The Hotel That Never Was

Artist’s rendering of the proposed Hyatt Place hotel

Tuesday, Feb. 14, 2012
Augusta, GA

Donated land was not the only promise broken in the TEE Center and Parking Deck debacle. Some people may remember that the promise of  a $25,000,000 Hyatt Place Hotel was a major selling  point more than two and a half years ago to force commissioners to act on approving the TEE Center and Parking Deck deal. We have this Augusta Chronicle article from August 11, 2009 that shows how Julian Osbon and Courtland Dusseau were essentially issuing an ultimatum to commissioners: Approve the TEE Center and Parking Deck or the city loses the hotel. The TEE Center and deck were eventually approved on Dec. 9, 2009.

It is very clear that the hotel was being used as a bargaining chip to get the TEE Center agreement passed, which in August of 2009 was at an impasse. In the article, Julian Osbon, who owned the land where the hotel was to be built said, “I don’t think all the people understand the consequences. I wanted to make sure that if we did lose the hotel, that everyone had an opportunity to consider the possibilities.”

Osbon, also sent a letter to commissioners and the Mayor that expressed this same sentiment, urging them to approve the TEE Center or they would lose the hotel and lose what he estimated being a $215,000,000 25 year economic impact to the city. Osbon also sent out an URGENT COMMUNITY ALERT (see 2nd pdf at end of article) to elected officials and business leaders essentially telling them that the only thing holding back construction on a new $25 million hotel was an agreement over the TEE Center. He also goes into a lengthy diatribe excoriating the black commissioners who he believes were holding up progress on the TEE Center, reserving most of his venom for Dist. 1 commissioner Betty Beard.

“Perhaps Commissioner Beard does not understand that revenue producing venues such as a successful convention center is where the money will come from to revitalize the Laney-Walker and Bethlehem neighborhoods which are her pet projects, but are unfortunately in another Commissioner’s district.   It appears that District One voters have been ignored by our elected representative.”  

You must remember that 2009 was an election year and Beard’s seat was coming up for reelection. It appears as an obvious political threat towards Beard:  Vote for the TEE Center or pay a political price for not doing so. Shortly after this URGENT COMMUNITY ALERT went out, Beard decided not to run for reelection. Ultimately, Matt Aitken, a pro TEE Center candidate defeated Bill Fennoy in a run-off and took office. After his election win, the TEE Center agreement was approved just days later.

Osbon also issued a deadline of August 31, 2009 to commissioners to approve the TEE Center agreement saying in his Community Alert: “But August 31st is an important date for me. It represents the time to “draw a line in the sand,” I invested in my property at a time when it was very questionable as to whether or not it was a wise thing to do. As mentioned above I have held the property for more than a decade primarily to insure the best use of it by the community. Yes, I will make money if the hotel closes on it. And probably I will make more money if they do not. My property is the key piece in any development in the Common area and will easily increase in value. But nothing will bring more value to Augusta than the proposed Hyatt Place Hotel.

 

Osbon’s self-imposed August 31st deadline for an agreement on the TEE Center was extended when things got even more complicated when revelations emerged that two commissioners were allegedly offered bribes by local attorney David Fry. That news came out about the same time as Mr. Osbon’s date for “drawing a line in the sand.” And complicating matters further is that one of the commissioners who was approached in the alleged bribery attempt, Alvin Mason, revealed that he was receiving political threats back in May of that year from a prominent local businessman, Joe Edge, the President of Sherman and Hemstreet Real Estate Company, who ironically was handling the sale of the land for the proposed Hyatt Place hotel. This Sept. 15th, 2009 article by Johnny Edwards  that appeared in the Augusta Chronicle gives more details about this political threat.

Alvin Mason released excerpts of the email he received from Mr. Edge. Here is one of the more interesting lines: “I own real estate in your district, and I will do everything I can to ensure you don’t get re-elected if the commission does not change their mind.” (referencing the stalled vote on the TEE Center). The May 28th email references the proposed Hyatt Place hotel, which was not made public until August of that year when Osbon began issuing his ultimatums to commissioners.

The hotel had now become a focal point in the debate over the TEE Center and commissioners were being urged and in some cases politically threatened to change their votes on it based on the promise of this Hyatt Place hotel and its supposed  $215 million 25 year economic impact on the city.

The First Signs of Trouble

So now let’s fast forward a few months to January of 2010. The TEE Center and its companion parking deck have been approved and plans are underway to begin construction. We have this  January 20, 2010 article in The Augusta Chronicle by Tim Rausch that seems to indicate that the hotel was moving forward. Courtland Dusseau, a managing partner of Alabama based Legacy Hospitality, LLC, the developers of the hotel said, “We’re working on budgets today. We’ll have the business plan, financial plan put together by tomorrow and start meeting with bankers. We were concerned about when the TEE Center was starting. As long as it’s gonna happen, we’re fine.” It was even expected that the hotel would be open a year before the TEE Center. But here we are in 2012 just six months from the expected opening of the TEE Center and there has not even been a ground breaking for the hotel.

