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The Concession Stand

The Midway

Everyone Knows That Hotel's a "Risk." Which Ain't Stopping Anyone.

Wed May 14, 2008 at 04:06:00 PM

By now, you know you're the proud future owners of a convention center hotel; the only question left to ask is, would you like a happy ending with that in-room massage? Too soon? Then how about a recap of the day's events, which concluded with 11 council members agreeing to spend your hard-earned without your permission.

Early this morning approximately 100 business and political leaders showed up in support of the hotel, most wearing “YES Convention Center Hotel” stickers, which were passed around by Becky Mayad, Mayor Tom Leppert’s spokesperson during the Trinity River toll road referendum. As Jim noted earlier, former TXU chairman Erle Nye and Sen. Royce West were among the speakers. Other notables included Phillip Jones, president and CEO of the Dallas Convention & Visitors Bureau; John Crawford, president and CEO of DowntownDallas; and Jan Hart Black, president of the Greater Dallas Chamber and former city manager.

Because a total of 109 people were signed up to speak, Leppert limited each side to a total of 20 minutes. Only four people spoke in opposition, including Anne Raymond of Crow Holdings and Ray Garfield of Garfield Traub Development, which was one of the original companies to submit a proposal for the hotel project but isn’t among the four finalists.

Raymond mentioned that a city-owned hotel would not pay property taxes, sales taxes and hotel occupancy taxes. She said she was troubled by an earlier comment from Leppert, who said last week he wanted to minimize public investment, and statements from Ron Natinsky, who said the proposed hotel would make money, and assistant city manager A.C. Gonzalez, who said in February that public investment would be between $40 and $100 million. “I’m finding it impossible to connect the dots,” she said. Raymond also quoted billionaire Warren Buffett: “The five most dangerous words in business may be, 'Everybody else is doing it.'”

Council members Ron Natinsky, Jerry Allen, Carolyn Davis, Tennell Atkins and Sheffie Kadane each gave support to moving forward with the land purchase and allowing City Manager Mary Suhm to strike a deal for a publicly owned hotel. Only Davis expressed reservation about her endorsement. “I’m going out on a limb, Mayor Leppert, on this,” she said.

With six votes in hand (including Leppert's), the council then took a break for its annual memorial service, which is dedicated to police offers killed in the line of duty. When the meeting resumed, it was Angela Hunt’s turn, and she didn’t hold back. She said, “It’s irresponsible to move forward without any public discourse,” citing the recent closed-door meeting of the Economic Development Committee as the only discussion on the matter.

She also quoted Leppert’s statement to The Dallas Morning News about wanting to minimize public investment and read from today’s editorial in the paper, which asks the council to slow down. “This is a mistake,” she said. “This is going to cost us.”

Hunt took aim at City Manager Mary Suhm, although she wasn’t called out by name, saying it was “extremely irresponsible” to combine both the land vote and public ownership of a hotel issues in the same addendum item. (Fact is, they were combined on Friday, giving council members little time to prepare for both votes.)

Deputy Mayor Pro Tem Dwaine Caraway spoke up when he had the floor, saying he didn’t consider last week’s committee meeting to be “closed-door.” Essentially, Caraway said he hasn’t heard any negative comments from his constituency, so everything must be OK with them. Of course, since none of his constituents were privy to the conversation that took place in a private meeting, it’s hard for them to complain. I spoke with Caraway late yesterday afternoon and will have more on him in an upcoming blog.

Dave Neumann, who pointed out that he’s been to all of the Economic Development Committee meetings even though he’s not on the committee, laid out a great argument against a publicly owned hotel. He raised three concerns: The taxpayers are at great risk, which concerns him. Is getting into the hotel business what the city should be doing? Is it a good business decision for the city to own a hotel?

But, predictably, Neumann changed course and went on to talk about how the convention center is losing $4 million a year, saying “no” to the hotel would be a bad message about the city’s commitment to revitalizing downtown, and the absence of a hotel would undercut development in Oak Cliff. “I will support this very cautiously,” he said.

