The City's New No-Tell Hotel
A look at tomorrow’s city council agenda would lead one to believe it will be a pretty typical day at City Hall. Sure, you can go see what happens to the homeowners from Little Mexico if you have a couple hours to burn whilst waiting for agenda item No. 61 to come up. But there really isn’t too much to get excited about.
The addendum is a different story and should give everyone a reason to pay attention to the goings-on in the chamber. The addendum is where City Manager Mary Suhm sneaks in the juicy stuff at the last minute, and this one is no exception. Such as, an increase in the contract for the Trinity Lakes design of $8.5 million and $1.5 million for the next phase of the Environmental Impact Statement for the Trinity Parkway are noteworthy items, But the key vote in the meeting will be on addendum item No. 10. A vote to move forward with this item would essentially green-light massive public subsidy in a convention center hotel.
Interested? Then jump with us.
The Dallas Morning News ran a story over the weekend explaining the item, which would approve a $500,000 deposit for land near the convention center. This deposit would grant the City of Dallas rights to purchase the property for approximately $40 million. There is a lot in this story that should scare the doo and doot outta taxpayers. Here are the biggies:
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The cost of the hotel to taxpayers is uncertain, but the city admits it would require a “significant taxpayer investment.” Mayor Tom Leppert and city officials are saying it’s premature to speculate on how much taxpayers’ money will be needed.
City officials estimate the cost of the hotel between $200 and $300 million, and a consultant said it could be as much as $400 million.
No one is able to say how Dallas will pay for the land, but refinancing the debt on the convention center is likely.
Mayor Leppert said even if the $40 million was spent to acquire the property, it wouldn’t guarantee that a convention center hotel would be built there.
If the city does not end up buying the property, the $500,000 deposit will be lost. Phillip Jones said, “It's a risk we're willing to take. It's that important to the city.”
The Dallas County Central Appraisal District's taxable value for the land is about $7.5 million, approximately $32.5 million less than what the city would be paying for it.
So, let's see if we understand this. The council is supposed to approve spending half a million bucks to reserve the right to spend $40 million (which they’re not sure how they’ll pay for) on land that will cost $30 million more than its appraised value and may or may not be used to build a convention center hotel? Oh, and the hotel doesn’t have a definite cost, and the amount of taxpayers’ dough to be used is unknown?
Clearly this presents a significant risk to taxpayers. From what I’ve heard from a reliable source at City Hall, Dallas taxpayers will be on the hook for at least $120 to $150 million of the cost of the hotel. In addition, the hotel could be publicly owned, which means that when it ends up in the red, as some convention center hotels have done, taxpayers will be hit with the bill.
Nearly six years ago, Jim Schutze wrote about the potential power struggle between Laura Miller, who had just become mayor, and former City Manager Ted Benavides. In the piece, Schutze talked about Miller’s first full day of briefings. She was shown two presentations from developers asking the city for millions of dollars in taxpayer subsidy for downtown projects.
“But the only people telling the council about this concept, the only ones giving them the details, were the development group seeking the subsidy and a very sympathetic member of the city manager's staff,” he wrote.
Schutze took this way of doing business and essentially predicted what would happen with the Trinity River Project. This quote from former council member John Loza says it all: "You would have to do your own research in order to prove anything to the staff."
Council member Angela Hunt took the time to do her own research on the Trinity River Project, and that independent way of thinking led to the referendum. Her colleagues instead deferred to city staff. The referendum was defeated, and the message was sent: See, you can listen to us or you can think for yourself. And you see where thinking for yourself gets you.
When Mayor Leppert said the Dallas Convention Center needed a hotel in his inauguration speech, I wondered if a similar fate would await those in opposition.
Over the past few months, Leppert and the Economic Development Committee have moved ahead with plans to build a convention center hotel. This is getting jammed down the throats of everyone, and Wednesday’s vote will show which council members will side with Leppert and which ones can think for themselves. The sales pitch has three main points: Everyone else has one, so we need one. We’ll be turning away business without one. We’ve already invested a lot of money into the convention center and need to give it a boost.
In a January 11 briefing to the Economic Development Committee, five cities were analyzed. Denver and Houston were looked at, along with three cities with convention center hotels on the way (San Diego, San Antonio and Phoenix). What was missing from the presentation was how adding convention center hotels affected other cities that have not seen anywhere close to the benefits that were expected. This is another bad case of the city presenting one side of the facts.
Much like the Trinity toll road issue, The News has been writing editorials in support of a convention center hotel. In the appropriately headlined, “Dallas needs a convention center hotel,” The News presented its case. It ended by citing the success of Denver’s hotel and says San Antonio and Phoenix have hotels on the way. Again, very one-sided. Mentioning the success of one of the few hotels that has been successful along with two that aren’t even open yet is hardly a solid analysis of the market.
The city is relying on the advice of Phillip Jones, president and CEO of the Dallas Convention & Visitors Bureau, and consultants paid to tell city staff what they want to hear. It would take independent research for council members to come up with the other side.
Back in September, I spoke with Phillip Jones and Dr. Heywood Sanders, who is regarded as one of the top independent researchers when it comes to the convention center biz. Dr. Sanders hadn’t been contacted by the city or The News, and he had strong thoughts about the wisdom of Dallas building a convention center hotel. Despite his expertise in the subject, you won’t see him in the paper or briefing the council. Why? Simple. He provides a view opposing all the momentum behind bringing a convention center hotel to Dallas.
As this process has moved forward, council member Hunt has said she doesn’t have enough information to make a decision. Unfair Park caught up with her yesterday, and she says the PowerPoint presentations and information provided by city staff still isn’t adequate to move forward. The proposed site is a parking lot right next to her district between Market Street and Lamar Street, south of Young Street.
“We seem to be moving awfully quickly,” Hunt says. “Before we’ve even made a decision on whether or not we’re going forward with the convention center hotel, we’re already putting an option on the land. That doesn’t appear to me to be the right order.”
The council and the taxpayers simply don’t have enough information to move forward with buying this land. There’s a reason why a deal with a private developer hasn’t been struck to this point: It’s not viable for them. So why should the City of Dallas take on the risk?
Before the council votes to move forward with this, they must demand more information. It shouldn’t be their responsibility to do independent research to find answers. City staff should be examining all the data, not just relying on what enables them to sell this to people.
Schutze’s words ring true as much today as they did six years ago: “It's remarkable that the city council would even allow itself to ponder something this new, this big, this complicated and this significant based only on the word of the people trying to sell it.” --Sam Merten
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