Convention Center hotel: A risk we can’t afford

Posted on 07 May 2009 at 2:25pm
By John Loza Special Contributor

Former councilman says building proposed taxpayer-owned hotel would be investing money in a shrinking industry

What’s the truth about the proposed taxpayer-owned hotel?

Actually, it’s very simple: We don’t need it. We can’t afford it. And if it’s built, we’ll wind up paying for it.

If this hotel were such a guaranteed money maker, why hasn’t it been built by the private sector? This is a question that most people inherently understand.

The fact is that no private developer has stepped forward to build this hotel. That speaks volumes about the risk that we, as taxpayers, are being asked to take.

According to a report by the respected Brookings Institution, the convention business is not a growth industry. In fact, convention attendance peaked in the mid-1990s and has declined or been flat ever since. The days of huge conventions are waning.

I have debated the mayor twice and a representative from the Convention & Visitor’s Bureau once. Neither refuted this argument.

If we’re going to invest $550 million, why not invest in a growth industry — biotechnology, for example? Why invest to try to get a bigger piece of a shrinking pie?

The other side frequently mentions Houston, Denver and Baltimore as examples of successful taxpayer-owned hotels. Yet the facts tell a different story:

1. Houston: First, Houston’s convention attendance lags far behind Dallas. Second, Houston tried to sell its hotel last year — and got no takers. Third, one of Houston’s major downtown hotels, the Hyatt Regency, has filed for bankruptcy.
In other words, jobs created by one hotel were simply eliminated by another.

2. Denver: Even with a convention center hotel, attendance at the Colorado Convention Center declined from 250,000 in 1998 to 150,000 in 2003. Besides, Denver had a vibrant downtown long before the convention center hotel was built.

3. Baltimore: Attendance at the expanded Baltimore Convention Center has both fallen and failed to reach the projected 330,000 annual attendance.
A more telling example of a taxpayer-owned hotel is St. Louis.

Using the same consultants that the city of Dallas is using now, St. Louis voters were promised a profitable hotel, one with as many rooms as Dallas’ proposed hotel, but costing one-fifth as much.

Guess what happened.

Those consultants were off by 41 percent, and the hotel was foreclosed upon at a $200 million loss to St. Louis taxpayers.

When asked about this, Mayor Leppert has said, "We’re not St. Louis."

True, but the point is that their voters were given the same assurances, by the same consultants, as we are getting now here in Dallas. And this for a hotel that only cost $100 million, not $550 million!

If this hotel does not make enough revenue to pay the debt service on the revenue bonds used to build it — about $35 million per year — then taxpayers will ultimately be called upon to make up the difference. Members of our LGBT community, both homeowners and renters, will see little to no benefits but will pay hugely for the mistake we would be making.

The other side has made gloom-and-doom predictions about what will happen to Dallas if Proposition 1 passes. This is ridiculous and not at all based in fact.

Even the city’s own reports say the convention center will do fine without a hotel.

Dallas is not going to turn into another Detroit just because of one hotel, and Dallas’ voters know better.

Investing in a shrinking industry, in the middle of the biggest economic downturn since the Great Depression, with the city of Dallas already facing a $100 million budget shortfall, just doesn’t make sense.

Please join me and thousands of other Dallas voters in voting yes for Proposition 1 on May 9. Remember, voting yes is a vote against a taxpayer-owned hotel.
John Loza is an attorney in private practice in Dallas. He served for eight years on the Dallas City Council from 1997 to 2005.

This article appeared in the Dallas Voice print edition May 8, 2009.

Comments

comments

Powered by Facebook Comments