Demanding Answers as the Dallas Convention Center Hotel Moves Forward

The Anatole has never received any city subsidy or bailout, and that has helped inform the conviction of Harlan Crow, a staunch Republican who claims that Mayor Leppert's plans for a new convention center hotel amount to little more than "corporate welfare."

Crow says he harbors no ill will toward Leppert, even though he supported his defeated opponent Ed Oakley, donating $5,000 to his campaign (as did Crow's father). Yet he calls Leppert "a nice guy," recalling a time between 1986 and 1989 when Leppert worked for Trammell Sr. as one of his national partners. At the time, the Trammell Crow Co. was the largest apartment developer in the country.

Crow began speaking out against the hotel project within two months of Leppert taking office. In a July 31 letter to the mayor (read it), Crow called the project "not economically viable." He also speculated that city staff was secretly working with Woodbine to cut a deal that would be detrimental to taxpayers. On February 14, he fired off another missive to the mayor (read the letter), calling the council's vote to option the Chavez property "morally wrong." He wrote that a convention center hotel would hurt the existing private downtown hotels, including his own. Not only did he envision that the hotel would be "a huge loser," he also branded its possible use of public money as "the height of folly."

A meeting was arranged between Crow and Leppert, but a health reason prevented Crow from attending. Instead, he sent Anne Raymond, who is in charge of Crow Holdings' hotel investments. Says Raymond, "It was a friendly meeting where we agreed to disagree."

Raymond says a 1,000-room hotel will cost approximately $500 million, but moving forward with the land purchase is irresponsible without knowing the actual cost of the public's investment. She maintains that a hotel of this size will be a burden on an already weak hotel occupancy rate, which was approximately 60 percent last year in Dallas and is forecasted by The Linneman Letter, an economic and real estate research publication, to decline for the next three years. And that's without the addition of at least another 1,000 rooms. "It's why we don't have it—because the market doesn't support it," she says. "And the only way it will materialize is if a whole series of huge, uneconomic decisions are made."

Crow and Raymond take issue with the city appraisals, claming the city is paying too much for the land. So Crow Holdings recently commissioned two appraisals of its own. According to a Crow representative, one appraisal valued the Chavez property at $29.4 million, the other at $33.9 million—both noticeably lower than the city's two appraisals, which valued the property at $40.1 million. The Crow appraisals were done, however, on an as-is basis, meaning the property was evaluated according to its current use as a parking lot.

Although first assistant city manager Ryan Evans gave Crow assurances in a May 2005 letter (read the letter) that "the city will not underwrite any operating losses" of a convention center hotel, Crow remains unconvinced. He believes the city will likely own the hotel, with losses falling on taxpayers. "There are so many ways to obfuscate and to make it look like someone else owns the hotel and is taking the risk—lawyers can be very creative," he says. "If they paint the picture using direct English, [the hotel] won't happen." That's why Crow feels City Hall is interested in keeping taxpayers in the dark, paying for the project with certificates of obligation rather than issuing municipal bonds that would require voter approval. "They don't want a vote," Crow says. "They'd lose a vote."

The Dallas Morning News won't accurately cover the issue, claims Crow, and it's not hard to understand why. In an October 31, 2007, editorial, the paper opined that the city should move "expeditiously" on plans for a convention center hotel.

"The bias they've had on this issue is remarkable," Crow says. "The land ownership over there is unbelievable."

Belo Corp. owns Belo headquarters on Record Street, The Dallas Morning News building and the WFAA building on Young Street, along with nine downtown properties within walking distance of the convention center. The nine properties totaling more than 5.2 acres are on the tax rolls for more than $9 million.