Stimulus Watch

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[edit] General Description

Build a 1,000 room hotel connected to, and part of, the Dallas Convention Center. The hotel will be owned by the city and managed by a private vendor on behalf of the City of Dallas.

This will complete the convention masterplan.

Land for the project has already been acquired.

[edit] Points in Favor

The Convention Center is an integral part of the masterplan for the Dallas Convention Center dating from the 1980s. Although it might theoretically be possible to update the masterplan to reflect changes in the economic landscape over the last 25 years, that would take a great deal of study and time-- our plan to build a new hotel is "shovel ready" today!

Conventions are a major industry for Dallas and bring significant revenue into the downtown Dallas area. Dallas once was a major destination for conventions such as Mary Kay Cosmetics, the National Home Builders Association, the hospitality industry, the 1984 Republican National Convention, and others but is in danger of losing visitors to nearby Fort Worth, where the downtown is far more "tourist friendly."

Conventions have a significant economic impact on the local economy in the form of taxes as well as dollars spent with local vendors and businesses. Since it is a travel and destination business it is highly dependent on convenience and features. Convention planners are going to locate conventions that present the most attractive, and convenient package for their clients. Like it or not, hotels co-located with meeting facilities have come to be an expected standard.

As noted on the Dallas Convention & Visitors Bureau website, out of the top 22 cities for conventions, Dallas is the only city that doesn't have a hotel on the grounds of the convention center (it also is the only major city in the U.S. lacking an unrestricted passenger airport within the city limits!). The Gaylord's (Grapevine, Texas-- adjacent to DFW Airport) website noted its meeting, entertainment, and hotel facilities have even drawn conventions away from San Antonio (over 200 miles away). Fort Worth recognized the importance of such a facility and Dallas residents must understand that Fort Worth is a superior city to Dallas. Fort Worth opened a convention center hotel, privately-owned, but partially funded by tax incentives. Mayor Leppert says that Dallas is rapidly losing visitors to nearby privately owned facilities in Fort Worth and Grapevine. Since the private sector isn't interested in funding Mayor Leppert's vision, what's the problem with the City of Dallas just owning a hotel outright and eliminating the private ownership role entirely? Sure, spending over $500 million of government money on the largest hotel in the City is a risk--- but no risk, no reward!

Accordingly, the project is needed for Dallas to remain competitive in the convention industry and complete the final component of the convention center design as determined by Mayor Leppert.

It will not only create jobs during the construction phase but will also create additional jobs for the operation of the hotel as well as sustaining businesses, restaurants, and other hotels in the area.

If anything, the recent economic crash has shown us the fallacy of the free enterprise model; in limited, measured doses there is nothing wrong with embracing some of the more attractive elements of socialism. Besides, plenty of private-sector businesses (carefully selected by the Mayor and/or his close advisors) will have the opportunity to benefit from this project via the award of non-competitively bid contracts, which will allow them to reap profits well in excess of the amounts they would obtain under a cumbersome, "free market" approach.

[edit] Points Against

Please visit http://www.notaxpayerhotel.com

The convention industry business is in a long term state of decline. Consider advances in internet technology (enhanced connectivity), visitors' preferences to travel less, corporate environments which are increasingly meeting-shy, etc. The history of City of Dallas-sponsored troubled investments is long and broad. As should be no surprise, the municipal government has shown a flawed ability to sponsor successful private sector enterprises. It is this preoccupation with expansionist, wasteful government spending that has led Dallas to fall far behind Fort Worth in the level and quality of municipal services provided to taxpayers.

The City of Houston has tried this idea of mining riches from a convention hotel... shortly after their city-owned hotel opened, the nearby Hyatt Regency was forced into bankruptcy. More recently, the City of Houston was forced to abandon its plan to sell the hotel for a profit due to the poor economic climate. Bids came in well below the expected value of the hotel. Although the real estate bubble of the last several years tempted many in government to think that making money investing in hotels is easy-- the recent downturn is showing the fallacy of that belief. Las Vegas, No.1 convention destination has recently lost 600+ convention contracts. If they're failing in these economic times, Dallas will sure miss the mark AGAIN. Dallas is currently running their own Convention Center, but they can't even answer their city phone lines, let alone mow and maintain their city landscapes. We won't even mention their crumbling streets or levees-- the latter of which threaten the very lives of Dallas' residents.

If building a mammoth project was cost-effective, then why wouldn't an existing hotelier build the desired hotel? This is exactly what happened in other cities, that the city approaches existing companies to build there. If it's not worth the cost of building for a private enterprise, then why is it worthwhile for the taxpayers either?

If it is a good investment, a private-sector hotel development company will build it themselves.

The St. Louis convention center hotel just went into foreclosure after operating only 6 years. their taxpayers weren't on the hook for the whole cost, but we ARE on the hook for the whole cost of this one. Building this hotel, particularly given that convention business nation wide has been declining for the past 10 years, is truly absurd.

In a time when the City of Dallas is running a $100 million deficit, it makes no sense to feed the ambition of the City's mayor, Tom Leppert, by allowing him to construct a $500 million hotel that will compete with existing business while simultaneously enjoying huge tax advantages as a result of being publicly-owned. This is just another Dallas Mayor trying to leave his legacy.