The proposed Dallas Convention Center Hotel

I am going to be one of the few local bloggers who has no problem with the actions taken today by the Dallas City Council today on a proposed hotel that may or may not be constructed on a tract of land in front of the Dallas Convention Center. All it did was authorize the sale of bonds needed to purchase the land. It did not authorize the construction of a hotel on the site.

OK, you're saying, but the vote today paves the way, so to speak, for the construction of that hotel by a financially strapped city that should be using those funds for public safety needs (fire, police, code) and improved city streets.

Those who make the above argument aren't paying attention. The money for public safety comes from the city's General Fund. The revenue for the General Fund, as most everyone knows, basically comes from sales taxes, property taxes, franchise fees and other special fees or fines. The money for the purchase of the land in question will not come from the General Fund, but from sale of bonds. What the council approved today was the issuance of those bonds. Now it is up to the hotshot bond salespeople to market these obligations to investors that will provide the revenue to purchase the land.

What does come from the General Fund, however, is the $4 million per year needed to make the Convention Center revenue neutral. The Convention Center is supposed to be, like Dallas Water Utilities, an Enterprise Fund which means the revenue it collects is supposed to pay all its operational costs. That's not happening, however, because of the general downturn in convention business, caused in large parts according to many experts, by the fact the city doesn't have an adjacent hotel. It also comes from the fact that the city is still funding that albatross known as Reunion Arena that sits vacant most of the year and something needs to be done to get Reunion off the city's books.

I was impressed, however, by the number of officials from other hotels in the downtown area who came to the council today in support of this idea. They see a hotel as benefiting them as well as all of downtown and not a competitor they need to be concerned about. The only hotelier that seems to be in opposition is Crow Holdings of the Anatole and I'm beginning to think they believe a convention center hotel may draw some shows that currently go to the Market Center away to the convention center. That could be but, if that's true, it suggests that a convention center hotel would be a plus for the city and its taxpaying citizens.

I had reservations about this project when it was first proposed but those reservations came from the differences in what the city was prepared to pay for the land compared to DCAD's evaluation of the same parcel, about one-seventh of what the city planned to pay. But DCAD has since revised its evaluations to align them with the proposed purchase price, so my earlier reservations have been resolved.

I also thought at the time that a convention center hotel was not going to position us any more competitively against such destinations as New York, Chicago, Los Angeles, Ls Vegas, Orlando or San Francisco. I still believe that to be true. Let's face facts -- compared to those cities, Dallas is dull. But it has come to light that the lack of a convention center hotel is costing us in competition with Houston, San Antonio, Phoenix, Denver and Minneapolis, cities we should be preferable to for convention business. C'mon, given the choice between Dallas and Minneapolis, it should be a no-brainer that Dallas would be the option. If the lack of a convention center hotel is causing us to lose convention business to Houston and San Antonio, and statistics indicate it is, then I say let's build a convention center hotel.

I have also heard the arguments that City Hall should not be in the hotel business. The problem with that argument is that no one is suggesting City Hall be in the hotel business. Its relationship to a convention center hotel will be almost identical to the one it has with American Airlines Center, it will finance the construction of the facility and get revenues from it. But the city does not operate the AAC. I also had to agree with Mayor Leppert's observation at the council debate on this subject today how much the land surrounding the AAC has appreciated since its construction and the development that ensued around it.

Now the city can go to private hotel developers and see if they can reach a profitable agreement to operate a successful convention center- affiliated hotel on this particular parcel of land. Those proposals will all be a part of the public record and subject to debate and council approval.