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.

On April 7, the council's Economic Development Committee received a briefing from HVS Convention, Sports & Entertainment Facilities Consulting, which the city retained to study the feasibility of building a hotel. During this briefing, Rod Clough, managing director for HVS' Texas office in Flower Mound, recommended the development of a 1,200-room hotel with restaurants, retail and other amenities. He said his report was dependent on using the Chavez property as the site for the hotel.

In that same meeting, city attorneys informed Rasansky that he could no longer vote on or even publicly talk about the convention center hotel because of a conflict of interest. He owns shares of Citigroup, and on March 26 the council approved Citigroup as one of six underwriters for possible debt issuances for a convention center hotel. Rasansky was clearly upset. "I think this really sucks," he said after leaving the meeting. "But there's nothing I can do about it."

This silenced one of the major critics of the project, but it didn't silence them all.

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Mayor Leppert told agreeable downtown residents that building a convention center hotel will keep Dallas competitive.
Brian Harkin
Mayor Leppert told agreeable downtown residents that building a convention center hotel will keep Dallas competitive.
"They don't want a vote," Crow says, "They'd lose a vote."
Brian Harkin
"They don't want a vote," Crow says, "They'd lose a vote."

Harlan Crow, the son of real estate mogul Trammell Crow Sr. and chairman and CEO of Crow Holdings, walks through the halls of his luxurious Uptown offices, stopping to admire an architectural model sitting on a table. The miniature mock-up of the old Parkland Hospital on Maple Avenue will house the future corporate headquarters of his company. Crow says the collection of buildings offers a campus feel, and it's his favorite project.

Wearing a golf shirt and khakis, Crow enters the conference room overlooking Dallas' Arts District. "This is where the prime real estate is," he says. Although Crow is one of Dallas' wealthiest men, one of Crow Holdings' most prized assets, the Hilton Anatole, is no stranger to tough times. And to protect his hotel's bottom line again, Crow has thrown himself into the middle of the convention center hotel controversy.

In late 1990, the hotel (then the Loews Anatole) was unable to make payments on its $75 million debt and for two-and-a-half years was in foreclosure. The Crow family finally found a new partner, the Teacher Retirement System of Texas, which gave it a much-needed cash infusion to resuscitate operations. The Crow family regained control of the hotel in 1995, the same year its name was changed to the Wyndham Anatole, reflecting the change in hoteliers. Ten years later, the name would change again to the Hilton Anatole, its association with the Hilton chain helping to boost its reputation as one of the top hotels within the vicinity of downtown Dallas.

The Anatole has never received any city subsidy or bailout, and that has helped inform the conviction of Harlan Crow, a staunch Republican who claims that Mayor Leppert's plans for a new convention center hotel amount to little more than "corporate welfare."

"The City of Dallas shouldn't be in the hotel business," Crow says. "There are things that cities are supposed to do...but building, owning and operating a hotel and exposing taxpayers to operating losses aren't what they should be doing." Despite these statements, Crow says a convention center hotel will be good for the city. He likes the idea, he says, because it will give Dallas some much-needed soul. "I hate to say this because I love Dallas, but Dallas doesn't have a heart. The closest thing we have to a heart is White Rock Lake."

Crow says he harbors no ill will toward Leppert, even though he supported his defeated opponent Ed Oakley, donating $5,000 to his campaign (as did Crow's father). Yet he calls Leppert "a nice guy," recalling a time between 1986 and 1989 when Leppert worked for Trammell Sr. as one of his national partners. At the time, the Trammell Crow Co. was the largest apartment developer in the country.

Crow began speaking out against the hotel project within two months of Leppert taking office. In a July 31 letter to the mayor (read it), Crow called the project "not economically viable." He also speculated that city staff was secretly working with Woodbine to cut a deal that would be detrimental to taxpayers. On February 14, he fired off another missive to the mayor (read the letter), calling the council's vote to option the Chavez property "morally wrong." He wrote that a convention center hotel would hurt the existing private downtown hotels, including his own. Not only did he envision that the hotel would be "a huge loser," he also branded its possible use of public money as "the height of folly."

A meeting was arranged between Crow and Leppert, but a health reason prevented Crow from attending. Instead, he sent Anne Raymond, who is in charge of Crow Holdings' hotel investments. Says Raymond, "It was a friendly meeting where we agreed to disagree."

Raymond says a 1,000-room hotel will cost approximately $500 million, but moving forward with the land purchase is irresponsible without knowing the actual cost of the public's investment. She maintains that a hotel of this size will be a burden on an already weak hotel occupancy rate, which was approximately 60 percent last year in Dallas and is forecasted by The Linneman Letter, an economic and real estate research publication, to decline for the next three years. And that's without the addition of at least another 1,000 rooms. "It's why we don't have it—because the market doesn't support it," she says. "And the only way it will materialize is if a whole series of huge, uneconomic decisions are made."

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