Richard Kessler sat at a table outside the Bohemian Hotel along River Street on Wednesday morning and pointed at a delivery truck blocking the view of the waterfront.
If he had his way, the trucks would be banned from operating after 8 a.m. to increase the quality of life for residents and visitors, Kessler said.
A morning meal devoid of exhaust fumes is a relatively modest vision for the developer, whose resume includes the Bohemian and five other hotels in Savannah’s Historic District — one of which includes a swanky restaurant and bar inside a restored funeral home.
Vehicle traffic may be out of his hands, but Kessler has been able to win some major concessions for his latest project that will have a much more significant impact than the elimination of humming diesel engines.
Pipe organ music could become commonplace during lunch hour where Kessler is planning a $250 million transformation of an abandoned industrial zone on River Street’s west end.
Beams of light would emit from the smoke stacks of the centerpiece of the project — a 104-year-old decommissioned power plant that would be restored for use as a hotel and include a pipe organ for the noon performances, Kessler said.
The “multi-use entertainment” complex will also include three new buildings to accommodate more than 400 hotel rooms, 20,000 square feet of retail, ballrooms, meeting space and a live entertainment venue Kessler expects could seat about 4,000 people.
The plan required zoning changes and height map amendments, in addition to federal approval of the extended Savannah Riverwalk.
To assist with financing, state legislation allowed Kessler to obtain $10 million in state historic preservation tax credits on top of about $16 million in federal tax credits expected for the project.
And in April, Kessler secured a $33 million bonding agreement with the city that allows the developer to construct a garage for hotel guests and public use.
The funding plan was the last real hurdle to beginning construction, which he now expects to start by early August.
“We are at the 5-yard ... line going for the gold,” he said.
On Wednesday, the developer sat down for an interview to discuss his vision and address some of the concerns the project has raised.
The garage deal
As part of the garage bonding agreement with the city, Kessler will retain all the parking revenue but be responsible for paying the bond debt, as well as the garage’s maintenance and operating costs. In addition, Kessler will pay the city $100,000 per year for 30 years and then $50,000 per year for 20 years after.
He is also paying the cost of issuing the bonds, which amounts to about $1.5 million.
There have been some questions about the estimated $31.5 million cost of the 488-space garage, which amounts to almost $65,000 per space. As a comparison, the city paid about $45 million to construct the 1,065-space underground Whitaker Street garage in 2008, amounting to about $42,000 per space.
Opponents of the deal have suggested that the funding is also paying for the hotel rooms that will surround the garage, which both Kessler and city officials deny.
“We went to the contractor and had them break out exactly what the garage part of the project is,” Kessler said. “And that’s what this is.”
The higher cost can be attributed to the plan to build half of the building’s eight stories underground, Kessler said, a task made even more challenging because of the close proximity to the river.
“When you are building next to the river like this, it’s basically silt,” he said. “So we had to go down to the clay for the structure. The clay is 70 feet down.”
The appearance of the garage also came into play.
A cheaper garage could have been designed, perhaps reducing the cost by 10 to 15 percent, Kessler said, but the decision was made to invest in something that would be an attractive addition to the area.
“We don’t want to build an ugly parking deck in a high-profile location,” he said. “Savannah has enough ugly parking decks.”
At the end of the day, the price of the garage doesn’t matter because he is paying 100 percent of the costs, Kessler said, in addition to an extra $4 million to the city over the next 50 years. As a result, he said the city gets a parking garage in a location it probably could not have afforded.
“If it’s a dollar more or less, so what,” he said. “I’m paying it anyway.”
The current Savannah City Council and the mayor and aldermen who preceded the current administration lent their support for Kessler’s project based largely on the promise of jobs and the estimated economic impact in an undeveloped area.
In addition to generating $35 million in new tax revenue for the city in the first 10 years of operation, Kessler said Plant Riverside will create 2,500 construction jobs and 700 full-time permanent positions with benefits, including health insurance.
The project is located in a state opportunity zone, which makes Kessler eligible for job tax credits for providing employment in an impoverished area. He is required to pay at least $10.25 as part of the tax credit agreement, but he said wages will be higher than that.
“I can easily believe we will be $13, $14, $15 an hour, minimum,” he said. “And that’s just walking in with no training.”
One thing the city needs to focus on is providing a trained labor force, Kessler said.
“Savannah is one of the toughest labor markets I’ve ever dealt with,” he said. “The only one that was tougher was Taos, New Mexico.”
While not required, Kessler said it his intention to hire residents from the area around the hotel, which includes one of the most impoverished Census tracts in the state with a 92 percent poverty rate.
The hotel will provide an opportunity to make a dent in that, give those residents skills and earn income that they were not getting before, Kessler said.
“That might not be a lot to me or you, but it’s damn sure important to the person who doesn’t have a job and doesn’t have a skill,” he said. “That’s where you can start, but you are going to grow.”
It is critical that Kessler focus on hiring and training residents from the surrounding area, where some people are making as little as $8,000 a year, said Suzanne Donovan, executive director of the Step Up Savannah poverty reduction initiative. A true living wage is probably closer to $15 per hour, but an hourly wage above $10 an hour, in addition to having health benefits, would be life-changing for many of the people in that community, Donovan said.
“Starting at a minimum of $10.25 an hour is a step in the right direction and I would hope other hotels would follow that lead,” she said. “Certainly, we want to urge more.”