Shut down about a year ago, the city–owned convention center hotel deal was carried by a development team of nine, the city plus eight.

The eight consisted of real estate firm Edens & Avant Real Estate Services, hotel developers Garfield Traub Development, real estate consultant Gary Realty, hotel architect TVS, Columbia architect Stevens & Wilkinson (S&W), environmental engineer Enviro AgScience, contractor Turner Construction, and sub–contractor Construction Dynamics. All of the players, the city plus eight, signed a Memorandum of Understanding (MOU), the contract.

In the contract, #1 under General Conditions, are the words, “Notwithstanding anything herein to the contrary, if the City determines that it is not feasible to proceed with the Hotel project it shall have no liability under this MOU.”

Also in the contract, #3 under Role of the Developer, are the words, “The Project Team will be responsible for the costs incurred prior to closing the financing. These costs include, but are not limited to, design, testing, bid packages, legal, underwriting, travel, etc.”

The developer here is the combination of Edens & Avant Real Estate Services, Garfield Traub Development, and Gary Realty.

Garfield Traub Development and Gary Realty together are suing the City of Columbia for $2.1 million, a claim against the work accomplished at the city’s direction, the lawsuit reportedly says. Edens & Avant is not participating in the suit.

The total development cost of the hotel to the city was hovering somewhere above $72 million, or $240,000 per room. At maybe half that the city had hopes to turn a profit.

The hotel development rule of thumb generally accepted industry–wide holds that for every $1,000 in total development cost per room, that room must collect $1 per night at 70% occupancy.

At $240,000 a room, the city would have to collect $240 per room per night at a 70% occupancy just to break even. The Marriott on Main Street is going for $99 a night during the construction upgrade. Once complete the Marriott should go for maybe $135 a night, the most expensive hotel in town.

The numbers the city and the development team advertised for the hotel feasibility study suggested a room rate of $120 per night. Each room, then, would be losing $120 per night, that much short of the necessary $240 to break even.

In their suit, Garfield Traub and Gary Realty cite S&W’s collection of about $700,000 in December of 2003. According to the contract, S&W should not have been paid, but since they were, the suit suggests all the players should be paid.

In a letter to the city dated June 14, 2004, Columbia lawyer I. S. Leevy Johnson said $5 million was due the development team. Gary Realty sent the city a $4.3 million invoice for the development team, recognizing the $700,000 already paid to S&W.

Gary Realty appears to suggest either all get paid or none gets paid, leaving unsaid and unanswered the question, “Should S&W return the $700,000?”