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Fort Worth eyes publicly-funded convention center hotel

By Suzanne Sprague, KERA 90.1 reporter

Dallas, TX – Suzanne Sprague, Reporter: It's a cold Saturday morning outside the Ol' Pancake House in Fort Worth's university district. Two female volunteers, bundled in hats, mittens and scarves and armed only with ball-point pens and clipboards, cheerfully try to latch on to nearly every customer leaving the restaurant.

Woman: Are y'all residents of Fort Worth? Are you aware of city council's plans to build a hotel with our tax dollars?

Sprague: Most of their targets just head straight for their cars, but that doesn't deter Marjorie Hirsch. She's one of the shivering volunteers collecting signatures to hold a referendum on the planned city-owned $160 million convention center hotel.

Marjorie Hirsch: Right now, it rests with the city council alone. They voted to do it. But it's our position that it would be better to let the citizens have a voice in that and to learn more about the issue and make a decision.

Sprague: Hirsch has a tight deadline. Her group needs 16,000 signatures by December 6th to keep the city from selling certificates of obligation, which would finance the hotel, on December 10th. Fort Worth native Florian Stadler, who rode her bike to breakfast from downtown, hopes they make their goal.

Florian Stadler, Petition Signer: If some people want it, then we should have a referendum to see if it goes through. I'm not in favor of it. I think we have enough hotels downtown.

Sprague: Many leaders of Fort Worth's tourism industry disagree. The city is spending $75 million to renovate and expand the downtown convention center and some officials believe that money might be spent in vain without a new 600-room luxury hotel to complement it. Kirk Slaughter is Fort Worth's public events director.

Kirk Slaughter, Fort Worth Director of Public Events: There have been three different studies conducted on the need and verified the need for a convention center hotel here in Fort Worth. Also the experts are telling us that in order for Fort Worth to be competitive for the lucrative convention market that we've got to have this hotel adjacent to the convention building.

Sprague: But Heywood Sanders isn't so sure. As chairman of the public administration department at the University of Texas at San Antonio, Sanders is a leading researcher on convention center issues. He says there's no evidence that the convention hotel strategy works as a magnet for lucrative tourism dollars. But, he adds cities are still eager to take on the projects.

Heywood Sanders, UTSA Publican Administration Department Chairman: Because in recent years there has been some real reluctance on the part of private investors to put their money behind these kinds of projects, what we've begun to see is a host of cities which have literally tried to take them on themselves.

Sprague: Also, cities can get better financing deals than private builders. So Houston and Austin are among a dozen or so cities nationwide that have built publicly financed convention center hotels recently. And Fort Worth council members like the Northside's Jim Lane, don't want Cowtown left out in the cold.

Fort Worth City Council Member Jim Lane: We have such a unique opportunity in this city to get into the real tourism industry. That is the cleanest dollar in the world. We have never tapped what we are capable of doing. We now have a commitment to do that. I think the whole city is committed to doing that.

Sprague: Fort Worth plans to finance the hotel by issuing certificates of obligation, which are similar to public bonds, but don't require voter approval. The debt would be repaid with the hotel's revenues, unless the project fails. Then, the city might have to dip into the general fund, which could lead to tax increases or service cuts. And therein lies the rub for some opponents like Steve Hollern. A local accountant, Hollern says certificates of obligation are intended for public facilities, not private hotels. And, he objects to the city's prediction that the hotel will reap hundreds of millions of dollars in profits over the next three decades.

Steve Hollern, "Let Us Vote Fort Worth": If that were true, the investors would be tripping all over themselves to invest in this. The question is, where are the Warren Buffets, the Ed Basses, the Tom Hicks, the developers and investors who do these kinds of projects are saying it's not viable.

Sprague: Ed Bass, Fort Worth's billionaire developer, even published an editorial discouraging the city from pursuing the convention hotel, claiming the Worthington Hotel, another downtown landmark, lost money nearly all of the 18 years his family owned it. So to answer public concerns, city officials reworked their hotel financing numbers this week. They're diverting some rental car tax money to a new hotel reserve fund. And, they've promised to use all of the bed taxes generated by the new hotel for paying off its debt. Assistant City Manager Charles Boswell says even if occupancy rates plunge 40%, the convention hotel could sustain itself.

Assistant Fort Worth City Manager Charles Boswell: Even in that very worse case scenario, we would have in the combined city reserves $14.9 million. That's $4 million than you need for your annual debt service payment.

Sprague: Council Member Wendy Davis, one of the hotel's most ardent supporters, says the potential payoffs from a successful convention hotel justify that level of risk.

Fort Worth City Council Member Wendy Davis: We are finding that the ability to create a reserve fund over the life of this debt is at the minimum $212 million over the life of the debt. And that's $212 million that can be used for other kinds of capital projects.

Sprague: But fellow council member Chuck Silcox says, forget the projections and consultant studies, he's got a philosophical objection to the project.

Fort Worth City Council Member Chuck Silcox: I just firmly don't believe in the city owning a hotel. That is not to say good or bad to anybody else, it is just not the proper thing for a municipality to do.

Sprague: Still, seven of nine Fort Worth council members, including Mayor Kenneth Barr, want the city to build the convention hotel. And they want to sell the certificates of obligation before interest rates go up. So they're hoping the "Let Us Vote Fort Worth" petition drive falls short of its goal. So far, organizers have collected about half of the signatures they need to stop the process. And if they're successful, the city will have to call for a public vote. For KERA 90.1, I'm Suzanne Sprague.


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