Hurrying the Hotel

What does a yellow signal at a stoplight mean exactly? Slow down and be prepared to stop, or hit the gas before the light turns red? Anyone who's driven in Dallas knows which answer many local drivers would choose, so maybe City Hall's hurry-up response to a possible citywide vote on a controversial $550 million publicly owned convention center hotel is no surprise.

Mayor Tom Leppert, who has been relentless in pursuit of a hotel that he and a majority of city council say is needed to boost tourism and downtown, is undaunted by an anti-hotel petition drive that recently collected more than 60,000 signatures calling for a May vote on the hotel.

Slowing down now, they say, could end up costing the city more money in the long run.

"As we have seen in both the strong mayor and the Trinity tollway elections, signatures on petitions do not always reflect the sentiment of the city, especially once they learn the facts," Leppert says. "The city has already invested a tremendous amount of money in this project, and to protect that investment, we must keep moving forward."

Of course the hotel's supporters think that, say opponents.

"That's exactly as we predicted, not a surprise at all. Let's get so pregnant that we have to spend half a billon dollars," responds Anne Raymond, leader of Citizens Against the Taxpayer-Owned Hotel and managing director for Crow Holdings, which owns the Hilton Anatole Hotel and would compete with a city-owned facility. "All that's happening is everyone is doing exactly what the mayor has told them to do, which is get this thing done as fast as they can."

Speed has been a hallmark of the $550 million hotel project. The council's Economic Development Committee jumpstarted the city's financial obligation when it met behind closed doors in November 2007 to discuss five potential sites for the hotel, each of which had to be within 1,000 feet of the Dallas Convention Center to receive tax breaks from the state. On January 11, at another private meeting, the committee chose a site directly in front of the convention center, which is twice the size needed to build the hotel.

The land was on the tax rolls for $7.3 million, yet the city eventually paid $42 million for it. The council vote to approve the land purchase was originally scheduled for April 23, but it was delayed until May 14. In the meantime, the Observer's blog, Unfair Park, discovered on May 1 that the Dallas Central Appraisal District had revalued the land at $36.5 million, a staggering increase of 400 percent. The Economic Development Committee also met in private May 6 and determined that the hotel would be publicly owned after Leppert was quoted just four days earlier in The Dallas Morning News saying, "But the public money—you want to try to get to zero if you can." Both items were approved at the May 14 council meeting.

On September 10, the council approved $4 million for pre-development costs for the hotel and was expected to pass another $4 million item October 22, which will move the design phase forward in order to begin construction in April. Jack Matthews, the developer of the hotel, says up to $10 million in construction costs could be accrued by the time a referendum on the issue hits ballots on May 9.

"I think we'd be lucky if they only spent $10 million," Raymond says. About one year after the land was on the county tax rolls for $7.3 million, the city could already have more than $60 million committed to the project. Additionally, the council was expected on October 22 to approve refinancing the Dallas Convention Center, which will yield $40 million that is intended for renovations to the center.

City staff and some council members say the rush to begin construction is necessary to get the hotel running as soon as possible, since the city intends to pay back the bonds with the money they hope it earns. The bonds are scheduled to be sold in January, and until the hotel opens, the city will be responsible for paying the $2.6 million monthly debt on the loans. Why not simply delay issuing the hotel bonds—and saving the debt—until after May?

"They should stop right now. They should see what the financial markets are going to do and see how the voters vote," Raymond says. "There's no big rush. It's really incomprehensible to me."

Selling the bonds in January will not only help Leppert persuade voters that the city is already deeply committed to the project, it will also make sure funding is secured before the 2009 legislative session, at which around $50 million in tax breaks for the hotel could be eliminated. (Under current legislation, passed in 2003, the state would waive collecting occupancy taxes on the city's hotel for 10 years.)

"We fully expect that lobbyists for the hotel's opponents will spare no effort to kill the hotel in next year's legislative session," Leppert says.

The May 9 referendum is not official, as the City Secretary's Office has until November 8 to verify 20,000 of the signatures. Nevertheless, the vote appears to be a foregone conclusion since the anti-hotel organization had 60 days to collect signatures and needed only 23 days to hand in more than 60,000 signatures. Raymond predicts that more than 50 percent will be verified.

The Economic Development Committee is scheduled to approve a final development agreement and price for the project December 5 before a council vote on the items on December 10, even though the referendum will be scheduled by then.

Deputy Mayor Pro Tem Dwaine Caraway, a committee member and close Leppert ally, has been a strong supporter of the hotel project. Yet he has described Dallas as having "the deadest downtown in the United States of America," and even after voting for full public ownership of the hotel in May, he said, "Once this thing gets going, who else might step up to the plate and take the city right out of the deal?" Like the mayor and the majority of his colleagues, he says a pending vote will have no bearing on his decision to build the hotel.

"Either way it goes, we have a commitment to the citizens. What if it doesn't go that way [voters kill the project], then we fall behind schedule and costs will go up," he says. "So it's good one way and bad another way. Who knows?"

At a September 24 press conference of a pro-hotel organization, Economic Development Committee chair Ron Natinsky dismissed the notion of voters weighing in on the project. "The people have voted. They voted for the members of the city council and the mayor," he said. "We think we're doing a good job. We hope you think we're doing a good job."

As the council nears its final approval of the project, Raymond says, the anti-hotel faction will continue to evaluate its options, which could involve a lawsuit. "Will we consider it? Of course," Raymond says.

Since taking office in June 2007, Leppert has viewed the addition of a convention center hotel as a vital cog in the rejuvenation of downtown Dallas and the city's ability to stay competitive in the convention business. He says meeting planners and convention groups cite the lack of a convention center hotel as a key reason for rejecting Dallas for their conventions. And if the May vote doesn't go his way, Leppert is noncommittal about his willingness to stop progress or what his course of action will be.

"We will evaluate our position and where we are on the project if that happens," he says.

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Sam Merten
Contact: Sam Merten