Do Not Disturb
Last week, Dallas continued its speedy progress toward completing a deal to build a $500 million, publicly owned convention center hotel when a city council committee selected a developer for the project. But key questions remain unanswered, and the cancellation of a debate on the issue has opponents crying foul.
On June 16, a discussion was scheduled to take place at PoPoLos Café in the Preston Royal Shopping Center, and the topic was "Does Dallas Need a Convention Center Hotel?" Crow Holdings executive Anne Raymond and city council member Mitchell Rasansky—both critics of the hotel plan—were to face off against John Crawford, president and chief executive of DowntownDallas, at the monthly meeting of The Dallas 40, an organization of business, professional and community leaders formed in 1967.
Just three days before the event, however, an e-mail was sent to members by Susan Abrahamson, chair of The Dallas 40, saying the meeting had been canceled "due to circumstances beyond our control." This communication came one day after Abrahamson sent an e-mail telling members that Crawford and Rasansky were added to the panel, with Crawford serving as a replacement for Phillip Jones, president and chief executive of the Dallas Convention & Visitors Bureau, which also supports the hotel. Members were told that Jones "rescinded his acceptance of our April invitation to participate." Jones did not return phone calls to the Dallas Observer to provide an explanation for his withdrawal.
Abrahamson refuses to comment on the matter, including why the meeting was canceled, why Jones decided not to attend and even why Rasansky was asked to join the panel.
Raymond says she was told that Jones' assistant canceled his participation "with no real explanation." Then, after agreeing to replace Jones, Crawford "abruptly canceled" approximately 48 hours later in a "very strange turn of events," Raymond says.
"It appears the city is unwilling to discuss, in a public forum, the expenditure of over 500 million of taxpayer dollars, with hundreds of millions more at risk," says Raymond, whose company owns the Hilton Anatole, just blocks from the proposed site of the new hotel.
Crawford would not offer an explanation for canceling. "I don't have any comment about that right now," he says.
Rasansky says Abrahamson sent him an e-mail asking him to participate in the debate, and he accepted her offer because the meeting was located in his district, only three minutes from his house. Rasansky, a member of the council's Economic Development Committee, has been restricted from speaking about the hotel issue in council and committee meetings because of a conflict of interest regarding his stock holdings, but he has been a vocal critic of the hotel project outside of City Hall and offers his opinion why two of the biggest proponents of the hotel canceled at the last minute.
"I cannot pinpoint it, but it's pretty obvious that it came from City Hall," Rasansky says. "You don't need to be a rocket scientist to figure out that if Phillip Jones canceled and John Crawford canceled...it's pretty obvious where it came from."
Chris Heinbaugh, Mayor Tom Leppert's chief of staff, says Leppert has "no comment" regarding Rasansky's allegation.
"I didn't expect anything different," Rasansky says. "It's a shame when people cut off freedom of speech and avoid a true American debate."
Council member Angela Hunt, another critic of the hotel project, expressed concern that the public is being asked to pay the $500 million bill for the hotel, yet hasn't been able to hear both sides of the issue.
"It's always better to have an open debate and discussion on major issues like this," she says. "And it's a little frustrating when, for whatever reason, we don't have an open public discourse on issues like this that are important to our city."
The same day that The Dallas 40 meeting was scheduled, the council's Economic Development Committee selected Matthews Southwest as its top choice to develop the hotel project, which Hunt calls "an additional layer of a poorly calculated plan." The city is negotiating with Matthews for a maximum of 60 days while also analyzing bids from potential hotel operators—the last major step in the process.
Dr. Heywood Sanders of the University of Texas at San Antonio, who is considered the leading independent authority on convention center research, says he is "constantly amused" and "astonished" at the haste at which the city has moved forward in the process of building the hotel.
"They seem fully committed to going off this cliff at 100 miles an hour," he says. "It suggests that there was some sort of deal set between Leppert and the council members some time ago. Either that, or they're just totally oblivious."
Assistant City Manager A.C. Gonzalez, who has been significantly involved in the process, claims the city has also been criticized by hotel supporters for moving too slowly.
"It's probably a good sign that we're being criticized on both sides," he says. "It probably means we're doing it right."
Both Sanders and Gina Norris, another executive with Crow Holdings, are extremely critical of the data, found in a study by HVS Convention, Sports & Entertainment Facilities Consulting, that are being used to support building the hotel. Based on the study's findings, Gonzalez says, the hotel will make money, and he hopes those profits will be placed in a reserve account to pay for any unexpected losses by the hotel. He estimates the cost of the hotel at nearly $520 million, which will include approximately $50 million in reserve funds.
The HVS study claims the hotel will begin its first year of operation, 2012, with a 52 percent occupancy rate before quickly rising to 68 percent in 2015, when the rate is expected to stabilize. The study also predicts the average room rate to rise each year, from $186 in 2012 to $250 in 2021.
Sanders says these assumptions don't accurately reflect the current hotel market, which he maintains is not stable, much like the economy. If these projections aren't met, he says the $50 million in reserves could evaporate quickly.
Norris cites a table included in the HVS study as an important analysis of Dallas' downtown hotel market that has been overlooked by the city. HVS included the top seven hotels in its research, which total 6,460 rooms or 2.4 million available room-nights per year. From 2002 to 2007, at least 1 million rooms were not filled each year, and the occupancy rate was just 54.3 percent in 2007. The addition of a 1,200-room hotel would add another 438,000 room-nights to the market—that amounts to 41 percent of the number of unoccupied rooms from 2007.
"It's pretty clear that the city doesn't think it's important for anyone to be asking them to do their homework," she says. "Understand the industry and do your homework before you make this substantial commitment."
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