The Half Truth and Nothing Like the Truth, So Help Me Tom

Dr. Heywood Sanders

In this week’s paper version of Unfair Park, we dig deep into the convention center hotel controversy at City Hall. Mayor Tom Leppert’s dream of building a hotel using public money will come closer to reality when the city council votes next week whether to approve financing for the purchase of land in front of the convention center, which will presumably be the location for the hotel.

Dr. Heywood Sanders of the University of Texas at San Antonio, who is considered the leading independent authority when it comes to convention centers, says the tactic of securing the land is a way for city leaders to test the waters in order to find out which council members will go along with the project and where the opposition is coming from --meanwhile, getting feedback along the way. “I would argue the city is taking baby steps, never outright lying, but never saying the whole truth,” Sanders tells Unfair Park.

You might remember Sanders as the guy that Mitchell Rasansky was willing to pay outta his own pocket to brief the Economic Development Committee. Angela Hunt brought this up at a committee meeting where Rasansky confirmed his offer. However, committee chair Ron Natinsky put the kibosh on any such plans, saying it would be inappropriate. Of course, this was all before Rasansky was forced out of the debate. Essentially, Sanders offers an opposing viewpoint to the findings of HVS Convention, Sports & Entertainment Facilities Consulting, which has been hired by the city to perform studies for a proposed hotel that were released in 2001, 2004 and early April of this year.

HVS wrote a critical review of Sanders’ 2005 Brookings Institution research brief, in which Sanders wrote about how convention center exhibit space expanded steadily while demand plummeted. The HVS response was written a few months after Sanders’ brief; it authors were Thomas Hazinski, HVS' managing director in Chicago, and Hans Detlefsen, director of HVS Global Hospitality Services in Chicago, The two men questioned whether Sanders painted an accurate picture of the state of the industry, attacking him for a “reliance on a small and unrepresentative sample of events.”

Sanders has HVS studies for many cities across the country that he says are structurally similar and lack sufficient data to support its claims. “I don’t say things I can’t back up,” Sanders says. “If you ask for my opinion, I’ll gladly give you my opinion, but I prefer to back it up with substance.”

So how much would it take for the council to hear his side of the story?

“I’m a state employee,” Sanders says. “All you’d have to do is pay Southwest a hundred bucks to fly me up there.”

Sanders says his sense is that most people in Dallas, including the council, are under the impression that the hotel is likely to be mostly privately owned with little public subsidy. Not likely: He warns that we should expect full public investment, with Dallas owning the hotel and paying for the cost of the project.

Harlan Crow, whose family owns the Hilton Anatole, is against using public dough to finance the hotel and says the city is “getting pregnant slowly” by deciding to option the land. He has made his stance clear to Mayor Leppert by sending him two letters, recently telling Leppert that putting an option on the land was “morally wrong.” Crow defends his accusation, telling Unfair Park, “If someone that knows what they’re talking about pointed out that you’re getting ready to make a serious mistake, then I guess that violates my sense of morality.”

Crow says he doesn’t believe any of the developers will put up “any kind of serious money.” What typically happens in these cases is that the developer charges a percentage around six percent of the project’s cost to develop the hotel, and then turns around and offers to give part of their profits to make the deal work, essentially risking nothing in the process, according to Crow. “We call it smoke and mirrors,” he says.

Anne Raymond, who is in charge of Crow Holdings' hotel investments, claims the problem with government being in the hotel business is that nobody has anything to lose, and there is no accountability.“When I make a recommendation to Harlan, I know if I’m wrong, his family is going to lose money,” she says. “I can’t be wrong. I can’t just go off saying things that are unsubstantiated with no consequence.”

Cal Jillson, professor of political science at Southern Methodist University, says the mayor has sold himself as a “big project guy” and thinks Leppert believes that in order to move Dallas forward, it requires big projects and “swinging for the fences.” Jillson says he was impressed by Leppert’s ability to take on the Trinity toll road referendum instead of sidestepping the issue or letting it blow up in someone else’s lap.

“Leppert is thinking that he’s on a roll, and he has the public pretty well behind him,” he tells Unfair Park. “And unless he screws something up badly, he’s gonna get the benefit of the doubt.”

Jillson says he is leaning toward the arguments for building a hotel but wants the arguments to be well presented. “Whether this one in this place at this cost is the right one -- that case remains to be made,” he says. “And the people that are pushing it are responsible for making it.” Jillson also claims the city should proceed without a vote on the issue, saying there would be a future vote on it because each of the elected politicians can potentially be voted out of office.

In some cities, hotels have been resoundingly defeated at the polls only to have the city find another way to use public money to get it done. Sanders says Texas cities have a long history of doing downtown projects with certificates of obligation because that’s a way to do “an end run on the voters.”

Deputy Mayor Pro Tem Dwaine Caraway, who has worked closely with Leppert on several issues, has been vocal in his support of a convention center hotel. He claims it will help fill a void in downtown and create vibrancy. But Caraway doesn’t want to overpay for the land or harm the downtown hotel industry, and he wants more private than public participation in the project. “I don’t really know more than what I’ve been presented, but if I find that something presented was not true, I’ll be the first to scream,” he says.

I’m not sure how much of what Caraway has been told is true, but at the very least, he and other council members are not being given all the facts, and time is running out. On Wednesday, the council will vote for the funding to purchase the land. When asked if the vote on April 23 is a vote to move forward with building a hotel, Angela Hunt says, “Ah, yeah, I do. I think every vote that’s been taken on this is a vote on the hotel to go forward.” --Sam Merten

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Sam Merten
Contact: Sam Merten