Natchez Convention Center managers say expansion needed

Published 12:10 am Tuesday, March 12, 2013

NATCHEZ — Natchez Convention Center managers say a multi-million dollar expansion of the center will be needed in two years.

New Orleans Hotel Consultants President Warren Reuther told Mayor Butch Brown and aldermen at a meeting last week that the center is rapidly approaching 70-percent capacity. Reuther’s company currently manages the convention center, the Grand Hotel, the community center and city auditorium under a contract with the city.

Graphic by Ben Hillyer / The Natchez Democrat

Graphic by Ben Hillyer / The Natchez Democrat

“When you get to that 70-percent capacity, you need to think about expanding,” Reuther said Monday. “Because you have check-in and check-out days, you can’t have 100-percent occupancy or you wouldn’t be able to get someone in and get the others out.”

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Reuther said he foresees the expansion being needed in two years.

Convention Center Manager Walter Tipton said the convention center is currently operating at 62 percent capacity. He said the convention center is turning away events because of lack of space, mainly wedding receptions.

The community center is used for one-day events, such as wedding receptions, and the exhibit hall is reserved for multi-day events, such as conferences that bring more money, Tipton said.

Preliminary plans for an expansion were drawn in 2006 in anticipation of demand at the convention center warranting an expansion.

The plans include adding approximately 10,800 square-feet to the exhibit hall. The addition would double the size of the Nashville room, the center’ main exhibit hall. The expansion would be made on the Franklin Street side of the center cutting into a portion of the current parking lot and green space.

The back parking lot adjacent to Wall Street would eventually be used for a parking deck, Tipton said. That addition would come later down the road after the expansion.

The expansion would also include new lobby and foyer areas and upstairs meeting space.

Reuther said no estimate has been made on the cost of the expansion.

“It will be in the millions, I’m sure,” he said.

The convention center is also in need of $174,500 in repairs, including resurfacing the exhibit hall floor and repairs to the sound system, elevator and repainting, among others, Reuther said.

Brown said paying for repairs and an expansion of the convention center will require some “creative thinking.”

He said the need for an expansion is a good problem to have, though.

“Obviously more space will bring bigger and better things,” he said.

Funding the expansion, Brown said, will require some “very creative thinking.”

That is in part because, he said, the city still has so much to pay on the $12 million bond that was issued in 1999 to build and furnish the convention center, as well as renovate the community center and auditorium.

Reuther suggested last week that the city could refinance the convention center debt to pay for the convention center expansion. But Brown said because of the lack of debt service to the bond, it would not be eligible for refinancing.

In the nearly 13 years since the bond was first issued, Brown said, more debt should have been paid off if the city was using the monies it has received from an interest-rate swap transaction executed in 2006 with Malachi Financial Products to pay off the debt.

Brown speculated that the lump-sum monies received from the 2006 swap transaction and from a modification to the transaction last year prior to Brown taking office were not used to pay off the debt.

“There has not been very good financial management for those bonds, in my opinion,” Brown said.

The city has received approximately $575,000 in swap funds, and City Clerk Donnie Holloway said all of that money has been paid toward the debt.

The city has approximately $10 million left to pay on the convention center debt and is expected to pay it off in 2024.

The city has been paying interest on the bond and will not really start paying off the bulk of the principal until 2014-2015, Holloway said.

The city could issue new bonds to pay for the expansion, Brown said. He said the city will consider carefully all options to pay for the expansion.

“It’s something that’s going to be costly and studied thoroughly,” he said. “We’re going to have to do some very creative thinking and creative financing.”