At this point, it seemed all but over with eight votes in the fold, but council member Vonciel Hill threw a slight money wrench into Leppert’s plans. Hill said moving forward with the land purchase is a good idea, but she is opposed to the hotel being publicly owned. Since Schutze has a Hill blog in the hopper, I won’t go into all of her concerns.

The wrench came in the form of a rare motion to divide the item into a separate land vote and a vote to move forward with public ownership. Hunt immediately seconded the motion, and then confusion ensued as Natinsky already had a motion on the floor to approve the item as-is, with Allen seconding it. In the end, City Attorney Tom Perkins stepped in and told Leppert that Hill’s motion was not debatable, so it went to a vote.

Her motion failed 7-6 with Pauline Medrano, Linda Koop, Tennell Atkins and Steve Salazar joining Hill and Hunt on the losing side. After Caraway followed with an amendment to the item (which I’ll explain in a separate blog), Hunt went after Neumann for voting against having two separate votes, saying he missed out on the chance to vote twice about a project that he was so enthusiastic about.

Hunt said the lack of debate was a “slap in the face to taxpayers, our bosses,” and it was beyond her why the other council members wouldn’t agree to discuss the items separately. “The decision to move forward is cowardly,” she added.

Leppert had the last say, standing up and yelling, “I win, Angela. Suck it!” OK, clearly that’s not really what he said. What he did say is that he was struck by all the support from leaders and other hotel owners for this project, and he emphasized that plenty of time was made making this decision.

“Is the risk going forward, or is the greater risk not doing anything?” Leppert said. We’re about to find out. --Sam Merten

37 Comments:

JC says:

What a farce. "Democracy" at its finest.

ellum08 says:

I only counted three people that spoke in opposition, and two of those were batshit crazy.

Where were all the other people that feel that this is a bad deal? Where are my fellow 'Friends of Unfair Park' that rant and rave about how corrupt the City is and how this is such a scam?

The silence from the opposition was deafening.

Although I thought the show of support was a bit of an overkill, it doesn't impress me that the only vocal public opposition is the owner of a hotel that might have the most to lose with a new hotel in town.

Alfredo says:

Sorry but the citizens of Dallas elected the coouncil to make these type of decisions and they don't have to debate forever. The mayor had the votes and if you don't like what they did vote them out of office at the next election. If the notice required concerning action items on the council agenda is somehow defective the remedy is at the courthouse.

religion of bacon says:

“Is the risk going forward, or is the greater risk not doing anything?” Leppert said.

"going forward" = spending a shitload of taxpayer money without their approval

"not doing anything" = not spending a shitload of taxpayer money

Or to put it another way, "we gotta do something quick, or we risk the taxpayers figuring out what's going on here."

observist says:

Good thing we have a small-government, fiscally responsible, business-savvy Republican mayor running our new $500m city-owned hotel. Maybe he can bring over the management team from DISD to handle the day-to-day operations.

Bob says:

Whether you agree with this vote or not, it was a vote of the folks that we elected to make just such decisions. Every time the council votes to spend money, whether as part of the annual budget process or otherwise, it is spending OUR money without OUR permission. Or, maybe, by voting them into office, we authorized the city council, gave them permission, to spend OUR money. Isn't that why we elect representatives, to carry on the public business, rather than decide all issues in a town hall meeting? You folks need a refresher course in civics. If you don't like the process, then change the city charter and require that every dollar spent by the council be approved in a public referendum. That should get old pretty quickly. But until you do, you're stuck with the representatives that you elected to hold and exercise the power to spend your money.

Mark says:

Travisshamocracy at work. I will be fully behind the hotel industry when they lobby to throw all you bastards out of office next term.

Michael Davis-Dallas Progress says:

Nobody responded to ellum08's comment. Bob, you are a voice of reason.

