Thursday, March 07, 2013

Past due

UPDATE:  Cleve Christie, LYCDC Board Chair has resigned.  Read his letter here.

The saga of Trenton’s lone hotel continues to get more sordid by the day.

This morning’s Trentonian has an article by David Foster revealing that Cleve Christie, chairman of the Lafayette Yard Community Development Corporation, has been promoting “jazz events” at the hotel.

One of these events, part of last autumn’s Bring Back Trenton series of musical events, was booked into the Trenton War Memorial. That rental showed up as an outstanding payable from the hotel in the amount of $1,698 owed to Patriots Theater.

This item came up at Tuesday night’s city council meeting when West Ward representative Zac Chester questioned the expense. It was explained that the hotel had “overbooked” its banquet/meeting rooms and had to bump an event to the venue next door, the War Memorial (Patriots Theater). We were made to understand that this is standard practice when hotels “overbook” rooms.

We can see this happening with guest rooms if there is an unexpected rush, fewer than expected cancellations, and guests unexpectedly extending their stay (we should be so lucky!).

Just how does it happen with banquet rooms when deposits are usually paid and contracts signed for a date and time for an event?

The answer appears in the revelation that the LYCDC board chair has been running a series of events at the hotel. In the article, Christie claims that he was approached by the hotel’s former general manager (presumably Jeff Zieger but we do not know for sure) to host concerts to “generate foot traffic and revenue for the hotel.”

Ok, first, this is a hotel. It is in the business of renting out rooms to overnight guests. Yes, it also hosts functions in its various meeting rooms but the primary business is to rent guest rooms. Building “foot traffic” does not generate room nights.
Second, the article explains that Christie didn’t have to put down a deposit to hold rooms for his events. This is contrary to the way the general public does business with the hotel. This is, therefore, special treatment, a benefit, afforded Christie that is not afforded others.

It is generally considered a conflict of interest if a board member personally benefits from business dealings with the entity whose board they sit on. It really doesn’t matter that the concerts only broke even or that they cost him some money out of pocket. Nor does it matter that the intent was to “generate foot traffic and revenue for the hotel.” Mr. Christie should not have been directly involved in the enterprise.

Still, Christie denies there was a conflict of interest.

Councilman Zac Chester said it best:

“The bottom line he did get a benefit as being board chair.”

What remains to be learned is if, as Christie claims, he or his group paid the hotel for the room rental. If so, then why didn’t the payment get made to Patriots Theater?

Was this a case similar to the $170,000 in parking fees collected from the adjacent garage but not passed along to the Trenton Parking Authority? Is the hotel so cash poor that they are playing shell games with the money streams just trying to keep their creditors at bay? That was surely the impression we were left with from the presentation given by Waterford (the current hotel management company) on Tuesday night.

Or is this a case of another “perc” that Mr. Christie felt entitled to as chairman of the LYCDC board?

Where was the rest of the board in all this? Were they aware, did they condone it?

What about the board’s legal counsel, Rocky Peterson? Was he asked to give an opinion on whether Mr. Christie’s activities might be a conflict of interest? Did he offer such an opinion or was he left in the dark about all of this?

What else has been going on at the hotel that we, the taxpaying public who are on the hook for $1.4 million in debt service every year for the next two decades, should know about?

From where we sit it is apparent that the current LYCDC board should be dismissed.  Letters of interest and resumes from those wishing to serve on a newly constituted board should be solicited…including those from any current members.  A new board should be put in place immediately with members vetted and approved by the city council as well as the administration.
And the matter of Mr. Christie’s apparent conflict of interest should be thoroughly investigated by the appropriate law enforcement agency.

Post script #1: It has also come to light that the currentbylaws of the LYCDC call for all appointments to be with the advice and consent of the city council. This clause has not been carried out in recent memory, if ever. This would then imply that the current board sits in violation of its own rules.

Post script #2: We don’t even know where to begin to address Mr. Christie’s quote that closes the Trentonian article. Christie implies that he is being persecuted because of his allegiance to our indicted mayor (who appointed Mr. Christie to the LYCDC). Kevin Moriarty does a fine job ofhandling that matter in his blog post.


Anonymous said...

I do not know Mr. Christie personally so these comments are completely objective and come from many years experience in the hotel industry.

Hotels will not hesitate to "bump" groups from meeting space and/or guest rooms when a substantially better piece of business needs more of either, or both. Often such a move includes some type of compensation to the group being moved, which could include waiving of part or all of the room rental.

Such compensation, however would not be needed if the group being bumped was on a "temporary" basis, - or without a deposit. Again, such circumstances are not unusual for a hotel with plenty of space and rooms available.

What should happen when holding space without a deposit is that there is an understanding that the group could be bumped out. This situation usually occurs when a group is in the early stages of planning their event. If they begin advertising or sending out invitations, they should secure the space with a deposit, or risk losing the space.

Most likely, there was a cozy relationship, but not necessarily unethical, between management and Mr. Christie, and the situation may have been more the fault of the hotel, for not following up and managing their space, then Mr. Christie.

The LY board really needs someone with hotel experience to sit in or advise them. I took a look at the financials posted on the City website and there seems to be more pressing issues than Mr. Christie's events. For example, they are not only running a 62% beverage cost, but also budgeting for it. Barring some very unusual circumstances, such a high bev cost is outrageous.

In general, management fees are based (I assume this applies here) on gross revenue, there is no incentive for them to control expenses unless the owner (in this case the LY Board/City) holds them accountable.

Old Mill Hill said...

We appreciate your insight and the points you raised.

The notion of that "cozy" relationship is what sticks a little in the craw.

Mr. Christie has a responsibility to the taxpayers to see that the hotel is run propertly and to the best it can be. He was given preferential treatment in that he didn't have to put a deposit on the room. Would he have gotten that same treatment if he were not the chair of the non-profit board that oversees the property?

Probably not.

That special treatment is inures to his benefit. That is, to our mind, a conflict.

There are other questions...and the liquor costs is part of that.

If, for instance, certain individuals had open tabs at the hotel, could that contribute to that high liquor cost? If any of those tabs were for board members or city officials, would that be a conflict of interest?

Now, we present these as hypotheticals, but I think you can (and I agree, Waterford had no incentive to do better) was lax. And the oversight of that management was apparently nil.

"Cozy" betcha!