The Savannah-Georgia Convention Center Authority (SGCCA) board amended its hotel-motel tax agreement with the city of Savannah Wednesday, and Savannah City Council followed suit Thursday by approving the amended agreement.
Amending the agreement by both parties was required to help the SGCCA secure bonds to finance its planned hotel on Hutchinson Island. The amendment extends the agreement to 2058 to coincide with an expected bond term and also ensures the SGCCA can use those hotel-motel revenues to repay bonds used to build the hotel.
“We needed to have it specifically approved by the city, and the agreement have specific language that [hotel-motel revenues] could go to this hotel project,” said SGCCA Chairman Mark V. Smith.
The Savannah Convention Center is one entity that receives hotel-motel tax revenues from the city of Savannah. The city receives 37.5% of the revenues to its general fund, with the rest distributed between the SCC, Visit Savannah and tourism product development projects.
The tax produced $49.4 in revenues for the city’s adopted 2025 budget. The convention center is slated to receive $6.9 million from that budget.
When it comes to financing the hotel, the authority expects bonds will be issued in three tranches, with the first two tiers backed by expected revenues from the hotel.
The authority will be on the hook for paying the third tranche, which is estimated to be in the $65 million range, Smith said. Having the amended hotel-motel agreement ensures a revenue stream that could be used to pay the bond debt.
Smith said the authority has about $26 million in cash reserves, and it is moving $10 million into an escrow account to secure the third tranche of bonds. Then, that’s where hotel-motel revenues come in.
“The hotel-motel tax agreement with the city would allow that if we need to replenish that $10 million, the hotel tax coming from the city could go into that fund,” Smith said.
Smith added that the hotel is an “insurance policy” for the now-expanded convention center, which cost a state-funded $276 million.
The planned hotel is expected to bring 445 rooms to the island, an addition to the roughly 400 existing rooms at the Westin Hotel east of the convention center. The added keys are needed to meet demand from inquiring conventioneers, Smith said.
“With this hotel, we’ll now have approximately 850 rooms on the island adjacent to the convention center, which will result in more bookings for the convention center,” Smith said. “So, it’s an insurance policy in that regard.”
Evan Lasseter is the city of Savannah and Chatham County government reporter for the Savannah Morning News. You can reach him at [email protected].
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