"It's about the city getting into the hotel business itself and operating The People's Ministry of Hotel Functions."

Huh. Seems like I read right here and in another newspaper, too, that the Omni Corp. won the convention center hotel management contract. Since Omni's already in the hotel business, there's no worry about the city getting into that business, right? Why write something that is an incorrect summation of the referendum?

So...what we have here is an ill-informed opposition and, giving you the benefit of a doubt here, bad, rather than maliciously errant, writing.

Steve,
Management and ownership are two different things. think before you speak.

@Steve-- uh.... no..... the City not Omni Hotels will be bearing 100% of the risk associated with this project. The City, as owner will be directing the work of Omni, as manager.

Think of it this way-- you decide to get into the restaurant business, so you borrow a bunch of money, throw in some additional cash, then build a $1 million taco stand. You then hire some guy to actually run the place (the manager) in return for a salary. The Omni is basically the guy who runs the place for a salary.

If the taco stand fails, the manager (i.e Omni) just moves on down the road to the next taco stand (after pocketing a salary for awhile)-- the owner is left to either file bankruptcy or scramble to find more cash to pay off the bank and all the unpaid bills.

Does that make it more clear?

Steve:

Omni has a 30-year operating contract (with incentives and a way out early, I might add) to do the things like hire maids, bartenders, reception staff, waiters, cooks, etc., and try to get folks to buy rooms priced at over $200 a night, even though the average max room rate in Dallas has been steady for years at around $160 a night. You get it right?

The city OWNS the hotel. I think that qualifies as getting in the hotel business.

Besides, the City Manager's office could set up "The People's Ministry of Hotel Functions." Sorta like the "Trinity River Corridor Committee." Another cute little cheerleading arm. How convenient.

So exactly how did the article misstate the referendum?

I nominate Steve's post for least educated post of 2009.

Welcome aboard there Steve.

Branden Helms says:
I nominate Steve's post for least educated post of 2009.
==========================================

Hold on there, bubba. The year is still young and I post almost every day.

One of the more disturbing ideas put forward by Mayor Leppert is that the city intends to buy this business, hire a manager -- wind it up and set it in motion -- and then pay absolutely no attention to it. That is not a good model at all. Plus, we can watch City Hall now and see exactly how it really will unfold. City Hall will indeed pay no attention at all to the money, mainly because paying attention to money is too hard, until something goes wrong. That's not to say that council members won't devote a good deal of time to trying to get some of the money, gouging the operator to hire their friends as concessionaires, contractors, etc., making an entirely negative contribution to the hotel's business efficiency. (See: Inland Port.)Then, when the whole thing does go south, they'll try to find a way to blame it on the something like the National Oceanographic and Atmospheric Administration. I predict there will be three smaller ballrooms, The Tom Leppert Room, The Dwaine Caraway Room and the Ron Natinsky Room, and then the Grand Ballroom, which will be named "Salle de Decherd."

Steve,

Don't worry about it! You won't find much support for the hotel here. People who read the Dallas Observer are the type of people who would rather have potholes filled instead of thinking that Dallas can be a world class city. There's no forward thinking with most of these people. It's a very liberal point of view here! But you're not alone, I support the project 100%! I think it'll be a tremendous asset to the City and one that is severly needed.

Just as the referendum against the Trinity Tollway was defeated this too will be defeated. It's just another waste of time as both sides spend more money on this!

Take that Steve.

James reminds me that this issue is sort of a municipal IQ test, and that may not be a good thing.

James

It isn't that people here don't support a CCH. Its that they don't support a city owned CCH.
Because of the city's continued inability to do anything in a competent and transparent manner, it just isn't sound logic to support a city owned CCH.

Excellent point, Toots. But if you wear a hat, no one will notice.

And Steve, do you have a middle name?

Why would anyone trust the city to get into the hotel business properly if they can't build a road or a bridge properly? It's like the blind leading the blind here.

jhr, Wylie H, HSH,

The City is already in the hotel business (DFW Hyatt) and the sports stadium business (American Airlines Center and the Cotton Bowl). Those have worked out well, haven't they?

Steve,

What James said.

JimS,

Considering that the folks that put both of these referendums on the ballot did so by gathering signatures in Wal-Mart parking lots from people that won't vote anyway, I would hold back on the 'municipal IQ' comments.

Ellum 08

I signed the petition downtown, during lunch, outside my office. No Wal-Marts down here. Not yet anyway.

