At last week’s meeting, the city council approved selling bonds to refinance the convention center and spending another $4 million on pre-development costs for the hotel. These were key items to secure Mayor Leppert’s plans to begin construction on the hotel in April and tie up approximately $100 million in hotel and convention center funding before the citizens have their say May 9.
“The political strategy you have adopted is obvious and unfortunate,” said Anne Raymond, leader of Citizens Against the Taxpayer-Owned Hotel. “You -- the mayor and city council -- intend to proceed at a breakneck pace, waste as much money as possible and then claim you’ve gone to far to turn back.”
I wasn’t present for vote, as I didn’t have all day to sit around waiting until Leppert decided to hear the items, which turned out to be around 3:30 p.m. But plenty of others packed the council chambers, including two secret weapons from the Build the Hotel’ers: John Scovell and John Wiley Price. I’ve left several messages for Scovell at his office for comment over the past few weeks with no success regarding his endorsement of the hotel, and his decision to come out of hiding for this vote spoke volumes about its importance.
I tuned in on the Internet during the council discussion and missed Scovell and the other speakers, but thanks to the city’s new meeting archive, I was able to see what I missed. After the jump, we’ll discuss what Scovell and Price had to say, try to figure out what council member Jerry Allen is smoking and provide a transcript of Vonciel Jones Hill’s speech urging the council to slow down.
When an issue gets a big turnout, council regulars can’t help themselves from speaking, and this was no exception. While the hotel opponents had the mic, Jill Floyd offered up the best case I’ve heard to not build the hotel, saying, “So we’re going to send our kids to the hotel to have sex?”
“That’s a tough act to follow,” said Dave Johnson, president and CEO of Aimbridge Hospitality. Then Johnson talked about wanting to build a much smaller hotel of approximately 200 to 250 rooms in Dallas, but he couldn’t make it work with the low occupancy rates and chose to build hotels in Frisco and Plano instead. He added that the hotel industry is down 5 to 7 percent, which isn’t expected to rebound in 2009.
Steve Van, president and CEO of Prism Hotels & Resorts, called himself an expert on hotel defaults and said the bottom is falling out of the hotel business because it is directly related to the economy. “Good things happen when people vote,” he said, using blacks getting the right to drink at white water fountains as an example.
After council regular William Hopkins’ ramblings wrapped it up for the anti-hotel’ers, John Wiley Price immediately corrected Van’s version of history, reminding everyone watching that blacks drinking in harmony with whites had nothing to do with a vote by the people. Then, in typical Price fashion, he started throwing numbers around and talked about closing the revenue gap and user pay.
As for the gap, Price made the case that conventioneers spend an average of $290 per day and painted a picture of a 1,000-room hotel filled with people ready to burn their cash. Then the sales tax on their purchases would we reaped by the city, lessening the tax burden on Dallas citizens.
The last sentence is undoubtedly rock-solid logic, and I’m sure Price has done his homework, so I’ll say the $290 is fine too. But it’s what he didn’t say that is a concern. First, the hotel won’t always have 1,000 rooms filled. Even with highly optimistic projections, the hotel is expected to stabilize at 68 percent occupancy. Second, subtract the number of people who aren’t staying at the hotel for a convention, and also subtract the number who would have stayed at another hotel had the city’s hotel not existed. Finally, factor in the risk the taxpayers have if the hotel loses money and spends its reserves.
The second part of Price’s argument was that somewhere between 65 and 70 percent of all municipal bonds are revenue bonds and Dallas County has been successful with user pay financing. He also said the failure rate on revenue bonds for the U.S. from 1970 to 2000 was .04 percent.
Again, I have no reason to question Price’s numbers, but he’s leaving one major piece of information out. User pay and the use of revenue bonds are successful because they are most often backed by the tax base of the county or city, just like Mayor Tom’s hotel. Bond holders love that type of security. Sure, let the people staying in the hotel pay for it. Fine. But when they stop coming and the mortgage is due, what is the city gonna do, ruin its credit? Nope, they’ll make the taxpayers open their wallets.
Price was issuing plenty of numbers, but much like Leppert and everyone else selling this hotel, not once did he reference any data saying that the convention center is struggling or showing how similar hotels in other cities have impacted convention business.
When Scovell stepped up, he said he wanted to explain his presence “because it doesn’t make a whole lot of sense.” Some thought he was in favor of the hotel simply because Woodbine was in the bidding to develop the project, he said, but even after losing out, he’s still supporting the hotel.
Scovell claimed all the business from the Hyatt Regency will move to the city’s hotel. “We get clobbered,” he said, but he believes in the long run and that "the tide will rise."
“If we don’t build the hotel, then we’re just on the gradual decline. We’re not going to go anywhere,” Scovell said. “If there’s anybody up here with his hair on fire standing up here, you’d think it would be us. It’s not. We believe in this project.”
Scovell’s time was extended as he discussed his history with the Crow family, which he said dates back 40 years when he audited Trammell Crow when Scovell was with Arthur Anderson. He gushed about the Crows, saying there wasn’t a greater visionary or person in the real estate industry than Trammell Crow.
“They’re competitors,” Scovell said. “They like to win. They don’t like to lose.”
Lemme get this straight. Scovell says the city’s hotel will steal his business and the Crows are worried about their business too? This sounds like a reason not to build the hotel. Since when do we allow the government to fully subsidize a project that competes directly with private businesses?
So why is Scovell in favor of the competition? I’ve got some ideas, but the bottom line is he’s admitting both hotels will suffer losses. One side helped get Leppert elected, and the other contributed to Ed Oakley’s campaign. Someone is gettin’ payback outta this, and it ain’t the Crows.
Then came the command from Darth Scovell, Lord of the Citizens Council: “You cannot do nothing. We have to do this.”
