Their arguments ... and our rebuttals

Below are a list of the common arguments we have heard from the opposition’s camp. For each, we provide some facts, along with analysis.

Argument - The downtown market is at only 55% occupancy, but the convention center hotel is projected at 68%.

That “downtown average” occupancy rate actually includes the blue chip hotels and the dogs. Also, none of those hotels are newly built projects, which tend to have a higher occupancy rate than “the average.”

The convention center hotel will be the first hotel to be built from the ground up in the central business district in 30 years. It will be a Class A property with a competitive advantage for convention business.

No one has said the hotel will achieve 68 percent occupancy immediately. Instead, studies say when the hotel opens in three years (2012) it will have a 52% occupancy (3% below the CBD average). The studies then project it will be in 2015 when the hotel will stabilize at 68%.

Hotel occupancy in Dallas has dropped every one of the last 10 years as the City of Dallas has gone from being ranked third in convention center business to ninth. Our occupancy rates are lower BECAUSE WE ARE NOT GETTING THE LARGE CONVENTIONS WE ONCE DID.

Argument – The burden is on the taxpayers.

Even if the hotel lost $5 million annually (unlikely), it could still operate for 10 years before the city might need to decide to fund any losses from other sources.

Even if the hotel underperforms, and then spends all reserves, the city still has the option of defaulting back to the bond holders. There is no legal obligation for the city to fund any operating losses out of the general fund. The general fund does not guarantee the bond debt - the guarantee is not full, faith, and credit. The project is collateralized by the hotel.

The city’s police force and streets are not affected by the construction and operation of the hotel.

The city has reserves in the budget to protect the bond holder and, in turn, ultimately the taxpayers.

Argument – The private sector should build it if it’s such a good deal.

By issuing bonds, the city can finance 100 percent of the project far less expensively and infuse no equity in the process. For a private developer to raise the equity and capital and still ask the city for incentives and still get the returns needed is just not feasible. The capital markets are dead right now.

The Vote Yes camp has opposed a convention center hotel, since its inception, whether it was to be financed publicly or privately.

Argument – The entire analysis of the hotel’s performance is based on the HVS study.

HVS is one of the world’s three most respected, independent, third-party feasibility research companies.

The very company discrediting HVS (and its study) has used HVS.

Marriott and Omni both provided their own independent analyses of the hotel, both of which offered comparable projections to those in the HVS study.

Argument – The City of Dallas should not be in the hotel business.

If the city is in the convention business, then the city is in the hotel business. The city already owns a hotel – the Grand Hyatt DFW – that is financed by bonds. The general contractor will sign a GMP ensuring the hotel is built for X. The operator will then invest with key money.

The city currently contributes $3 million annually out of the general fund to pay for the operating shortfalls incurred by our convention center business operating. This contribution will INCREASE (not decrease) if a convention center hotel does not get built.

Argument – The City of Dallas should promote private development, not build a hotel.

Who else will build on the south side without an anchor to promote ancillary development? Condo developer? Apartment developer? Retail developer? Office developer?...

The highest margin of tax comes from visitors. Visitors spend money ($290 per day on average - hotel, meeting space, taxis, rental cars, restaurants, shopping, etc) but rarely cost the city anything. Meanwhile, a resident (of Dallas) requires the city to pay for police, trash, utilities, health care, education, infrastructure, etc. that visitors do not.

Argument – No one supports the hotel.

Every major chamber (Black, Hispanic, Dallas, North Dallas, etc.) supports the hotel. Thirty hotels and 120 associations support the hotel. Eleven of 13 city council members who voted on the hotel voted FOR it.

The only hotel in the Dallas area publicly opposed to the convention center hotel is the Anatole.

Argument – A convention center hotel is not good for the city.

Every major convention center hotel in the United States (“private” or public) has received considerable public incentives.

Of 22 convention markets, Dallas is one of only two cities without a convention center hotel (built or proposed).

The Hyatt is the de facto convention center hotel of Dallas. No hotel will be affected more in the short term, and it supports the construction of the convention center hotel.

Woodbine Development Corporation spent $750,000 in a losing effort as developer of the convention center hotel and yet it still supports the hotel. Marriott lost out to Omni as the hotel’s operator, but still supports the hotel.

Additional Facts

The individual against the hotel, along with his family, has personally contributed more than $2.5m to oppose the convention center hotel – 99.8 percent of the opposition’s contributions. There is no widespread grassroots opposition to the hotel. It is funded by one man.

That individual also hired a California ad agency to produce commercials that personally assassinated the character of Dallas Mayor Tom Leppert, calling him arrogant and a liar.

That individual has also contributed to the campaigns of four separate Dallas City Council candidates who say they are against the hotel. He is attempting to buy the election – but Dallas is NOT for sale.

He claims to oppose the convention center hotel to ‘protect Dallas taxpayers’. But he himself is not a resident of Dallas and the Vote Yes camp issued a call for volunteers that blatantly said they would only be working the polls north of downtown.