Almost Done Here: Five Issues To Consider Before Casting Your Vote On Proposition 1

As he's done throughout the convention center hotel campaign, Mayor Tom Leppert's op-ed in The Dallas Morning News Thursday focused more on kicking Harlan Crow in the crotch than providing tangible reasons why voters should approve public ownership of a $500 million hotel.

He wasted valuable words ripping Crow for living in Highland Park, even though Leppert himself lived in the Park Cities before moving into his Preston Hollow mansion in 2003. And, as D's Glenn Hunter pointed out, Dallas Convention & Visitors Bureau CEO and pro-hotel'er Phillip Jones resides in Southlake.

Leppert labeled Crow's efforts as "a multimillion-dollar misinformation campaign" but failed to cite any examples, and he said there have been "too many smokescreens." As a retort, here are five issues I think folks should consider before casting their votes on Proposition 1.

No. 1: Leppert is right -- there have been too many smokescreens, but undoubtedly the biggest one is his attempt to vilify Crow.

"With the possible exception of Ray Hunt, no living person has done more to build downtown Dallas than Harlan Crow," D's publisher Wick Allison wrote. Crow also has given away millions of dollars to charity without fanfare, yet Leppert and his supporters boast about the donation of his $60,000 mayoral salary.

But, whether Crow is a Dallas gem or the greedy billionaire Leppert paints him to be, what's really important is Crow shouldn't factor into the debate at all. Leppert and the pro-hotel campaign are making the classic ad hominem argument: attack Crow, not the strength of his case against public ownership of the hotel.

When I talk to pro-hotel peeps, the first thing that comes outta their mouths is resentment toward Crow, and that tells me their argument for taxpayer ownership of the hotel is weak.

No. 2: Just like the Trinity River toll road campaign, Leppert likes to mention all of the people supporting the project, but how knowledgeable and trustworthy are they? Those who should know the most about the hotel are members of the council's Economic Development Committee, so let's take a quick look at some of its members.

Ron Natinsky, chair: He has constantly said the project is "not a taxpayer-funded hotel" without explaining that taxpayers will pay for losses if the hotel isn't profitable. Natinsky also referenced the $50 million reserve as a "rainy day" fund, which we've cast serious doubt upon, and he said the convention center is "absolutely going to lose" $150 million without the hotel, although we proved that to be a flat-out lie. He even doubled that number. "We made a decision that the risk of losing $300 million is significantly larger than the risk that we calculated on the other side," he said.

Tennell Atkins, vice chair: He said, "One thing people don't know [is] I could have voted the other way, but I didn't. And the reason why [is because] it would have been a wasted vote. To me, I think it would have been a wasted vote. No apology."

Dwaine Caraway: Just after the committee made the critical decision for the city to own the hotel, we asked him to explain why public ownership made the most sense. Caraway struggled mightily to answer the question, which we asked repeatedly.

Jerry Allen: His response to a question regarding the potential failure of the hotel: "Of course, by that time, I'll be off council. So I cannot be held accountable." And he said if the hotel isn't built, "You might as well just demolish that convention center."

Sheffie Kadane: After saying he was originally opposed to public ownership until city staff showed him the city would profit by owning it, we asked him to explain how the city would profit. "I'm just not real clear on all of it," he said.

No. 3: The city and Leppert initially represented the hotel project as a public-private partnership. "The public money -- you want to try to get to zero if you can," Leppert told The Dallas Morning News just four days before the Economic Development Committee voted to publicly own the hotel. "I don't think that's possible. But I want to take time to minimize it as much as possible."

I have no idea what happened in those four days to completely change Leppert's mind, but the reason given for the city owning the hotel (because it can get a better interest rate on the bonds) certainly didn't emerge in that timeframe -- that was always the case. It would be interesting to see the other proposals, some of which involved full public ownership and others that were public-private partnerships, but the city refused to release those documents.

No. 4: In his op-ed, Leppert mentions the College Football Hall of Fame and a minor-league baseball stadium as two developments that the hotel is attracting. However, the Hall of Fame idea is nothing more than a Hail Mary at this point, and the people building the minor-league stadium have said it's a go whether the hotel is built or not.