GuiltyBystander says:

The problem with our form of City "government" is that each council member is elected based on the votes of his/her slice of Dallas. Carraway doesn't give a rip if I send him a letter because I don't live in his district.
In a situation like this, where it's a decision that involves the entire city, it all comes down to how the mayor can cajole/con/control the needed votes to ram something through.
Like the Trinity vote, this hotel deal is a friggin' sham and dirty political rigging at its best (worst?)

religion of bacon says:

So we have to wait until the next election to get upset about this, otherwise we're in need of a civics refresher? Come on, it's not like anyone is suggesting putting Leppert in shackles, appealing as that might be...

What was done was probably not illegal, but it's sleazy as hell. Which is the main reason it was rushed through and the supporters looked for every excuse they could find to silence or ignore anyone who questioned it.

ellum08 says:

Mark, but that is the thing....except for the Crows raising holy hell, no one in the hotel industry is upset about this. In fact, there were reps from several hotels voicing support for this hotel. The Adolphus, the Renaissance on Stemmons, the Ritz, the Mansion, all in support for competition.

What am I missing here?

Chris says:

ellum08, its called backrooms deals, full envelopes, etc...

And I voiced my opinion to my council member through email since I could not be there.

And I have a feeling that a petition to make this a vote will be coming around soon. This is bullshit from the CEO of dallas.

ellum08:

There were, in fact, four speaking in opposition. The two that were “batshit crazy” as you say, along with Raymond and Garfield. Garfield did endorse the hotel, he but opposed the purchase of the land.

You wrote: “Except for the Crows raising holy hell, no one in the hotel industry is upset about this. In fact, there were reps from several hotels voicing support for this hotel. The Adolphus, the Renaissance on Stemmons, the Ritz, the Mansion, all in support for competition.What am I missing here?”

What you’re missing is that the Adolphus, Ritz and Mansion support the project because IF it is able to increase convention attendance, then some of the high rollers will stay with them. And since they are upper-tier hotels, they don’t have to worry about competing with a convention center hotel. That’s like saying Wal-Mart is competing with Neiman Marcus. As for the Renaissance, that’s a Marriott brand. And since you were at the meeting, you know that Marriott is one of only two hotel chains in competition to become operator for the convention center hotel.

Nearly every one of those showing support had a financial stake in it, just like Crow, so his opposition can’t be discredited.

You wrote: “The silence from the opposition was deafening.”

I agree. It was disappointing not to see more citizens show up in opposition, although it’s hard when the decision was made to own the hotel without any public input and in a private committee meeting.

Bob:

You make some solid points. However, when it comes to a massive publicly-financed project like this one, which is about twice what voters approved for the Trinity River Project, the public deserves a say. At the very least they deserve to be included in the discussion publicly, and not behind closed doors.

Ryan says:

I'm a bit confused, too, about why in the hell The Adolphus, Ritz Carlton, and The Mansion would support this move. If the statistic I'd read somewhere about Dallas' hotel occupancy rate being only 60% for a recent year is true, then why would those hotels look forward to the possibility of any of their bookings landing elsewhere in the future? Maybe that statistic is incorrect, but I seriously doubt they're turning people away left and right at those places now.

Gabe says:

I think a lot of the other hotels ('s owners) were in favor because a strong downtown is good for them no matter what. Having a convention center hotel (in their theory) will bring in bigger conventions and more business for everybody (not everybody is going to stay at the convention hotel). Not everything is a zero-sum game where someone doing well automatically means someone else is doing worse.

I don't think Dallas should run it's own hotel, but I don't believe that its all some scheme from the council for kickbacks or other devious mischief. I think they all think this is good for Dallas - and I'm always open to the fact that somebody somewhere is smarter than me. Even opposing, if it does happen, I hope it does well. The alternative (a giant flop) is in no one's best interest. Except those who get a big fat "I told you so."

