Dallas City Council Passing Go, Collecting $550 Million Taxpayer Dollars

By: Allison Miller

Dallas City Council members believe a new convention center and hotel will serve as a centerpiece for their efforts to revitalize the city’s downtown area. But several taxpayer advocacy groups say the project is a waste of public money and won’t meet Mayor Tom Leppert’s expectations.

Leppert has said he believes the Convention Center hotel is essential to the city’s growth and will allow it to compete with other top convention cities like Las Vegas and Orlando.

The hotel will be connected to the Dallas Convention Center on land currently owned by Cincinnati-based Chavez Properties Ltd. The City Council already approved spending $500,000 on an option to buy the Chavez Property for $42 million, which is estimated to be twice the size actually needed for the development. The hotel will be publicly financed, costing the city an estimated $550 million. 

The group Citizens Against the Taxpayer Owned Hotel collected more than 60,000 signatures calling for a referendum on the issue in May 2009. But developer Jack Matthew said that before the vote takes place, the city will have already spent $10 million on construction costs. City Council members plan to hurry the project along, hoping voters will see their tax dollars already in use and vote to complete the hotel so their money is not wasted.

The Dallas City Council has repeatedly claimed that Dallas must build the hotel in order to stay competitive in the convention center business with other cities that have added hotels. This includes the cities of Austin and Houston. 

Furthermore, Leppert has treated the hotel as an economic generator, saying it will bring new revenue, generate new business, and create new jobs in Dallas. The City Council adds that Dallas stands to lose several businesses if they can’t keep their convention center booked. They say that consistent bookings of the convention center can only occur if they add the extension.

A study by Dr. Heywood Sanders for the Brookings Institute on the economic impact of convention centers finds these grounds given by Mayor Leppert and the City Council to be erroneous and misleading to the public.

According to Dr. Sander’s study, all three rationales can be disproved by the fact that the trend of large convention center events has been in decline since before the post-9/11 economy. Existing convention centers have lost large amounts of business within the past decade, while newly constructed centers and expansions have not been able to gain or keep consistent business.

This trend doesn’t appear to be ending anytime soon, and it seems like convention centers and their expansions, like the hotel in Dallas, will become a drain on taxpayers’ wallets. Even a turnaround in the industry would not create a substantial increase in business for any given city. 

A testament to the failures of Dallas’ plan is the St. Louis taxpayer-owned hotel, which was largely financed the same as the planned Dallas hotel. The St. Louis hotel is now missing its second mortgage payment and projects business to deteriorate even more this year.

If the Dallas hotel fails, taxpayers will be the ones incurring the debt. Taxpayers deserve to know the real facts that surround the taxpayer-owned hotel.

Links:
http://blogs.dallasobserver.com/unfairpark/2008/10/hey_look_theyve_alrea...
http://www.brookings.edu/metro/pubs/20050117_conventioncenters.pdf
http://www.dallasobserver.com/2008-04-17/news/demanding-answers-as-the-d...
http://www.notaxpayerhotel.com/
http://www.stltoday.com/blogzone/mound-city-money/uncategorized/2008/11/...