Shocking! Surprising! And Exciting!

After the jump, a detailed look at how and why Matthews Southwest was selected to become the developer for the convention center hotel -- including interviews with Assistant City Manager A.C. Gonzalez and Jack Matthews.

When the city council’s Economic Development Committee selected Matthews Southwest as the developer for the convention center hotel project, we were shocked. Since the beginning of the process, almost everyone we talked to predicted Woodbine Development would easily get the nod. And the reasons were varied, ranging from Woodbine owner Ray Hunt’s ownership of Reunion Tower and the Hyatt Regency to Mayor Tom Leppert’s cozy relationship with John Scovell, president and CEO of Woodbine and chair-elect of the Dallas Citizens Council.

A.C. Gonzalez

Based on hearing the name Woodbine about a jillion times as the expected winner, we felt more or less comfortable making a prediction last Monday morning that Woodbine would indeed be selected as the developer. Shortly afterward, we posted another item in which Ray Garfield, principal at Garfield Traub Development, expressed confidence that Woodbine would be the clear choice. But after a lengthy closed session, the committee emerged to pick Matthews, and not only did Woodbine not finish first, it finished third among the three finalists (FaulknerUSA of Austin was the other).

This prompted yet another item when Matthews was selected, in which we owned up to being spectacularly wrong. Though, clearly, we weren’t the only ones hedging our bets on Woodbine.

“It’s fascinating because I would have been willing to put substantial money on this being a deal that Woodbine nailed down from the outset,” says Dr. Heywood Sanders, convention center guru.

“I was really amazed,” says Larry Hamilton, one of the original six developers hoping to land the project. “I thought it would be either Faulkner or Woodbine.”

“I’m somewhat surprised that it’s not Woodbine,” says council member Angela Hunt.

“We were surprised,” says Gina Norris of Crow Holdings.

“I was shocked,” council member Mitchell Rasansky says. “Absolutely shocked.”

So what the heck happened?

Assistant City Manager A.C. Gonzalez, the city’s go-to guy on this project, tells us that Matthews was recommended to the committee by city staff because of the team it put together, which included a “wide array of local and minority businesses.” He also says staff was impressed with Matthews’ proposal, which contains a residential component.

“They exhibited a lot of enthusiasm for the project and offered up a lot of flexible plans on how we might be able to achieve what we’re both after-an exciting development program and understanding that we had a budget to work within,” he says.

That budget, of course, is top secret. But it looks like this baby is going to cost at least $520 million, according to Gonzalez.

Jack Matthews says it was “a long, steadied process,” and he’s “highly optimistic” that he’ll reach an agreement with the city within the 60-day time frame to negotiate a deal. He touts the team he was able to assemble, which includes Foster & Partners as the architect and AEG as the entertainment consultant.

“We put together a terrific team, and it was so hard for them to say no to us,” Matthews tells Unfair Park. “To do just the hotel, it would really be an injustice in our minds. If it’s not an icon at the end of the day, then we’re probably making mistakes getting there.”

Foster designed the Margot and Bill Winspear Opera House, which will be part of the soon-to-be-opened Dallas Center for the Performing Arts, along with many other projects worldwide. AEG is a big-time player in the entertainment industry, and owns many venues you may be familiar with, such as the Palladium Ballroom (also developed by Matthews Southwest), the NOKIA Theatre in Grand Prairie, the AT&T Center in San Antonio and the Staples Center in L.A.

“They all bring expertise and different parts of the puzzle,” Matthews tells Unfair Park. “The way we looked at it, you had to create excitement and had to create a great hotel.”

Of course, the city reserves the right to kick out any part of the team it wants to, which makes the great team explanation a bit hard to digest. “It was disconcerting at the time, but at the end of the day, I don’t mind it at all,” Matthews says.

But looking at the criteria for selecting a developer, I guess the team composition became a much larger component once you tossed out the irrelevant issues. As recently as June 19, the city claimed the criteria was based 30 percent on the “ability of the developer to arrange private financing,” 30 percent on the “amount and form of public participation,” 30 percent on “achievement of goals for the convention center hotel project,” and 10 percent on “team composition.” Since the council has already OK’ed full public financing on the deal, that wipes out 60 percent of the criteria, which apparently was shifted to team composition.

A.C. Gonzalez disagrees, saying the 60 percent was replaced with “similar criteria” related to the financial component of the deal, and stresses that it gave developers the “flexibility to offer contributions.”

No matter what the criteria, we’re impressed that there was finally a curve ball thrown in this process. From what we’re hearing, Mayor Tom backed off and actually let city staff rank the proposals based on which one was the best, and the committee supported staff by ranking the three bidders exactly as they had.

Heck, even Crow Holdings, which accused city staff of “secretly working with Woodbine” in a July 31 letter to Leppert, seems convinced that although the project itself is a dumb idea, at least it went to the right guy. “I told at least three people that I would never bet against Jack Matthews,” says Gina Norris, an executive with Crow Holdings. “He’s really ethical, talented and earnest.”

Gonzalez and staff now are in the process of choosing a hotel operator for the project, which will be the last component before the deal is finalized and sent to the council for its inevitable approval sometime in the fall. But Norris says she doesn’t expect to be surprised, guessing that Omni (which partnered with Matthews) will be chosen. --Sam Merten

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Sam Merten
Contact: Sam Merten