promising that a hotel would be finished by 2026 in time for the World Cup. Greater Cincinnati officials submitted a bid to host tournament games but were rejected.

“Thank God we didn’t get the FIFA World Cup,” she said, because now that the headquarters hotel won’t be finished until 2028, the county will not be able to cash in on other events or conventions planning to come to Hamilton County between now and 2028.

The county is giving up future revenue, she said, specifically $3.13 million a year in the county hotel/motel tax also known as TOT (Transient Occupancy Tax). Reece said 3CDC officials have told her there will be no profit from the Convention District for at least 30 years.

TOT money from other hotels in the county go into a fund the county uses to pay down debt for Community Development Block Grants (CDBG), the Black Music Walk of Fame, and other committed debt. According to the Convention District financing plan, all tax revenue will be going to pay for the convention center headquarters hotel.

Reece said all she wants is a clause added to the financing plan that protects the county should the economy sour or if a consultant says the funding model won’t work. Two funding models should have been run, she said, one to protect taxpayers and another from consultants finding that the deal can be done as structured.  

“I’m not the rubber-stamp-type of person,” she said.

Boggs-Muething said the hotel has already started to drive a lot of new interest and traffic to the convention center. She said 3CDC and Visit Cincinnati see a “considerable increase” in the number of room stays. She admitted 3CDC struggled with balancing the right kind of financing structure to have the county put up money on the front end of the project and float bonds of interest to investors.

“What I wanted to do is not put money on the back end” of the deal, Reece said, alluding to the struggles with tourism in Las Vegas. “We’re tying the hands of future boards” of county commissioners, she warned.

Aluotto said he understands the county wants to be as flexible as possible, but telling a potential bond buyer that the ability to repay bonds is dependent upon an outside metric will drive up the cost of bonds or prevent people from wanting to buy the bonds. The headquarters hotel and renovated convention center will do more than redistribute rooms, he said, they will grow the financial pie in the convention district.

Driehaus said she wanted the public to understand that funding for the Black Music Walk of Fame and other projects is being backed by county parking revenue.

Summerow Dumas closed the meeting by saying she is pleased to see the convention headquarters hotel in the plans and is happy about the attention being paid to participation by minority and women businesses.

“Build it, they will come,” she said of the headquarters hotel.

Public Comment: There was none.

The meeting was adjourned at 10:45 a.m.

If you believe anything in these notes is inaccurate, please email us at documenters@signalcincinnati.org with “Correction Request” in the subject line.

Find more Documenters’ notes here.