Council reacts to Drury withdrawal, presentations from developers

Several council members say no subsidy should be allowed

The Ehrhardt Hospitality Group presents their conference center proposal to the Jefferson City Council at City Hall on June 6, 2013. Speaking is Trey Propes, of Jefferson City. Propes is a manager of a local hotel with the Ehrhardt group.

The Ehrhardt Hospitality Group presents their conference center proposal to the Jefferson City Council at City Hall on June 6, 2013. Speaking is Trey Propes, of Jefferson City. Propes is a manager of a local hotel with the Ehrhardt group. Photo by Deborah Cote.

The Jefferson City Council now has seen the presentations from two developers on plans for a proposed conference center, with both plans detailing smaller facilities and a possibility for the need for an operating subsidy.

But before those plans, developed by the Ehrhardt Hospitality Group and the Farmer Holding Company, had been unveiled, a third proposer withdrew its bid on the conference center project.

Drury Development Corporation notified the city May 31 of its decision to withdraw its bid, citing “observations” that the operating costs likely would exceed the facility’s revenue and concerns about the occupancy and average daily rate of the current hotel market in Jefferson City.

“I think that’s one company’s opinion,” said 3rd Ward Councilman Ken Hussey. “We still have two good proposals that are approaching the situation thinking that it’s a wise investment and an opportunity.”

Third Ward Councilman Bob Scrivner said he would rather have had three options to choose from rather than two and he would have preferred Drury make their presentation and include a statement saying a subsidy would be necessary rather than simply pulling out of the process altogether.

“I don’t think there would have been any support for the idea of a subsidy,” Scrivner said “Maybe we made that so clear to them that they chose to back out.”

Both of the remaining developers have detailed plans that are smaller in scope than the city originally requested and both noted there may be a need for an operating subsidy, though it’s too early to tell.

Fourth Ward Councilwoman Carrie Carroll said Drury’s withdrawal made her wonder if there was anything the city could have done to make the project more appealing.

“Is there something that could have been done from the city’s end that would have made it feasible to a company of their experience, of their caliber?” Carroll said.

Carroll said she’s made it clear from the beginning that she was in favor of a more flexible request for proposals from the city that was open to operating subsidies or other ideas to ensure the city attracted the best proposals. She said the request that was sent out was not the best the city could have done.

“In my opinion, the RFP we sent out ... there were a lot of things that were maybe not as inviting to companies of the caliber of a widely recognized name like Drury,” Carroll said. “We probably could have added things that would have made it more appealing ... Does the council want to be open to developers and making this development work or not?”

Carroll said she’s still convinced that a conference center is feasible and viable in Jefferson City, but the city and the council need to be as open as possible to developers to make it happen.

Hussey said he’s confident the Jefferson City market is strong and the area could be host to many statewide and regional conferences. When asked if there was concern about a potential need for an operating subsidy, he said it would be something to consider as the city begins a more thorough review of each proposal.

“I think that’s just the conversation to be had once things go public,” Hussey said. “I’m open-minded to listen to what the two developers have to offer and see how we can best work with them.”

First Ward Councilman Rick Prather said the withdrawal of Drury’s bid was not too concerning as that company does not currently operate within Jefferson City and may not be aware of or comfortable with the area’s market.

“The other two (developers) are from Jefferson City,” Prather said. “Maybe they understand the markets a little bit better around here.”

Prather said the council’s intent from the start of the request for proposals process last fall was to have a facility that did not require a subsidy.

“I’m pretty certain it will not be looked upon favorably,” Prather said of an operating subsidy.

Second Ward Councilman Rick Mihalevich said the very reason the council opted to hire a facilitator, Charles Johnson with Johnson Consulting, was to ensure that each of the proposers would have a financially viable facility.

“I think it’s pretty clear that people do not want to continue to subsidize a conference center over the years, so we’re ensuring the best we can with expert advice,” Mihalevich said.

Fourth Ward Councilman Carlos Graham said the $9 million contribution from lodging tax funds should be the only city funds used for the project and developers should know that.

“I think that the citizens have certainly made it clear that there should be no subsidies,” Graham said. “I am not in favor of a subsidy as relates to going forward to make this project a reality. I am totally against it.”

Fifth Ward Councilman Larry Henry said his main question is what will attract conferences to Jefferson City and how will the developers achieve that goal.

“I know that’s a huge question that I’ve gotten from the public,” Henry said. “As we move forward and try to get a conference center here, what’s going to attract conferences here? Whose job is that going to be?”

At Thursday’s special City Council meeting, the recently hired facilitator Johnson recommended a 60- to 90-day process to gather more information from each development team and hold a public forum to gather input. That timeline differs from the previously stated intent of the council to make a final selection by July 1.

Mayor Eric Struemph said if that’s the recommendation of the facilitator, then that is how the council plans to proceed. Struemph said Johnson has the expertise in the area and there is nothing wrong with taking additional time to ensure the process is done right.

“I was happy to see that we had two qualified Missouri based companies before us tonight,” Struemph said. “I think, for the first time in a long time, our city can hopefully come to an agreement with a developer to build a conference center that our city’s been wanting for nearly 80 years.”

Find complete proposals for the conference center at www.newstribune.com/jcmo.

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Related article:

Conference center one step closer with details of two proposals

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