By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
Crow and Raymond take issue with the city appraisals, claming the city is paying too much for the land. So Crow Holdings recently commissioned two appraisals of its own. According to a Crow representative, one appraisal valued the Chavez property at $29.4 million, the other at $33.9 million—both noticeably lower than the city's two appraisals, which valued the property at $40.1 million. The Crow appraisals were done, however, on an as-is basis, meaning the property was evaluated according to its current use as a parking lot.
Although first assistant city manager Ryan Evans gave Crow assurances in a May 2005 letter (read the letter) that "the city will not underwrite any operating losses" of a convention center hotel, Crow remains unconvinced. He believes the city will likely own the hotel, with losses falling on taxpayers. "There are so many ways to obfuscate and to make it look like someone else owns the hotel and is taking the risk—lawyers can be very creative," he says. "If they paint the picture using direct English, [the hotel] won't happen." That's why Crow feels City Hall is interested in keeping taxpayers in the dark, paying for the project with certificates of obligation rather than issuing municipal bonds that would require voter approval. "They don't want a vote," Crow says. "They'd lose a vote."
The Dallas Morning News won't accurately cover the issue, claims Crow, and it's not hard to understand why. In an October 31, 2007, editorial, the paper opined that the city should move "expeditiously" on plans for a convention center hotel.
"The bias they've had on this issue is remarkable," Crow says. "The land ownership over there is unbelievable."
Belo Corp. owns Belo headquarters on Record Street, The Dallas Morning News building and the WFAA building on Young Street, along with nine downtown properties within walking distance of the convention center. The nine properties totaling more than 5.2 acres are on the tax rolls for more than $9 million.
Dan Blizzard, a senior vice president at Belo, says Belo is not taking a position on where the hotel is built. When reminded that the hotel could have an impact on Belo properties because it will be built within 1,000 feet of the convention center to take advantage of the Wolens legislation, he adds, "We're not supporting the convention center hotel because we own land. We're supporting it because we want the convention center to attract the kind of business it once did, which will be great for the city."
Council member Hunt, who battled a barrage of pro-toll road Morning News editorials during the Trinity River Project referendum, says Dallas residents should decide if the paper is truly neutral on the hotel issue. "It would be nice if every time they do an editorial lauding the merits of this fabulous convention center hotel, they disclosed their own property interests and what their corporate owners have to gain," she says. "But they don't do that, and I think that certainly makes their opinion and motives on this issue questionable."
One person the Morning News hasn't quoted in its editorials is University of Texas-San Antonio professor Dr. Heywood Sanders, a leading researcher analyzing the convention center industry. Sanders testified before a congressional committee on the subject and wrote a research brief for the Brookings Institute in 2005 called "Space Available: The Realities of Convention Centers as Economic Development Strategy," in which he detailed an industry in decline (read the report).
He maintains that none of the three basic arguments coming from proponents of a Dallas Convention Center hotel withstand close scrutiny.
Their first argument is the "keeping up with the Joneses" argument: All the other major convention cities have hotels or are in the process of building them so we better get on board or fall behind. That argument is flawed, says Sanders, because city officials don't analyze what factors contribute to making a hotel a success—things such as a robust downtown that will fill the hotel when conventioneers don't. Their second argument is the "look at all the business we are going to lose if we don't have an attached hotel" argument. Business ebbs and flows, says Sanders, and every convention and visitors bureau will get some business and lose some.
The third argument is that a hotel will become an economic generator for all that it touches. But Sanders counters that the economic development expected from building a hotel simply doesn't happen in most cities. The convention center market needs people to come in large numbers, which isn't the case in many cities. And a hotel has a financial incentive to keep people inside, visiting its shops and restaurants, which cuts against the larger goal of generating new business for others. Just look at the Gaylord Texan Resort and Convention Center in Grapevine, says Sanders, which is "making a hefty profit" because it is able to keep conventioneers inside the hotel, spending their money in Gaylord's restaurants and entertainment venues. "The Gaylord is trying to tell Dallas that there is a market in this area, but it's not in downtown Dallas," Sanders says.
Another problem facing a downtown hotel is the zero-sum-game effect of revitalizing one part of downtown at the expense of another. Sanders points to Victory Park, where the American Airlines Center was built using public financing. Its success came at the expense of revitalizing downtown, says Sanders. "This happens all the time. Folks assume that you can do something like Victory and not have any negative impact on other places."