Careless Whispers, the "Advantageous" Reunion Site and Other Convention Center Hotel Revelations

The Dallas City Council’s decision to buy land in front of the convention center for $42 million removed the first major obstacle in building a publicly owned hotel. The city now has plenty of room to build Mayor Leppert’s hotel, along with meeting space and other development.

Council members Angela Hunt and Mitchell Rasansky raised several questions throughout the process of purchasing the land, and both voted against the council’s approval, on February 13, to spend $500,000 on an option for the property. But their concerns fell on deaf ears, and the city owns the land whether a hotel is built on top of it or not.

Ownership of the land is a done deal, but an exhaustive open records request by Unfair Park sheds more light on just how the city proceeded in acquiring the Chavez property. Jump to hear responses from Hunt and Rasansky to an e-mail from Assistant City Manager A.C. Gonzalez to Michael Anderson, who brokered the sale on behalf of Chavez Properties Ltd., along with a description of the five properties considered as a site for the hotel.

Two days before the option was put on the land, Gonzalez e-mailed Anderson a list of questions he might get about the property. Gonzalez also included “a couple ways you might consider approaching your statement,” which included both a “short version” and one with “more detail.”

Both of Gonzalez’s suggested statements began by noting that Anderson had been approached by many times by buyers offering him “more money than the appraised value for the property at that time.” The short version includes noting that “this plan for development of a convention hotel plus surrounding entertainment really impressed us,” and it says the deal is a “win-win for the community and our investor group.”

Anderson responded to the e-mail by asking if Gonzalez was referring to the press or the council members, and Gonzalez replied “both,” telling Anderson he didn’t need to come to the council meeting but should be “close by and available by phone.”

Gonzalez downplayed the exchange, telling Unfair Park that his e-mail was in response to an earlier conversation during which Anderson asked for “guidance” because he hadn’t been involved in a controversial land purchase that involved an executive session. Gonzalez claims Anderson wanted to know what he could and could not say that wasn’t privileged information.

Council member Hunt was provided with a copy of the communication, and says she finds “that kind of coaching very troubling.” Hunt didn’t buy Gonzalez’s explanation, saying if city staff did not want Anderson to disclose confidential information, they should have provided him instead with a list of items that could not be disclosed or discussed publicly because they were sensitive and could endanger the deal.

“That, to me, is the more appropriate response in this situation, if indeed the purpose is to prevent the dissemination of confidential information,” Hunt says. “But nowhere in that e-mail did I see any admonishment about ensuring confidentiality with regards to specific issues. Rather, I saw active coaching of a property seller on what would be the most advantageous political arguments. And I don’t believe that’s appropriate in this situation.”

After reading over the communication several times, Rasansky claimed Gonzalez was “priming the seller,” and his explanation for why he sent the e-mail was “wrong.” Rasansky first took issue with some of the questions provided by Gonzalez, such as ones asking what Anderson was making on the sale, what the original purchase price was and how the sales price compared with other downtown properties.

Rasansky says he would never ask what Anderson or Chavez was making on the sale, the purchase price is “none of the council’s business,” and the property should not have been compared to other downtown prices.

When Gonzalez told Anderson to explain how other buyers have approached him with offers higher than the appraised value, Rasansky calls it “a bunch of bologna.”

“We can’t tell him to justify our price,” Rasansky tells Unfair Park. “That’s like calling an appraiser and telling them to back you up.”

As for Gonzalez including that Anderson was impressed by the city’s plan for the hotel, Rasansky says that’s “BS,” and if he was the owner and could get more money from someone else, he’d sell it to them instead.

Rasansky, once silenced on this issue, now claims that his attorney says he can talk only with the press about the hotel project. He says the communication between Gonzalez and Anderson “doesn’t pass the smell test,” and asked, “Why do we even have to tell them how to answer us?”

Also discovered in the open records request: copies of the PowerPoint presentations given to the Economic Development Committee regarding the site selection. The first session, which took place November 19, 2007, gives an overview of the five properties considered as the site for a hotel. The criteria for the site was that it be located within 1,000 feet of the convention center to receive incentives from the state, and it needed to be at least four acres to accommodate the hotel, meeting space and other development associated with the project.

The first property includes two city-owned lots combining for 4.35 acres at 500 S. Stemmons Freeway and 501 Memorial Drive. The land contains part of the Reunion Arena Parking Garage, and staff estimated the market value at $85 per square foot -- the same amount listed for all five site options.

“It would appear challenging to not only utilize the site in light of its physical location, but it would also be necessary to demolish/relocate the existing parking garage or build above it,” according to the presentation. “For these reasons, this site is not considered feasible.”

The second area considered was the approximately 8 acres of land where Reunion Arena now sits. Demolition of Reunion, which is now a topic of debate for the council, was estimated at $5.9 million.

The presentation listed this site as “advantageous” because it is owned by the city and met the four-acre requirement.

The third option was the Chavez property, which was just purchased by the city, and the fourth included 1033 Young Street and 1114 Wood Street. However, 1033 Young is being used by developer Larry Hamilton for his aloft hotel project, and Hamilton bought 1114 Wood to include with his proposal for the convention center hotel project.

The final contender was land between Griffin Street and Lamar Street, owned by three different entities. Because it contained just 3.23 acres, it appears to have been ruled out because it wasn’t big enough.

The five properties were then assessed scores, with the Chavez parcel getting perfect scores in all categories, which led to another closed-door session on January 11 to name Chavez as the winner.

The presentation noted that the city has been reluctant to condemn the Chavez site, but didn’t explain why. Also included: “Owners bought it at a price that has allowed them to cash flow the property, thus are not motivated to sell at any price other than a premium.”

Listed under the heading “Concerns,” the presentation suggests that the committee shouldn’t waste any time making a decision: “The owner has placed the requirement that if we desire to control the price and availability, we have to act quickly.”

Although this information was obtained legally, Gonzalez and other city officials will not comment because the presentations were heard in executive session, much like the discussion for the hotel to be publicly owned.

With the future of Reunion up in the air, we have to ask why the Reunion site wasn’t given more consideration. Sure, the Chavez site was better because it’s so darn close, but wouldn’t spending $5.9 million to tear down Reunion Arena make more sense than spending $42 million on a site that city staff admitted in executive session was priced at a premium?

Then, if the hotel deal ended up as a disaster, the city could simply sell the Reunion land, and maybe put the proceeds towards something like, I dunno, maybe the $50 million budget deficit?

As for the hotel project, Rasansky says, “I wish them luck -- they’re gonna need it.” --Sam Merten