Steve says:

This is fiscal irresonsibility combined with politics,cronyism,and backroom politics. Theis will create a nice pie to slice for all involved. The losers are the million or so residents of Dallas who ,while voting for these elected officals, could not forsee the agendas that these elected officials had in store for our tax dollars.This is an unreasonable decision for the city council to make at a time when the economy is weak and gasoline is so high.There is so much more that needs to be done before we do a convention hotel.I will predict that the hotel construction costs exceed its original budget;that millions will have to be spent on widening streets and roads;and that the hotel will lose millions for at least the first five years. This hotel will start falling down before it begins to be paid for.

Rich Sheridan says:

We are going to spend $42 million for a parking lot that was recently appraised at $7.5 million, then hurriedly re-appraised for about $38 million.

The current owner Chavez said they wouldn't object to the much higher tax rate if the city purchased the land. If the city pulled out, then they would appeal the new assessment.

Are there any real estate agents out there, anyone who sees the corruption here, or incompetance?

When I worked for Frito-Lay, we went out to look at a site that Frito-Lay was considering purchasing for a new plant that costs about $60 million. We handed out dummy cards so the locals wouldn't know it was Frito-Lay. We did't want the price jacked up.

It looks like our city officials walk into a property sale bent over and saying PLEASE STICK IT TO US (we're not paying for it)!!!

Then we're going to pay about another $500 million ($500,000,000) to build and own a hotel. We can't make money on Reunion arena, we can't make money on Fair Park, we couldn't see the economic benefit of the Cowboys stadium...how may deals have we screwed up...BUT WE KNOW THAT $500 MILLION INVESTED IN A HOTEL WILL BE A GOOD INVESTMENT.

Dallas can't even properly provide shelter for the homeless who blight the downtown area, and detract from economic development. Dallas will open the new homeless assistance center next week, which cost $23 million, and which will be short about 800 beds the day it opens. It was known 3 years ago that we need 1200 beds. Everything available in the New Assistance Center could have been done 3 years ago at a fraction of the cost. 70 to 80% of the chronic stret sleepers will still be street sleepers the day the Assistance Center opens.

What a great investment! Another example of Dallas knowing what it's doing.

Richard P. Sheridan says:

We were scammed with the land purchased tied in with the hotel vote. They should have been separate.

There was no real public disclosure and discussion of the aspects of the land acquisition, which stinks like a three day old fish.

Tired of being stuck with the bill. says:

Im in Mitch's district. Since he was not allowed to vote does that mean I wont have to pay?

Ryan Paige says:

So how much money does the average convention bring to the city?

Catbird says:

"ellum08 says: Where were all the other people that feel that this is a bad deal?
The silence from the opposition was deafening."

Dear Ellum08: Most of the people who don't like this deal have JOBS - some of us working for the people who were down speaking FOR the hotel deal.

This is a sorry set of circumstances.

ellum08 says:

Sam, thanks for your response and the correction.

I was so thrown with the batshit crazy people speaking in opposition, that I forgot about Mr. Garfield.

The Dallas Morning News indicated that more 'large' hotels would speak out in opposition of this plan now. They better hurry and get a move on. This train is moving fast.

It has been nice of them to let Crow Holdings take the lead on this and stick their neck out.

One more point, using Gabe's logic, if the American Heart Association will now bring a convention to town with 30,000 people, then that would boost all the hotels downtown. If the City scores five or six more conventions with those type of numbers, which Phillip Jones with the DCVB seems convinced he can do, then wouldn't everyone benefit?

engmofo says:

The City's Running a Little Light on Dough -- Got $50 Mil to Spare?


Anyone remember that.
Obviously not the friggin' Council
BTW ellum08 what horse have you got in this race?

Joe says:

So in order to get on City Council, is it a scratch off prize in your Cheetos? Or do you have to register for a raffle somewhere? Who are these people, and why on earth does anyone elect them???? I can think of a few other things to spend $40mm on in Dallas (DISD). Hire teachers, renovate, buy computers, invest it in the high schools. Then make the Chambers do their jobs and sell convention planners...It shouldn't be that difficult. Then, City Council, let someone build a minor league ballpark downtown, that will revitalize more than another hotel.

