Albany officials consider Hilton Garden Inn finances

ALBANY — Ward V City Commissioner Bob Langstaff offered a short tutorial in Hotel Financing 101 Tuesday morning during the commission’s work session, clearing some of the confusion surrounding a call for a collateral change by principles with the downtown Hilton Garden Inn hotel.

The hotel’s owners asked the city to accept a payment of $600,000 on the $3.2 million they owe on the loan granted by the city 10 years ago when the hotel was built and to accept “first-lien” status on the asphalt surrounding the hotel in lieu of the second lien the city currently holds on the hotel itself.

“Looking at where we are now, the second lien we currently have on the actual hotel is really not worth that much,” Langstaff, an attorney, said as he illustrated with a crude drawing. “If something happened and the hotel closed down, we would be put in a position of having to pay $7 million or so to buy out the first lien holder to protect our interest in the hotel. But that would also put us in the hotel business, and we’d have to hire a management team.

“They want us to move our lien from the hotel — which, they’ve told us, is a requirement for getting financing to build the second hotel (a Home2 Suites extended-stay facility) — to the asphalt surrounding the site. We would then hold first lien on the asphalt until the point that they started construction on the (Home2) hotel. Once they did, we would revert to second-lien status.”

Langstaff said the financial wrangling is not unusual in such transactions.

“As I said, if Nathan can get our debt-to-income ratio worked out so that it’s no worse than it is now, I think we’d actually be better off holding first lien on the asphalt than we would second lien on the Hilton Garden Inn,” the Ward V commissioner continued. “If they tried to continue running the hotel without building the second one, we could play hard ball and tell them they couldn’t park on our asphalt.

“But I think they’ve proven that they are a reliable tenant. They’ve made every monthly payment (of $28,000) for 10 years. So if Nathan works out the legal details, I’d like to see us move forward with this.”

Davis said the hotel’s owners had an “established track record” of keeping payments current, and the city attorney said that fact, plus the owners’ desire to “maintain the Hilton flag” on their establishment, was the primary plus in the proposal for the city. The “con,” he noted, is that the city would be at risk until the second hotel was under construction.

The board voted to table the matter so that Davis could weigh the legal pros vs. the cons.

“As I said before, I’d like for Nathan to ask if they could make a payment of more than the $600,000 they’ve offered, pay the entire $3.2 million if they can,” Ward IV Commissioner Roger Marietta said.

The commission also gave tentative approval during the work session to $15,000-$20,000 in funding that would be needed to make street improvements requested by Alice Jenkins at 120 Delta St. Jenkins told the board police were ticketing her son, who lives at the house, and others for parking in front of their house, which is the only one on the street. She said large trucks from nearby chicken processing and recycling plants had little room to maneuver as they entered Delta Street, jeopardizing vehicles parked there.

Ward II Commissioner Bobby Coleman said the city should pay the money to rectify the situation.

“We can spend $1.5 million for a (Rails to Trails) trail, why can’t we spend $15,000 for this lady whose family has been at that house forever?” Coleman said.

Attorney Phil Cannon, who represents one of the businesses near Jenkins’ home, said, “Why can’t they park three feet farther up the road? That’s all it would take for them to be legal and out of the range of trucks entering the highway.”

As Jenkins and Cannon argued, Ward VI Commissioner Tommie Postell joined in, reprimanding Cannon. Mayor Dorothy Hubbard banged her gavel, saying, “This is not a courtroom. This is not a courtroom.”

Ward I Commissioner Jon Howard said the situation offered the commission an opportunity to serve “as a voice for the voiceless.”

“We have to be more aware of these things that happen in poor neighborhoods, where the people have no voice,” the Ward I commissioner said. “We have to make sure we speak for them, especially minority folks or people of color.”

Howard reiterated that theme during a discussion of the Albany Utility Authority’s energy efficiency, education and assistance plan, which the utility expects to roll out over the next few weeks. Marketing Director Monique Broughton said the plan is an attempt to educate the community and “address some misperceptions in the community” about the utility’s rates.

“We’ve got to find a way to tap into the have-nots, to educate the public,” Howard said.

When interim City Manager Tom Berry explained that part of the Utility Authority plan is to create an energy code “with some teeth,” he noted that the authority should “expect some push-back from property owners.” Howard replied, “Some of those property owners are state elected officials; that may be where the push-back comes from.”