But in that same January 20th Augusta Chronicle article we had our first warning that this hotel may not ever happen. In the article, Dusseau admitted that he had no time line in place for ground breaking and had still not secured financing for the project. He was hoping that a grant from the OneGeorgia Foundation would help him secure other financing from local banks. So now, something that seemed like a sure thing once the commissioners signed the dotted line approving the TEE Center was up in the air. And it was a little more than ironic that Mr. Dusseau could not give the public a date for groundbreaking when commissioners were being issued a deadline just a few months prior to approve the TEE Center, based on this hotel. We have to ask, Did commissioners ever bother to get anything in writing from Mr Dusseau prior to voting to approve the TEE Center project on Dec. 9, 2009, that he did indeed have guarantees for financing the hotel  if the TEE center project was approved and built? Just like the supposed promise to release the liens on the property where the parking deck sits, getting things in writing before voting on something is always the smart course of action. But it does not appear that commissioners have learned from past mistakes.

Time Goes By

Months and months passed and still there were no announcements of when there would be groundbreaking for this Hyatt Place hotel. Then we have an Augusta Chronicle article from October 5 2010 telling us that the project was indefinitely delayed because of issues of securing financing. Mr Dusseau told Augusta Chronicle reporter Tracey McManus, “In today’s economic climate, it’s just really hard to get hotel financing. It’s just a matter of time.” A matter of time? Like the next century? While commissioners were being rushed by Mr Dusseau and Julian Osbon just a year earlier to approve the TEE Center project because of the immediacy of this hotel… now he was taking his own sweet time to secure financing. We have to ask… shouldn’t the guarantees for financing have been secured before Mr Osbon started issuing ultimatums to commissioners over this hotel?

Then, in December of 2010, Dusseau was coming to city leaders with his hands out. He was hoping the city would lend its credit to help him with financing his 139 room Hyatt Place hotel. This Dec. 13, 2010 Augusta Chronicle article by Susan McCord gives more details. City Administrator Fred Russell declined the request saying that the city didn’t need to be in the hotel business, but two new levels to the TEE Center Parking Deck were added around this time. It is not clear if that was motivated to help Mr Dusseau secure financing for the hotel.

A 2009 parking study did reference possible future development as one of the justifications for building a parking deck rather than less expensive surface parking. In that study, which was released in October of 2009, two options were recommended to satisfy expanded parking needs for the TEE Center. Option 1 was a much cheaper surface parking lot along 9th street at The Riverwalk. The second option was building a 400 space parking deck across Reynolds Street. Were city leaders compelled to go with the more expensive deck option because of the promises being made by Mr Dusseau and Osbon of another hotel being built directly across the street? We will have more on this in an upcoming article.

But my how things had changed. What was being presented as a $25 million gift to the city of Augusta by private developers just little more than a year earlier was now being pitched as something that the city should go into millions of dollars in debt to get built.

In a 2009 Letter to the Editor in The Augusta Chronicle, Julian Osbon called approving the TEE Center a “no-brainer”… and he once again referenced this hotel saying, “Does anyone really think the Hyatt Hotel Group would put a new $25 million facility in downtown Augusta without doing their due diligence?”

 

Due diligence? Like securing financing upfront? Perhaps Mr Osbon should have done his due diligence by getting assurances from Mr. Dusseau that this hotel was a sure thing as long as the TEE Center was approved before he started issuing ultimatums and deadlines to commissioners and firing off snarky letters to the editor and issuing his URGENT COMMUNITY ALERT.
Commissioners were pressured to approve the TEE Center partly because of this hotel and it appears by all accounts, that the hotel was pure fantasy…. merely a proposal and not a shovel ready project that simply awaited their approval. But this is not the first time commissioners have been  mislead over the TEE Center. They were told land would be donated and it never was. And let’s not forget that we have a trial about to get underway involving the alleged attempted bribery of two commissioners over The TEE Center and Parking Deck. But here we are two and a half years after Julian Osbon issued his first ultimatum over the TEE Center based on this hotel which it appears will never be built. Blame the bad credit market, but the fact remains that this hotel project should have been presented as a mere proposal that still required securing financing, instead of a sure thing to get commissioners to change their votes on the TEE Center. It appears that commissioners lived up to their end of the bargain. They approved the TEE Center project. The parking deck is open for business and the convention center is just months away from opening. Like the land that was promised to be donated to the city for the parking deck, it appears that this hotel has also turned into thin air.***

Below are pdf files of the Augusta 10, 2009 Memorandum and the Community Alert that Julian Osbon sent out:

OsbonMemorandum