I got a call this afternoon from Dallas FOP president, Mike Walton. Dallas lost the 2013 FOP convention to Cincinnati, 800 to 1100 votes. We think one thing that may have tipped the vote in their favor was that FOP members in states near Ohio wanted to drive to their destination, and they have a larger voting bloc than down south.

I’m disappointed, but am so glad I had the opportunity to work with Mike, Fred, Dena, and everyone else who put so much time and energy into this effort. We’re very lucky to have these folks in our DPD.

Enjoy these pictures from our trip, and check out the videos of our presentation (below). Mike was on fire, and did a great job selling our city and hitting all the right notes.

Next time, I’m bringing the Dallas Cowboys cheerleaders. I kid you not.

In January, I joined DPD officer and Dallas FOP executive board member, Fred Mears, and Dena Rambo of the Dallas Convention & Visitors Bureau, as we gave the national FOP officers a tour of Dallas’ police headquarters. Fred’s been working tirelessly to bring the convention to Dallas, which would be terrific for Dallas’ economy. I’ve been working with the Dallas FOP and the convention center to ensure we could bring the best deal possible to the table.

I was really impressed with the regional cooperation and statewide support Dallas received. Richardson, DART, Fort Worth and others have stepped up to help lure the FOP to Dallas. And the FOP lodges across Texas have been really working the delegates here at the convention, encouraging them to vote for Dallas.

On Monday, I met with Dena from the DCVB and DPD officer Mike Walton, president of the Dallas FOP. Mike has been working his butt off, campaigning every possible minute. We discussed our presentation for Wednesday (each city vying for the 2013 convention gives a ten minute presentation to the entire delegation).

On Tuesday, I spent the day at our convention hall booth with Dallas’ 20-member delegation. We were working hard to sell the delegates on Dallas. We had two main points. First, the entire delegation would be in just 3 downtown hotels, all close to the convention center (including the convention center hotel) and connected by light rail. This was a big selling point because the group is usually spread out across whatever city they’re in. This has been especially true in Long Beach, where some of us (the Texas delegation) are 10 miles from the convention center. Second, Dallas is economical. The three hotels have agreed to offer the prevailing federal per diem rate, which is $115 right now. None of the other cities could beat that.

Last night, Dena, Mike and I got together to prepare our presentation. We worked on it about 4 hours, and I think it paid off. Today, we made our presentation to the whole delegation (I’ll post the video shortly).

This has been such a great group to work with. I can’t say enough good things about the DPD officers I’ve gotten to know on this trip, and Dena from the DCVB could not be a better cheerleader for our city.

Tomorrow, the delegation will vote on the host city for 2013. I’ll give everyone an update on the results. Keep your fingers crossed.

(FYI — I didn’t spend any taxpayer funds on this trip; it was paid for by the FOP and out of my campaign funds.)

I did not, and do not, think that Dallas should wholly own a convention center hotel. After examining this issue very closely for more than a year, I still believe Dallas should have subsidized a privately-owned hotel, and that a private company should have borne the financial risk. As it stands, if the hotel fails, taxpayers would ultimately be responsible for the debt. I remain unconvinced that city consultant HVS’s overly optimistic financial projections will prove true.

However, Dallas voters assessed this risk when they voted on May 9. They (narrowly) approved city-ownership of the hotel. In the end, it is their money and their decision. So when it came time to authorize the bonds, I felt my obligation was to approve the authorization IF there were sufficient protections in place for taxpayers (my responsibility to the 49% who voted against city-ownership of the hotel).

I spent a great deal of time talking with city staff about the deal they have brokered for sale of the bonds, and what types of taxpayer protections were in place.
My primary concern with the original deal was with the way the reserve fund was set up. A reserve fund lets you dip into it if you don’t have enough money to make your debt payment. Originally, $50 million was going to be put in a rainy day reserve account for the hotel. If the hotel wasn’t profitable enough to make its debt payment, it could dip into the reserve.

However, the original deal required the reserve fund to be kept at $50 million (to protect the bondholders), and that meant using taxpayer dollars to shore up the reserve fund if funds were withdrawn from the account to make the debt payment — like robbing Peter to pay Paul. That essentially opened up the city’s general fund to the hotel, a risk too great when the returns on the hotel were too uncertain.

I am pleased that city staff took to heart the reservations expressed by those of us opposed to city ownership of the hotel. The current deal does not require that the reserve account be refilled by taxpayers. Instead, it is replenished only by hotel profits. That is a much better deal for taxpayers, and means that taxpayer funds will only be used if the various reserve funds are used up. There are several reserve accounts, starting out at over $50 million.

While I still believe the city would be better off with a privately-owned hotel, I am very pleased with the protections put in place for taxpayers and hopeful that taxpayer dollars will never have to be used to rescue this hotel.

As this project moves forward, I’m going to do all that I can to make it a success so that taxpayers never have to bail out this hotel.

I would like to thank Harlan Crow for his effort to allow the citizens of Dallas to have a say in the city’s proposal to build a convention center hotel. I would also like to thank Anne Raymond for tirelessly debating the issue and educating voters. I have been in her position before, and it is a grueling, challenging task.

I have consistently voted against the city-owned hotel because I disagree with its funding mechanism which places the risk solely on the shoulders of taxpayers, with no developer or operator funds at risk.

But today, the voters of Dallas have spoken and settled the matter. After assessing the risks, a majority of voters decided that the potential benefits of a city-owned hotel outweigh the risk to taxpayers. The City of Dallas will now finance, construct, and own a convention center hotel.

As we move forward with the construction of this hotel, we must make sure that its financial success is our number one goal, and that taxpayers are not required to make up any cost overruns or revenue shortfalls. We must also be diligent to ensure that the ancillary economic development promised along with the hotel materializes and enhances our tax base. And finally, we must make sure that the hotel has sufficient connectivity to the rest of downtown so that all areas of our city center may benefit from its construction.