And I vote on these issues. So it is definitely a municipal IQ issue.

ellum 08-

you think the Cotton Bowl stadium has worked out well? is that why the cotton bowl game is moving to arlington?

seriously, that doesn't help your case in the slightest. and last I checked, the AAC is owned by Mark Cuban and Tom Hicks. it is not OWNED by the city.

i would love for the city to move beyond fixing potholes, but why should they? if you run a retail business and the manager ruins your most profitable location, you don't give him responsibility over more stores, do you?

Expo,

I vote as well, so I guess we will cancel each other out then.

On May 9th, we'll find out who passed and failed, correct?

JF,

Sorry, you are wrong, from the City of Dallas website,

'While American Airlines Center is not a hotel, it is City-owned and leased to a partnership owned by Stars and Mavericks. The teams are required under the lease to make an annual rent payment of $3.4 million to the City, and to expend annually at least $1 million in capital improvements to the facility. Like the proposed Convention Center Hotel, the AAC is maintained not by the City but by the operator.'

http://www.dallascityhall.com/convention_center/conventioncenter_hotel_faq.html

As far as the Cotton Bowl is concerned, the new renovation is spectacular, TX/OU will continue to play there and Tech/Baylor will begin playing there in 2010. Not too bad in my opinion. As for the bowl game, everyone knows the Cotton Bowl is trying to get into the BCS. That might be easier at Jerryworld, but once the newness has worn off, people will see that college football is better at Fair Park than in Arlington.

Ellumo8: I am so intrigued by your arguments. Then you really don't believe in any separation of private enterprise and government? Or are we going back to the argument that the city really won't own the hotel, so it will be a private business? Any precison you can offer will be most welcome.

Thank you, Ms. Hunt, for educating the mayor, Mr. Natinsky, Mr. Gonzalez, and the rest of the council and staff.

The portion of the cost of the American Airlines Center funded by the center was roughly $136 million ($11 million for land plus $125 million for construction costs). The $3.4 million annual rental payment received equals a 2.5% return on the City's investment. However, the city issued $125 million in bonds to fund most of its share of the construction cost; the debt service on these bonds consumes all of the rental payment. In addition, a significant portion of city tax revenues are directly allocated to the AAC; that counts as forgone tax revenue, as well.

The Cotton Bowl has been a financial disaster and the DFW Airport (in its best year) appears to have generated about a 7.8% return-- but that's due to the fact that the land and parking were thrown in for free. The per room cost of the Grand Hyatt was also $300,000-- this compares unfavorably with the projected $500,000 per room cost of the Convention Center Hotel--- also, it is important to note that the DFW Airport Grand Hyatt is a five star hotel; the Convention Center Hotel will be a four star hotel. The numbers don't even come close to making sense.

I thought the Cotton Bowl was owned by the County, rather than the City.

Why do the little cartoon characters look like Terrance and Phillip? Are they Canadian?

Regarding Public/Privately owned stadiums in the USA:

Almost every major league sports stadium in the USA is "technically" publicly owned. The only exceptions I believe are: [New England Patriots/Washington Redskins/possibly the Carolina Panthers].

The reason this is done is to avoid the huge amount of property taxes this would incur. In reality, the teams generally can do whatever they want with the stadium depending on their lease agreement.

Technically the city of Irving owned Texas Stadium. In reality, Jerry Jones did whatever he wanted to the stadium.

This no way is comparable to the city owning and running a hotel - which is a terrible idea.

To anybody who believes the complete myth that this convention center hotel is the solution that God sent to us Dallas residents on the wings on Leppert's back: wake up and smell the beans.

Leppert is a compulsive liar who thinks he can just pull the wool over our eyes and pull money out of our pockets while distracting us with the idea that we're doing something to improve the city. Well, he lied to us on the Trinity, he's lying to us about this hotel, and he will lie to us about whatever his next cause is. Here's a strategy to improve downtown: get rid of Leppert.

JimS - In some aspects, no I don't have a problem with the city government competing directly with the private sector. As I mentioned before, the City has done it before without any major issue, so why should this be any different?

I do have an issue with a private citizen forcing a public referendum and almost solely financing a campaign against something that in the end would ultimately benefit his enterprise. Again, I am mystified as to why the Observer has never investigated that angle of the story.

Wylie H, I appreciate your arguments, but have the taxpayers been once asked to 'bail' any of these entities out? Isn't that the real issue with the hotel? That the citizens will have to foot the bill if the projections don't pan out?

We will have to disagree on the Cotton Bowl. TX/OU will stay at Fair Park, more college games are being played there, and I am sure another bowl game will make its home there in a couple of years.

