Dr. Heywood Sanders, a professor at UT-San Antonio and a leading researcher analyzing the convention center industry, says the HVS study is "fundamentally flawed analytically." He says the report assumes that a potential hotel in Dallas will perform like convention center hotels in other cities such as San Diego, and it doesn't document the hotel's effect on convention business.

Although financing hasn't been completed for the project, Gonzalez says the city will use revenue bonds to pay for the hotel. These bonds will be secured with the revenue generated from the hotel. Sanders says this funding strategy didn't work in much stronger markets such as San Antonio, Denver, Phoenix and Baltimore, and Dallas will have to commit "substantial tax revenues independent of the hotel's performance" in order to secure loans.

As opposed to most other big projects, the use of revenue bonds allows this potential $500 million project to move forward without consent from voters. Bonds for the Trinity River project and American Airlines Center were narrowly passed by voters in 1998, with the city committing $246 million to the Trinity and $125 million for the AAC. The AAC is also city-owned, but it's operated by the Dallas Mavericks and Dallas Stars, much like the hotel would be operated by a company such as Marriott.

Council members Angela Hunt and Mitchell Rasansky want Dallas voters to decide if the city should own a hotel.
Brian Harkin
Council members Angela Hunt and Mitchell Rasansky want Dallas voters to decide if the city should own a hotel.

Dallas voters also green-lighted $18 million for the Dallas Center for the Performing Arts in the 2003 bond program. General obligation bonds were used for this project as they were used for the Trinity project, meaning the funding was secured with tax money and required a vote. The AAC is funded with a 5 percent car rental tax and the 2 percent hotel tax hike, which required voter approval because of the changes in taxation.

The city will establish a local government corporation to handle the hotel's financing, Gonzalez says. Norris maintains this is what Crow Holdings expected because many cities do this to keep the money out of the purview of the taxpayers.

"So then the big lie is that this isn't taxpayers' dollars, it's just special project financing that the taxpayers will never be responsible for," she says.

Several issues remained unresolved with this project, such as which developer will be chosen and how much the project will ultimately cost. Gonzalez says the four proposals under consideration range from $350 to $550 million.

Norris says she continues to be dismayed that the city is pushing the decision process forward so quickly. A council vote is scheduled May 28 to approve $42 million to purchase an 8.375 acre plot of land on Young Street as the site for the hotel.

"People are starting to say, 'Golly, the taxpayers don't get a say in this?'" Norris says.

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