As Schutze mentioned earlier, the non-vote on the Dallas Area Rapid Transit board appointment highlighted the craziness at today’s city council meeting. The other big item of the day was a vote to approve spending $42 million on certificates of obligation to purchase land for a convention center hotel. Much like the DART item, there was no vote. In fact, it sounded like Mayor Tom Leppert’s plan to sneak a hotel project past the council and voters has hit a snag, much like his failure to keep Joyce Foreman off the DART board.
After the item was read into the record, Leppert explained that there would be no vote on the item because of an extension reached with Chavez Properties, who owns the land. One of the reasons this process has been moving so fast is that part of the option agreement with Chavez said the $500,000 from the Dallas Convention & Visitors Bureau would be applied toward the price if the sale was completed by May 31. The original plan was to approve the certificates today, and then receive the proceeds around May 22 in time to meet the May 31 deadline. The deadline has now been pushed to June 20, with the final day of the option remaining September 30.
The only public speaker on the item was Gina Norris of Crow Holdings. She told the council that a possible $500-million hotel would be the most significant vote they’d see in their terms. “I’ve been alarmed that the council is being pressed on this land purchase well before we know how much the hotel will cost and if it will be financially viable,” Norris said.
Norris mentioned the two appraisals that Crow Holdings had done on the property of $29.4 million and $33.9 million, which were both significantly less than the city appraisals of $40.1 million on the land. One of the appraisals by Peter Malin of the Malin Group said the best use of the Chavez property was as a parking lot (which is the land’s current use), and nothing was mentioned about a hotel, according to Norris. She added that it was not a responsible decision to move forward with purchasing the land and suggested the council hear from someone like Dr. Heywood Sanders, who “doesn’t have an axe to grind,” to hear the pros and cons of building a hotel.
Ron Natinsky, chair of the Economic Development Committee, said he was under the impression that the council would be voting on the item today until he did some research and found out about the extension.
“I couldn’t agree with you more, Gina,” he said regarding her statements that there are too many unanswered questions to move forward. Tennell Atkins, co-chair of the committee, expressed concerns about the city appraisals and asked Norris for copies of Crow Holdings’ appraisals.
Additionally, Sheffie Kadane said he disagrees with the city appraisals, and appraisals should be done on an “as-is, where-is” basis. Kadane said city staff has convinced him that a hotel is needed, but “all our ducks need to be in a row” before pulling the trigger. Dave Neumann said he’d love to support the hotel but isn’t sold yet: “I’m very nervous about the longer term impact on our city if we jump so quickly out of enthusiasm that we don’t do our due diligence on the numbers.”
Angela Hunt, the lone vocal opponent so far, reiterated her many concerns about voting to buy the land. She asked Norris if HVS (the consultant who has done three studies for Dallas regarding a hotel) had ever recommended not to build a convention center hotel. Norris told Hunt that Anne Raymond, also of Crow Holdings, was in a meeting after HVS’s 2004 study was released, when HVS said not to build one because the market wasn’t ready. Leppert tried to use this as a selling point, essentially saying HVS didn’t recommend building a hotel then, and now they are, so it must make sense to build one.
Hunt also revealed her discovery that Chavez Properties contested the land’s value of approximately $7.3 million to the Dallas Central Appraisal District, claiming its appraised value was too high. “We’re sitting here talking about buying it for $42 million when they don’t even think it’s worth $7 million,” she said, adding that she would like to hear from Dr. Sanders and wondered why there had been so much resistance to bringing him in to brief the council.
Hunt then put Leppert on the spot, asking if Dr. Sanders could be brought in so the council could hear the other side. After a long pause, Leppert said, “I guess I’m not ready to comment on that.” He said he wanted to make sure Sanders didn’t have a conflict, which prompted Hunt to ask if he would be brought in if there was no conflict. “I’d clearly like to understand all the options before I commit to something like that,” Leppert said.
“That sounds like a yes, so I’ll take that,” Hunt said.
Assistant City Manager A.C. Gonzalez stressed that he is still in the process of gathering information for the council, and he wouldn’t ask them to commit on the land without having all the data. He added that he is working to refine the HVS study based on questions from council members and the financial underwriters for hotel, and said one of the six developers (Hines of Houston) was eliminated from the process because of non-compliance with the Request for Proposals by the city.
Gonzalez stuck to his guns regarding the appraisals, saying other transactions in the area suggest the number should be higher. He said that at the end of the day, a property is only worth the price that a buyer and seller are willing to agree upon.
This item will be coming up on every agenda until a vote is taken, with May 14 the next scheduled agenda meeting. I’m guessing another delay will be in order as it’s extremely unlikely that all of the questions will be answered by then. This was a sign that, contrary to previous statements by the council, they no longer appear to be willing to blindly follow Leppert down a path that could cost many of them their seats in the 2009 election. This, combined with the DART appointment, shows a major crack in the cohesive council that Leppert has been praised for establishing. Now that Leppert’s happy family isn’t listening to Daddy anymore, it will be interesting to see how the rest of this plays out. --Sam Merten
Honest question for you, Sam....
Are you against a convention center hotel all together, or just one that would be publically subsidized?
Granted, Dr. Sanders may have a dim opinion on convention center hotels, but the Convention and Visitor's Bureau has a pretty long list of groups that won't even sniff Dallas until a hotel is built. So, it doesn't seem like a new hotel would sit empty.
Give Leppert a little credit for at least pushing this issue. Whether you like him or not, he is trying to actually do something to boast convention business in the city.
Good for the other council members for not stepping in line, but I would hardly call this a 'major crack'.
This Council is head and shoulders above what this City has had to deal with the last ten years. At least the Council meetings aren't filled anymore with Maxine Thornton-Reese calling everyone a racist.
Posted at: April 23, 2008 4:19 PM