What the mayor doesn't mention is the sweetheart deal Matthews Southwest got from the city to build ancillary development, which no one knows what it will look like or when it will be built, if ever.

No. 5: Let's talk numbers.

As we mentioned a while ago, comparing the last two studies performed by HVS on the hotel is shocking. In 2004, HVS said the hotel would create roughly $444 million in revenue from 2012-17, and that number jumped to $571 million in the 2008 study over the same period of time -- a spike of more than 28 percent with no evidence to support it.

Even though the city started a revised study, it was canceled when the city realized it couldn't issue bonds for the project, according to assistant city manager A.C. Gonzalez. But there was a study completed in early 2009 by HVS on the convention center when it was refinanced. It doesn't directly address the financial feasibility of the hotel, but it has plenty of other useful information.

First, to point out how ridiculous the 2008 study is, convention center guru Dr. Heywood Sanders pointed out to me that there are three obvious gaffes that make the entire report questionable. If you look at the attendance numbers in 2007 for Dallas, San Antonio and Kansas City (pages 43, 120 and 125), they're identical: 39 conventions and 911,360 attendees. Whoopsie.

Now let's compare some numbers from the '08 study and the '09 study. Although the '08 study is reporting calendar year figures and the '09 study uses fiscal years, the numbers just don't match up.

2008 HVS Study -- Dallas Convention Center (source cited: DCVB)

2004: 32 conventions; 714,500 attendees 2005: 32 conventions; 735,025 attendees 2006: 40 conventions; 735,500 attendees

2009 HVS Study -- Dallas Convention Center (sources cited: DCC & HVS)

FY 2004/05: 28 conventions/trade shows; 200,931 attendees FY 2005/06: 29 conventions/trade shows; 278,804 attendees FY 2006/07: 34 conventions/trade shows; 291,511 attendees

And, as we've reported, the most damning part of the '09 study is it proves the convention center will make more money without the hotel. No one has been able to disprove this claim. The only attempt we received was a letter from Thomas Hazinski, managing director of HVS, to Frank Poe, director of convention and event services for the city of Dallas. In the missive, Hazinski says the study for the convention center "is not an analysis of the financial performance of a planned CC hotel," and he claims the Dallas hotel market will be stronger with a headquarters hotel because "it will generate new demand rather than simply absorb room nights that are already in the market."

This in no way whatsoever addresses the study's conclusion that without a hotel, the convention center will make more dough. Obviously, the study didn't include a financial performance analysis of the hotel, but it did include an analysis of how the hotel would affect the financial performance of the convention center, which is extremely relevant to the debate.

A final thought: Remember what you're voting for.

This isn't about whether or not you think Dallas needs a convention center hotel. Two of the biggest anti-hotel'ers out there -- Harlan Crow and Angela Hunt -- want a convention center hotel. They just don't want the city to own it, and that's what this vote is all about.

Despite the pro-hotel'ers arguments to the contrary, there has been no evidence to prove their claims that the charter amendment prohibits the city from offering incentives to developers such as tax increment financing and tax abatements to build the hotel. In fact, the amendment specifically allows for the creation of TIF districts and tax abatement agreements in accordance with state law.

Leppert has spent a lot of time demonizing Crow and making the case why Dallas needs a convention center hotel while avoiding the real issue at stake: public ownership. His case for the city owning it has always been that the city can get a better interest rate on the bonds, but that argument simply falls flat.

The city can get a better rate on building the minor-league stadium, so why don't they own that too? Heck, at least that's something Dallasites would actually enjoy themselves -- how many locals will ever see the inside of the convention center hotel?

The mayor assures everyone that it's the patrons of the hotel that will pay for the bonds, not the taxpayers. But what happens when the hotel doesn't meet the rosy projections in the HVS study?

"Dallas taxpayers will be ultimately responsible for the debt."

-- Tom Leppert, September 24, 2008

A "yes" vote on Prop. 1 approves the charter amendment, which prohibits the city from owning the hotel. A "no" vote on Prop. 1 defeats the charter amendment and will allow the city to continue with its plans to issue approximately $500 million in revenue bonds to fund the project.


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