Sam Coats, named last week to take over as the interim leader of the scandal-plagued Dallas convention and visitors bureau, called VisitDallas, is the perfect guy. He has a deep international résumé as a fixer of broken companies and a turnaround artist. He has experience as an elected official and mayoral candidate. Nobody is going to trick Coats. But, please. Mayor Mike Rawlings gets the credit for doing anything here?
Last week when Rawlings announced Coats’ appointment, he talked Robert Wilonsky at The Dallas Morning News into writing a story that suggested cleaning house and appointing a new boss at the visitors bureau had been Rawlings’ idea all along. That’s just nonsense and not true. If anything, this is a great example of how City Hall stories get told upside down and backward in Dallas because the people telling them don’t want anybody to know what really happened.
The visitors bureau, now called VisitDallas because gluing two words together is just so cool, is a “privatized” entity, which, as we have learned so painfully, is not quite the same thing as a private entity. You and I are private entities. We have to go out and scratch up our own sustenance. Not VisitDallas.
In five years from 2013 to 2017, VisitDallas received $146 million in public largess from the city. What did the city get back for that money? In a scathing report last January, the Dallas city auditor said nobody knows: “The City of Dallas does not have sufficient mechanisms in place to effectively evaluate services provided by VisitDallas … ,” the report said.
The city got maybe nothing or way not enough, and it’s not merely that nobody knows. Except for two guys, nobody else at City Hall ever wanted to know. As a private tax-exempt entity, VisitDallas has always been required to file annual reports with the IRS showing how much money it takes in and what it does with it. The city officials in charge of the contract with VisitDallas never even looked at those IRS reports.
The “990” reports are online. They’re public. They’re only a few pages. I look at that stuff all the time for nonprofits. It takes 10 minutes. But for $146 million in Dallas tax money, City Hall couldn’t find the 10 minutes.
What is VisitDallas? It promotes the city’s convention center. It books conventions. So how on earth do we know that we’re getting back anything worth the almost $30 million a year we’re paying VisitDallas? VisitDallas tells us we are. The entire work product, the value we get back for all that tax money, consists of so-called economic impact studies VisitDallas does on itself every year. They always find that they have a positive economic impact on the city that’s somewhere in the zillions.
Sure. And I could do an annual economic impact study on myself. According to my own estimates, this city might be ahead kabillions just for having me.
Economic impact studies by groups touting their own importance are almost always flat-out scams. The State Fair of Texas did economic impact studies on itself when it was trying to fight off changes to its contract at Fair Park a few years ago. They made my mere kabillions look like peanuts. They were worth godzillions to the city. And you know what? You could take the fair’s godzillions, put them together with my kabillions and VisitDallas’ zillions, go to Tom Thumb, go through the check-out lane and try to buy a quart of 2 percent milk. Tom Thumb would call the cops.
In the case of the fair, a couple of serious academic entities took a crack at doing real economic impact studies and came up with something between a fraction of what the fair had claimed and bubkes. It’s nonsense.
So how do things like this get going in the first place? Who sets them up? And how do they continue for so long and at such a shocking level? For that answer we have to go back to those two terrible guys, those awful guys, those guys the Morning News wants you to vote against and toss out on the street in the June mayoral and City Council runoff elections because they have such bad personalities. I’m talking about District 14 council incumbent Philip Kingston and District 1 member and current mayoral candidate Scott Griggs.
Kingston began drawing attention to the VisitDallas money even before he went on the council, during his first campaign for office in 2013. In preparing to run, Kingston made a study of the city budget. He stumbled on a black hole of about $30-35 million a year associated with the convention center.
“I noticed that the way that the budget office characterized the expenses on the convention center was as losses,” he remembered the other day. “I said, ‘What in the hell is this?’ They said, ‘That’s losses from operating the convention center.’”
Kingston dug deeper and found that the millions the city was booking as a straight loss every year on the convention center was the money the city was paying VisitDallas, which was still called the convention and visitors bureau then before its names got glued together. There was no bookable bankable return for that money that an accountant could put on a page as value received. The city’s budget people just put it all down as money out the window.
“There were never any metrics applied to the convention and visitors bureau,” Kingston said. “The only metric anybody held them to was their own made-up economic impact number.”
This saga goes on and has several twists and turns. Some years later, Griggs, who was then on the council, looked into a special tax district funded by the city’s hotel and liquor tax collections. Both he and Kingston were being approached by arts groups with a strange story to tell of their own.
In Houston and other large Texas cities, local arts groups were being subsidized by some of the money raised from hotel and liquor taxes. But whenever arts groups asked about it in Dallas, they were told the cupboard was bare. All of the hotel and liquor money here was spoken for by the convention center and its associated city-owned convention hotel.
Griggs probed deeper into the tax district. Its main function was giving away tax money to conventions as incentives to get them to come to Dallas. But the tax district had a strange way of doing it. Basically, the district turned its money over to one guy, who was also in the business of luring conventions to other cities competing with Dallas. The outcome was a secretive insider game that seemed to have less to do with profit than political favor. The Baptists and the National Rifle Association were given use of the convention center rent-free, charged not a dime, while a convention with sexual overtones had to pay full freight.
When Griggs turned to VisitDallas for details on how they lured conventions, they stonewalled him. He was a council member with a right to demand the information, but VisitDallas slammed the door, claiming proprietary secrets. Griggs resorted to making demands under the Texas Public Information Act, the way a regular citizen must, but VisitDallas resisted those as well and won the support of the state’s attorney general, who was in court battling his own ethics challenges.
But Griggs and Kingston didn’t give up. They began seeking out reporters and online venues where they could at least tell the story of what they were asking and the answers the city and VisitDallas were refusing to provide. They achieved one great purpose: At a certain point, the absence of a serious audit of VisitDallas loomed so large that it began to cast a shadow on the office of the city’s highly respected auditor, Craig D. Kinton.
At some point in 2018, Kinton made two important decisions. He initiated an audit of VisitDallas. And he announced his retirement. Kinton told reporters he was retiring because he wanted to go fishing, which I personally consider to be an even better and more honorable reason than spending more time with family.
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All of this tells the story of how bad it was, but I’m not sure it totally resolves the why. Why do things like this seem to happen so often at Dallas City Hall? Who wants them to happen? Who benefits?
For decades, two entities have been the primary beneficiaries of the cyclical expansions of the city’s convention center and the building of the convention hotel. They also have been ardent defenders of VisitDallas. One is The Dallas Morning News, whose abandoned corporate campus sits next to the convention center, and the other is Woodbine Development, owner of the nearby Hyatt Regency Hotel and Reunion Tower.
An indication of how important its downtown real estate may be to the newspaper company came a couple of weeks ago in a declaration made to the SEC. A major shareholder seeking to force a sale of the newspaper told the SEC that the entire value of the newspaper company consists of its downtown real estate plus its cash on hand. The paper itself, the shareholder claimed, has no economic value. Meanwhile, Woodbine founder Ray Hunt and his entire family are making the maximum legally allowable campaign contributions to Eric Johnson, Griggs’ opponent in the June election.
We can know this much for sure. Last week’s move, booting the incumbent management at VisitDallas and installing Sam Coats, is the direct outcome of years of investigation and effort by Kingston and Griggs. And I suspect it also has a lot to do with why The Dallas Morning News and Ray Hunt want you and me to un-elect them.