After the speakers, Economic Development Committee chair Ron Natinsky once again said, “This is not a taxpayer-paid-for hotel.” He also noted for the zillionth time that there have been more than 20 meetings about the hotel, and it has been an open, visible process. Of course, he forgot to mention that many of the key decisions -- selecting the site, public ownership and developer -- were made in closed session, and in none of those presentations was there any data saying the convention center is struggling or making the connection between how other cities’ convention attendance has been affected by building a hotel.
Deputy Mayor Pro Tem Dwaine Caraway chastised Citizens Against the Taxpayer-Owned Hotel for sending a mailer to the Southern sector thanking them for their support, saying they had no right and calling it misinformation. Caraway must have forgotten about the misinformation sent out all over Dallas by Vote No! last year during the Trinity toll road referendum.
Southern sector council member Tennell Atkins said he hasn’t received any phone calls or memos telling him not to build the hotel, which seems like an excuse to do almost anything.
Jerry Allen said he’s convinced “150 percent” that the city needs to move forward with building the hotel. “The numbers, to me, are pure. They’re clean,” he said. “It’s one plus one equals two. That’s how clear it is to me with the numbers.”
In 2004, HVS Consulting & Valuation did a study on a proposed 1,200 convention center hotel, just like they did again this year. In ’04, the study said the hotel would create roughly $444 million in revenue from 2012-'17, and that number jumped to $571 million in the ’08 study. That’s a spike of more than 28 percent with no reason to support it, and those are pure numbers? Additionally, this year’s study says the hotel will earn $70.7 million in 2012 and steadily rise to $123.5 million in 2021, an incredible revenue increase of 75 percent in just 10 years.
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Allen also spoke about the 60,000 signatures, pointing out the 1,240,000 citizens who didn’t sign it. “I’m all about voting. Let them vote,” he said. “But I’m all about, when it’s all said and done, that those votes have already taken place. And that’s when they voted for us.”
In the May 12 election last year, a combined 61,145 people voted for the 14 current council members and Mayor Leppert, and four of those council members (Hill, Neumann, Davis and Atkins) and the mayor didn’t win their places outright, needing the June 16 runoff to secure victory. Given that essentially the same amount of people cared about the council and the mayor that care about voting on the hotel, what about the 1,240,000 citizens who didn’t vote for Allen and his colleagues?
Finally, for the two people who have stuck it out this long, Vonciel Jones Hill shed light on what otherwise was mostly a pro-hotel affair. With Mitchell Rasansky recused and Angela Hunt in Europe, she was the lone voice of opposition. After a long stare at John Wiley Price, someone she said is like family to her, Hill served up one of the most eloquent speeches you’ll hear from a council member. It's below. --Sam Merten
“My position on this issue is no secret. I have said from the beginning I separate the issues of whether my city has a convention center hotel and who owns that hotel. I continue to believe that those are separate and distinct issues. I believe that my city needs an attached convention center hotel. I do not believe that the hotel should be owned by the City of Dallas.
I recognize that the payment for the hotel is projected to come from hotel users. I do my homework, and, therefore; I understand the documents. I understand the argument. However, I believe neither the occupancy rate projections nor the revenue stream projections. If I believed the numbers, perhaps I would think differently. I do not believe the numbers. I respect every one of my colleagues around this horseshoe. I respect [Assistant City Manager] A.C. Gonzalez. I believe in A.C. Gonzalez.
Let us be clear what I do not believe are the numbers. I do not believe the occupancy rate will be as projected, I do not believe the revenue stream will be as projected, and, therefore, I do not believe that the hotel will pay for itself. I did not believe that in the beginning, I do not believe it now, and I do not anticipate that I will believe it in the future. If this hotel project was being handled differently, I would think differently.
I am not opposed to tax abatements for the hotel. I am not opposed to tax incentives for the hotel. We are not doing either of those or any other packaging that would encourage a private developer -- people who know how to own and operate hotels -- to take this venture. If people who are in the hotel business are saying, ‘I can’t make a profit,’ why would I believe that my city can make a profit? Again, let me reiterate. I do not believe the numbers, and, therefore, I have come to my position.
Additionally, we now have what we did not have before: signatures of taxpayers -- the people who elected all of us, who are saying, ‘I want to vote.’ The voters might say ‘yes.’ The voters might say ‘no.’ But the voters should say. I am not convinced that if we allow the voters to have their say, we will have the catastrophic effect that is being projected at this time. I am not convinced that if we do not move today, buildings will fall down and bad things will happen.
I believe in the democratic process. It may be messy, it may be lengthy, but it’s our way. It’s the American way. If it were not our way, the council would not be full today. This chamber would not be full. We would not have the opportunity to hear those of you who agree and those of you who disagree. We would not have the opportunity for me to sit and disagree openly with the majority, in fact all of my colleagues, who are sitting around this horseshoe, including the mayor.
This is democracy. The voters have said, ‘We want to have a say.’ I don’t know what they will say, but I would like to hear it. I disagree with the city owning the hotel. I disagree with our moving forward at this rapid clip. I believe we need to step back and take another look. I recognize that I am the minority on this issue. That doesn’t bother me.
Let us be clear. I do not know Harlan Crow. I don’t know Trammell Crow. I don’t hang in those circles. Those are not the people who come to my home for tea. And, therefore, I am not influenced by what Harlan or Trammell or any of the Crow family has said. I think for myself. I have an independent mind that I am entitled to use that the 88-plus thousand [she meant hundred, but 1,945 people voted for her May 12 and 3,231 voted for her June 16 for a total of only 5,176] people who elected me expect me to use at this horseshoe, and I use it on this issue to say I do not agree, and I believe we should slow down and take another look.”