What a Difference Five Years Makes: Public Funding and Ownership of Hotel Goes From "Considerable Risk" to $315 Million Cash Cow

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In December 2003, the city of Dallas issued a request for proposals to build a convention center hotel after former Mayor Laura Miller and her husband, former state Rep. Steve Wolens, months earlier helped pass legislation creating 10 years' worth of tax rebates for hotels built within 1,000 feet of convention centers. Three companies -- Woodbine Development, FaulknerUSA and Hines -- responded with plans for publicly financed and owned hotels. Hotel consultant HVS International submitted a market study on the proposed hotel in February 2004, much like it had in 2001 and would later do 2008 and 2009.

A December 2004 memo (pages 1 and 2 of the PDF below) from Assistant City Manager Ryan Evans, currently the first assistant city manager and president of the Dallas Convention Center Hotel Development Corporation, recommended that the city council enter into exclusive negotiations with Woodbine to deliver a project that would be "largely privately financed" because the public deals "presented considerable risk to the city" after city staff evaluated the HVS study and proposals.

Of course, negotiations with Woodbine went nowhere, which is why Mayor Tom Leppert included building the hotel as part of his to-do list when becoming mayor in 2007. And he checked it off this morning as the city council voted unanimously to fund the project with a bond issuance of up to $514 million.

During this year's campaign, the anti-hotel group questioned the '08 HVS study (as we did), and it pressed the city to release an updated version of the study, which everyone at the city claimed didn't exist.

An open records request -- some of which was sent off to the attorney general, again -- revealed a request from Angela Hunt and response from Assistant City Manager A.C. Gonzalez (pages 3 through 9 of the PDF below) regarding any draft documents related to the updated HVS report. The document is labeled "Draft," followed by "Benefits of the Hotel" and what appears to be Vote No! talking points.

"To the extent that it was all that was provided by HVS, I guess I found it not terribly informative," Hunt tells Unfair Park.

Did she believe this information, which was provided to her April 28, to be legit or simply cooked up to appease her request?

"I'm at a loss," she says. "Your guess is as good as mine."

The city used the updated HVS market study to test the profitability (to the tune of $315 million, by the way) of the hotel, and bond buyers will be given the same document. But just what exactly has changed since 2004? The economy is in the crapper and the hotel industry is struggling, yet the numbers all the sudden make sense?

Dr. Heywood Sanders, a convention center researcher and professor of public administration at the University of Texas at San Antonio, calls the latest HVS report for Dallas "total horseshit."

"At whatever juncture I think that HVS has reached the bottom, they manage to do worse," he tells Unfair Park. "It's just amazing."

Sanders claims many of the statistics and tables in the report are incorrect, and the projections are highly optimistic. Once again, Sanders is critical of the council members and city staff.

"These council members will do what it takes to keep the mayor happy because he's gonna -- as he already has -- promise goodies for them on the side," he says. "But what really disturbs me is what the staff's done. They can't have read any of this stuff."

Our open records request also unearthed a document sent April 6 from Gonzalez to City Manager Mary Suhm regarding the potential impacts of Proposition 1 and 2. During the campaign, Leppert and the other Vote No'ers claimed that Proposition 1 would affect other projects, with Gonzalez sending Natinsky a memo outlining the ramifications on other economic developments.

However, Gonzalez's memo to Suhm (pages 10 through 13 of the PDF below) lists Prop.1 as having an "uncertain impact" on various approved and future deals and a "negative impact" on only the convention center hotel project. In the e-mail, Gonzalez says the information was also sent to Natinsky.open records request - convention center hotel

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