Anonymous says:

"If the City scores five or six more conventions with those type of numbers, which Phillip Jones with the DCVB seems convinced he can do, then wouldn't everyone benefit?"

Maybe.

Of course, the statistics that Heywood Sanders keeps trotting tend to show that cities who expand their convention facilities or build hotels don't see an increase in convention business or, at best, see a very minor uptick (Houston, for example, apparently can credit an increase in only 50,000 hotel room nights to their new hotel, which even by the most optimistic multiples is only about $10 million to $12 million in total area spending. As a result, their hotel, which was less expensive than ours will be, operates at a loss).

There may be a list of 120 conventions that won't even consider Dallas without a hotel, but even with a hotel, that just gets us in the bidding, it doesn't guarantee that a single one of those conventions will choose Dallas (or that conventions already coming here will continue to come) over all the other cities with the required hotel.

All cities have limited resources. Even if the convention center hotel is a good idea, is it the best idea - is it the best use of the city's limited resources?

That's something that doesn't seem to be asked, and the speed at which this was pushed through seems to have been designed to specifically avoid that kind of analysis.

Josh says:

All these comments about "this is who you elected and if you don't like it, tough titty", are woefully misguided. They were elected to run the affairs of a city, not to engage in public enterprise and risk public dollars. This hotel *will* lose money, because those responsibile for its management are not the ones risking their own capital.

If I were a hotel owner or manager within 100 miles I would have a lawsuit infront of a clerk before the day ended. The city is unfairly competing with taxpaying enterprises by emepting itself from all city taxes that competitors must pay.

jerry says:

It's not as if our only daily newspaper has any concern about the interests of Dallas taxpayers in this half billion dollar quickie.

Rod Dreher keeps giving himself facial after facial over some naughty internet priest sight nonsense.

Tod Robberson wants ICE to chase the diaper-discarding illegals from his park without profiling them and making him look hypocritical.

Bird-watching, often out-of-office blonde honey Keven Willey says "I find myself tending to trust Mayor Leppert because he's so charismatic, experienced and seemingly authoritative as a man who knows the world of business and high finance" (Paris Hilton would have just said, "That's hot!").

Thank God for the Observer at least chronicling this foul little piece of almost invisible history.

john k. says:

Government going into private business reminds me of Amtrack and how much money it makes for the government every year. The hotel is a no brainer.


Chris says:

And now we get the news that the Trinity river tollroad is delayed. And the cost closer to $2B! There is no way the city leaders should have a job.

Alexis says:

The city completes privately all the time. The city built the Latin American Cultural Center. You know, that competes as a public space for events. Should the Adolphus sue them too because they'll loose a few weddings? Maybe they should sue the W-Hotel too. It's a market system. If you're a hotel in "100-mile radius" you either need to find a target market, offer a good deal, or offer good amenities, like every other hotel in Dallas. If you don't, you'll loose money. Like every other hotel in Dallas. And really, if every hotel in a "100-mile radius" was smart, they'd look at it this way, the convention center hotel will have about 1,200 rooms. These conventions bring 30,000. They have to stay somewhere. And as soon as we have 30,000 people downtown, then we can sustain the restaurants, the shopping, the grocery stores downtown. You can't get the bread without having an flour.

Raymond says:

Rumor has it Leppert is now looking to get the City into the rental car business. Dallas-Rent-A-Car can't fail ... it will be exempt from the 39% in taxes applied to car rentals in the city giving it the competitive advantage it needs.

I wonder how many Dallas residents realize they're not only paying to build the hotel, but they'll be subsidizing every guest's stay in the new Convention Center Hotel (no lodging taxes collected, no property taxes collected)?

ellum08 says:

Catbird, you obviously have enough flexability in your JOB to read and post on Unfair Park during working hours.

