Demanding Answers as the Dallas Convention Center Hotel Moves Forward

During a February 19 Economic Development Committee meeting, councilman Ron Natinsky, chair of the committee, told Rasansky and Hunt that there was a difference between the tax rolls and the appraised value because the appraisals were done assuming a hotel was already on the site. The tax rolls appraised the property according to its current use as a parking lot. Gonzalez says the appraisals were done based on the "highest and best use," and not assuming a convention center hotel was on the site.

Hunt's and Rasansky's concerns were not enough to stop the council from taking the next step. On February 27, the council approved the use of certificates of obligation (secured by property taxes) to raise the $42 million needed to purchase the property. These certificates are short-term debt instruments and are used much like long-term revenue bonds to raise money to finance major construction projects. The main difference is that bonds require voter approval; certificates of obligation do not, which is part of their appeal to politicians concerned that their pet projects might be defeated at the polls. The certificates are interim financing, and the city will either refund them from the sale of revenue bonds for the hotel or the restructuring of the convention center's debt.

Again, Rasansky and Hunt were the lone dissenters, voting against plans for the certificates. Both claimed to be in favor of a convention center hotel, they just opposed the manner in which it was proceeding and the scarcity of information upon which they were being asked to cast their votes. "I am ready and willing to support it if I know it's more than just a vanity project," Hunt says.

Differences between the mayor and city staff regarding financing seemed to mirror these council members' concerns. Leppert's public position at Urban Market was that the city would be relying on public money to finance the project. This seemed at odds with the position of the city staff in its March 7 Request for Proposals, instructing prospective hotel developers that "It is the city's goal to minimize the level of public financial participation in the project and to attain the most distinctive, highest-quality and marketable project possible."

On April 7, the council's Economic Development Committee received a briefing from HVS Convention, Sports & Entertainment Facilities Consulting, which the city retained to study the feasibility of building a hotel. During this briefing, Rod Clough, managing director for HVS' Texas office in Flower Mound, recommended the development of a 1,200-room hotel with restaurants, retail and other amenities. He said his report was dependent on using the Chavez property as the site for the hotel.

In that same meeting, city attorneys informed Rasansky that he could no longer vote on or even publicly talk about the convention center hotel because of a conflict of interest. He owns shares of Citigroup, and on March 26 the council approved Citigroup as one of six underwriters for possible debt issuances for a convention center hotel. Rasansky was clearly upset. "I think this really sucks," he said after leaving the meeting. "But there's nothing I can do about it."

This silenced one of the major critics of the project, but it didn't silence them all.

Harlan Crow, the son of real estate mogul Trammell Crow Sr. and chairman and CEO of Crow Holdings, walks through the halls of his luxurious Uptown offices, stopping to admire an architectural model sitting on a table. The miniature mock-up of the old Parkland Hospital on Maple Avenue will house the future corporate headquarters of his company. Crow says the collection of buildings offers a campus feel, and it's his favorite project.

Wearing a golf shirt and khakis, Crow enters the conference room overlooking Dallas' Arts District. "This is where the prime real estate is," he says. Although Crow is one of Dallas' wealthiest men, one of Crow Holdings' most prized assets, the Hilton Anatole, is no stranger to tough times. And to protect his hotel's bottom line again, Crow has thrown himself into the middle of the convention center hotel controversy.

In late 1990, the hotel (then the Loews Anatole) was unable to make payments on its $75 million debt and for two-and-a-half years was in foreclosure. The Crow family finally found a new partner, the Teacher Retirement System of Texas, which gave it a much-needed cash infusion to resuscitate operations. The Crow family regained control of the hotel in 1995, the same year its name was changed to the Wyndham Anatole, reflecting the change in hoteliers. Ten years later, the name would change again to the Hilton Anatole, its association with the Hilton chain helping to boost its reputation as one of the top hotels within the vicinity of downtown Dallas.