Demanding Answers as the Dallas Convention Center Hotel Moves Forward

As Mayor Tom Leppert pushes for a convention center hotel, critics demand more details and less tax money. At least, those who haven't been silenced do.

Miller says that she and Wolens rejoiced at their legislative coup, thinking that the tax revenue would be enough to cover the city's portion of a privately owned hotel deal. But when the three developers offered their proposals, they found that wasn't the case. "We had sticker shock," she says. Developers were estimating that the project would cost taxpayers between $50 and $100 million, "which was way too expensive for us at the time," she says. Although the city selected Woodbine in December 2004 to build the hotel, the developer's exclusive rights expired without consummating the deal.

Miller would still like to see a convention center hotel built but wants any public subsidy limited to $50 million in addition to the estimated $50.6 million in tax breaks that Wolens' legislation would still generate for a hotel developer. "If the new administration can figure out how to subsidize a convention center hotel that is privately owned for less than $50 million in tax monies, then I think it's terrific, and my hat is off to them."

After his election in June 2007, it became Mayor Leppert's turn to pick up the hotel torch. In his June 25 inauguration speech, Leppert mentioned building a convention center hotel as a "key to our economic and competitive success tomorrow." The day after the city council returned from its July recess, members were presented with a convention center hotel status briefing. In this briefing, city staff told the council that one of the key site selection criteria (similar to a factor that was part of the city's lease proposal under Miller) was that the hotel be located in a place where the convention center could be linked to the Hyatt Regency and the Reunion Parking Center owned by Woodbine—one of the six developers to submit a proposal to build the hotel.

Now that the city attorney has barred Rasansky from participating in the vote or the debate regarding the hotel, Hunt finds herself in a familiar position as a lone council member opposing the mayor's plans.
Brian Harkin
Now that the city attorney has barred Rasansky from participating in the vote or the debate regarding the hotel, Hunt finds herself in a familiar position as a lone council member opposing the mayor's plans.
Anne Raymond and Harlan Crow of Crow Holdings oppose using public money to finance a new convention center hotel. Crow Holdings owns the Hilton Anatole.
Brian Harkin
Anne Raymond and Harlan Crow of Crow Holdings oppose using public money to finance a new convention center hotel. Crow Holdings owns the Hilton Anatole.

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Dallas City Council

1500 Marilla Drive # 5FN
Dallas, TX 75201

Category: Services

Region: Downtown & Deep Ellum

Before the February 13 city council meeting, a last-minute item was added to the council's agenda: a vote on whether the council should approve using $500,000 from the Dallas Convention Center & Visitors Bureau to pay for an option to purchase the Chavez property as a possible site for the hotel. The city commissioned two independent appraisers, who had each valued the property at $40.1 million or $110 per square foot. The economic development committee selected the site in a closed session despite there being no public briefings to the council. The council, however, voted to approve the option, with only council members Hunt and Rasansky dissenting. Both felt the council had little information upon which to move forward; Rasansky, a real estate developer himself, called the option "extremely flawed" and was amazed that the two appraisals came in for the exact same amount to the dollar. Hunt pointed out that the gap between the Dallas Central Appraisal District's taxable value of approximately $7.3 million and the city appraisals of more than $40 million was "remarkable." Assistant city manager A.C. Gonzalez says after he showed the two appraisals to DCAD, its staff admitted the property was undervalued.

During a February 19 Economic Development Committee meeting, councilman Ron Natinsky, chair of the committee, told Rasansky and Hunt that there was a difference between the tax rolls and the appraised value because the appraisals were done assuming a hotel was already on the site. The tax rolls appraised the property according to its current use as a parking lot. Gonzalez says the appraisals were done based on the "highest and best use," and not assuming a convention center hotel was on the site.

"It looks like the appraisals were done as instructed," Rasansky would later say. "You do appraisals based on its current use, not if you build a Taj Mahal on it because what if the hotel isn't built and we have to sell the property?"

Hunt's and Rasansky's concerns were not enough to stop the council from taking the next step. On February 27, the council approved the use of certificates of obligation (secured by property taxes) to raise the $42 million needed to purchase the property. These certificates are short-term debt instruments and are used much like long-term revenue bonds to raise money to finance major construction projects. The main difference is that bonds require voter approval; certificates of obligation do not, which is part of their appeal to politicians concerned that their pet projects might be defeated at the polls. The certificates are interim financing, and the city will either refund them from the sale of revenue bonds for the hotel or the restructuring of the convention center's debt.

Again, Rasansky and Hunt were the lone dissenters, voting against plans for the certificates. Both claimed to be in favor of a convention center hotel, they just opposed the manner in which it was proceeding and the scarcity of information upon which they were being asked to cast their votes. "I am ready and willing to support it if I know it's more than just a vanity project," Hunt says.

Differences between the mayor and city staff regarding financing seemed to mirror these council members' concerns. Leppert's public position at Urban Market was that the city would be relying on public money to finance the project. This seemed at odds with the position of the city staff in its March 7 Request for Proposals, instructing prospective hotel developers that "It is the city's goal to minimize the level of public financial participation in the project and to attain the most distinctive, highest-quality and marketable project possible."

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