Just making the point that if everyone is so ticked off, do something about it. Take a half day, a vacation day, or call in sick and head down to City Hall and speak to the Council, that is what the 'public' hearings are for.

I guess it is easier to bitch about it on this forum.

Engmofo, no horse in this race. Just an interested citizen who is continually amazed at the amount of 'conspiracy theories' that abound here.

It is quite entertaining.

Motel 6 says:

The Adolphus, Ritz Carlton, and The Mansion may have been promised that the Convention Center Hotel will keep their daily room rates exorbitantly high during non-convention periods, thus lessening competition and not lowering their occupancy.

Who cares if the Convention Center Hotel only achieves 5% occupancy .... no shareholders will complain. Dallas taxpayers will absorb the losses. And by the time that's realized Leppert and Natinsky will be enjoying their retirement in Florida. Neumann will remind voters he's always had concerns about the hotel, but neglect to mention he's always been an empty-suit, rubberstamp for anything the Mayor's wanted.

Ryan Paige says:

"These conventions bring 30,000. They have to stay somewhere. And as soon as we have 30,000 people downtown, then we can sustain the restaurants, the shopping, the grocery stores downtown. You can't get the bread without having an flour."

Are you saying there are no conventions in Dallas now?

Because I was under the impression that Dallas already got some conventions from time to time. Why don't they bring restaurants, shopping and grocery stores to downtown?

Are we right at the tipping point? One more convention will do it? Two more? How many more conventions do we have to bring in to make all that happen?

And what if we just stay the same? What if we go down a little bit? We seem to be building the hotel just to stay competitive. We've been competitive prior to the hotel building boom, the hotel may just keep us at the same level as before.

I'm not knee-jerk against the idea of a convention center hotel. I just am tired of the pie-in-the-sky, best case scenario and then some being considered the norm while the true norm that other similar cities are experiencing is never even considered as a possibility.

What will make Dallas achieve at higher levels than Chicago or Boston or Houston or San Antonio or any number of other cities who have already done what we're planning to do?

What has our city shown in the past to prove that we're more equipped than any of these other cities to capitalize on a new hotel at levels that these other cities can't manage to achieve?

Where's the evidence that we're better at this than anybody else?

If there's no evidence to support that notion, then maybe we should consider a more realistic scenario of what will happen with a convention center hotel and plan and spend accordingly.

cp says:

It just seems like our leaders don't have a clear direction for downtown and surrounding developments. West End got sucked dry by Victory and the restaurants there struggle when there's not a game. Now the Mandarin has been put on hold. Deep Ellum is circling the drain because the owners over there envision a manufactured "entertainment district", a giant West Village rather than what it used to represent- live music. None of Downtown's surrounding developments are doing anything to help downtown. I just wonder when the money will run out for everything that we want to do.

We need to make downtown an affordable place for the 30-something with a 30-something salary. We need more people in downtown to drive more retail and grow outwards to connect all the surrounding neighborhoods, like Uptown, Victory, Cedars, Deep Ellum- right now conventioneers see a central business district that shuts down at night, and all these little "pockets' of entertainment outside of the central business district. Until we get more people living in downtown, then we will never realize that all these developments can be connected by residential infill. And these neighborhoods will continue to "compete" with each other for the same things.

Anonymous says:

"These conventions bring 30,000. They have to stay somewhere."

So these conventions are balking at coming to town unless 4% of their attendees can stay closer to the convention center while 96% of attendees stay in existing hotels that are, for various reasons, unacceptable?

anna says:

i don't think the idea of a convention center hotel is so awful as a whole. what is awful is the city building, owning, and operating a hotel on land that was grossly overpriced. all at the cost of the taxpayers. the taxpayers who have not been given the opportunity to agree or disagree with this specific use of public money.

if a convention center hotel in downtown dallas is a solid investment, wouldn't a private developer be interested/already had the project underway/built one a few years ago?

this smells like disaster and tastes like sh*t.

i hope they prove me wrong; more than anything i'd like downtown dallas to thrive.

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