Go_Dallas - Why are you surprised about Leppert? Isn't that the Mayor's job to push forward these projects? This has been the Dallas way since Thornton lured the Centennial Exposition here in 1936. Probably even before that. Our history is full of Mayors that pushed, at the time, unpopular projects that have turned out to be hugh benefits to the community. I'm not saying it is right all the time, but Dallas is no different than any other city.

A convention center hotel has been discussed for at least twenty years. The Trinity for even longer. I may not agree with everything the Mayor and Council do, but I can appreciate the effort to push some of these projects along.

To the "Hey, the Cotton Bowl works" crowd - how do you compare a specific-use building that has extremely limited use (the Cotton Bowl will have FOUR games per year eventually? Woo hoo!) with a hotel that needs to be filled to a certain capacity 365 days per year?

The city owns the hotel. That means the city has to manage the manager of the hotel and actually pay attention to how it is running. Streets are broken. Does anyone believe the manager will be managed properly?

If Dallas really needed a convention center hotel, why hasn't private enterprise built one yet? There's a great untapped market that only the City Council recognized? I find this exceedingly hard to believe.

In 2000, precisely the same arguments were made in St. Louis over the public funding of a proposed 1,100-room convention center hotel. The city floated bonds to complete the hotel in 2003 based upon a feasibility study. It was sold at auction foreclosure sale on February 9, 2009. It cost $288 million to deliver; it sold for $98 million. The taxpayer ate the difference. It was built during the zenith of convention center traffic in the country. We are facing an open-ended recession.

"Here in St. Louis, we now know the folly of listening to consultants who promise that a big new hotel will attract more convention business. Our downtown Renaissance Hotel, built on the basis of such projections, has just defaulted on its debt payments. " St. Louis Post-Dispatch January 7, 2009.

UMB Financial Corp. spokeswoman Pam Blase said bondholders issued the notice of a trustee’s sale to set the foreclosure process in motion. A report by consultant Jones Lang LaSalle will was presented on the hotel’s performance and future ownership scenarios. “We want to make clear that it’s the bondholders' intention that the hotel remains open and the operations continue uninterrupted,” Blase said. “Marriott is going to continue to manage the hotel, and it’s business as usual. There is no change in management or service levels as a result of the foreclosure notice.”

Meanwhile, Houston has dropped its plans to develop a second hotel, and they are trying to get rid of the one they have. a committee set up by Mayor Bill White is strongly considering a move that would partially privatize the Greater Houston Convention and Visitors Bureau, as well as a city department with a $60 million budget.
Ric Campo, an apartment developer who chairs the committee, said combining some operations of the Hilton Americas Hotel, the visitors bureau’s convention operation, and the city’s Convention and Entertainment Facilities Department, makes good business sense.

Campo and other members of the committee, which was convened last month, met this week to discuss the financial implications of such a change. The departments that would be involved in such a merger are funded with hotel occupancy taxes.

Combining the three could eliminate redundant sales efforts, leading to $1.5 million to $3 million in annual savings, committee members said. It also would lead to a more agile marketing effort, Campo said, allowing the city to quickly create packages that include hotel, convention and event tickets.

He said privatization is not the only way to do that, but several committee members said it is the option most seriously being considered.

Mayor Bill White and several City Council members said they support the idea of saving money on marketing efforts but were waiting to see the committee’s recommendations before commenting further.

The Houston (strong) mayor began last year to address the recession and attendant shortfall in sales tax and property tax revenues by forming a task force made up of area university economists and business leaders. Their mission: to pare down the city budget to the economists forecast of diminished revenues.

ellumo8: well, to be fair, Sam Merten has done a great job of covering Harlan Crow's involvment, including payments made to city council campaign funds by Crow and associates. On the other hand, just because the guy has money, he should still have access to the same rights of petition and initiative that us poor folks have, right? If he plays by the rules and gets his signatures verified, what particlar sin has he committed other than being rich? Some of this anti-Crow stuff is real hard to take from a mayor who is such a transparent handmaiden and lay-down for the Citizens Council and Robert Decherd. Crow's real sin, I would submit, is not in being a rich guy but in being a rich guy who doesn't play by fraternity rules. That happens to be sort of a Crow family tradition going back to to the old man. He wasn't a maverick, exactly, but he wasn't a Citziens Council zombie either. It's interesting hbow the real politics tends to work in this town. It's never really conservative vs. liberal. It's all about whether you're in the choir.