In the days ahead, I pledge my support to the Mayor and our Council in the pursuit of these important goals.

The Mayor (along with Ron Natinsky) has told voters that without a hotel, the convention center itself is going to be a drain on Dallas taxpayers, costing taxpayers hundreds of millions of dollars. That is simply not true.

According to Sam Merten at the Observer, the Mayor and Ron Natinsky have been stating unequivocally that the convention center will cost taxpayers $150M – $300M if we don’t have a city-owned hotel:

At a Bachman Recreation Center debate in early March, Leppert said the convention center is uncompetitive for three reasons, one of which is because it loses $3 million per year.

“That comes right out of your wallets my friends because that comes out of the general fund. Three million dollars. And that number’s not going to go down,” he said. “Keep in mind, that’s your tax money. So as that gets worse and worse and worse, we’ve got to get better. It’s not unreasonable to believe over the next 30 years, it’s going to be over $150 million in taxpayers’ money if we don’t do something.”

Council member Ron Natinsky debated at the Farmers Branch Recreation Center in late February and made a similar claim. “If you take $5 million over the 30 years of the program on the hotel, that’s $150 million that I can stand here and tell you we are absolutely going to lose — if not more,” he said.

Natinsky ramped up the scare tactics by doubling that amount, claiming “our convention people” estimate the convention center will lose approximately $10 million annually.

“Well, $10 million a year of your taxpayer money is $300 million at the end of 30 years, and we will lose that,” he said. “We made a decision that the risk of losing $300 million is significantly larger than the risk that we calculated on the other side.”

That’s just not true. This morning I asked Dave Cook, City of Dallas Chief Financial Officer, if this was correct. Here is his answer:

We do not anticipate a need to subsidize the Convention Center operations. The convention center debt restructure greatly reduced the chances that a general fund subsidy would be needed. Following the debt restructure, Convention Center has returned the FY 2008-09 subsidy and the plan is to return the prior subsidies (Fy 2006-07 and FY 2007-08) to the general fund next year. That will “undo” all General Fund subsidies. I have heard of no scenario that would now require a $10M (or any other) general fund subsidy to Convention Center.

So why are the Mayor and Ron Natinsky lying to voters? Again?

If we’re going to play “who loves Dallas more,” then a fair argument can be made that hotel proponents who claim the sky will fall without a city-owned hotel are actually anti-Dallas. They see nothing beneficial or desirable about our city except huge, expensive projects (Calatrava bridges, Trinity toll roads, convention center hotels). They think so little of Dallas and what we have to offer that they desperately throw money at any unnecessary (but flashy) project just to convince people we’re a decent city. Whatever your position on the hotel, our city has much more to offer than the Mayor and others give it credit for, and we don’t need a hotel or any other massive, taxpayer-funded monument to excess to prove it.

In theory, the hotel would be able to pay for itself through its own revenue. But if the hotel doesn’t meet the Mayor’s rosy projections for occupancy, taxpayers get stuck with the bill. So I am voting YES on Proposition 1.

I am voting NO on Proposition 2, which will essentially call for a referendum whenever the city provides more than $1 million in financial incentives for a development.

There are areas of our city that need incentives to convince developers to build there, and developers won’t stick around for a public vote. They’ll simply go elsewhere — Las Colinas, Irving, McKinney — where they can get the same incentives without waiting months for a vote. Bottom line is, Prop 2 has the potential to make Dallas non-competitive and seriously damage our city’s ability to provide reasonable economic incentives to businesses.

UPDATED:
On another website, someone posted “So many things would have to go wrong for this hotel to use taxpayer funds.” Not really. Just missing a mortgage payment could force the city to dip into taxpayer debt.

While the hotel debt is initially secured by hotel revenue, it is also secured by taxpayer dollars. Apparently, the market didn’t feel comfortable betting solely on the hotel, so it required additional security — in the form of taxpayer funds. So here’s how it works:

The city’s going to borrow $550 million for the hotel: $500 million to build it and $50 million to set aside in a rainy day fund (the “reserve account”). The reserve account protects bondholders so they know they’ll get repaid — the city can dip into this reserve account if the revenues for the hotel aren’t enough to repay the debt.

If it ended there, I’d be supporting the city-owned hotel, but it doesn’t. The reserve account has to stay at $50 million to satisfy bondholders. Guess who has to keep the reserve account full? Well, if the hotel doesn’t have enough money to pay its mortgage, it surely won’t be able to refill the reserve account. So that will fall on taxpayers. It’s really not that complicated, or that unlikely.

This city-owned hotel is a gamble, and in this economy, it doesn’t make sense for the city to be putting taxpayers at risk.

We all knew the vote on the land purchase was coming. We’ve been discussing it for months. What we didn’t know — what no one knew until Friday night — was that we were also voting on approving a publicly-owned convention center hotel that will put taxpayers on the hook for $500 million.

Didn’t hear anything about that? That’s because the very first time public ownership was even discussed was last week, when the economic development committee met behind closed doors. And suddenly, without public discussion or debate, the city was getting into the hotel business.

To add insult to injury, these two separate issues were mashed together into one voting item. You either voted to purchase the land AND public ownership of the hotel, or you voted against both.

A little background: on May 2, less than two weeks ago, the Dallas Morning News reported on the mayor’s trip to China:

….Mr. Leppert acknowledged that a break-neck sprint toward a convention center hotel deal perhaps isn’t the most prudent course.

“You come to Hong Kong, and you see the benefits this has for a city,” the mayor said. “But the public money – you want to try to get to zero if you can. I don’t think that’s possible. But I want to take time to minimize it as much as possible.”

How is putting taxpayers on the hook for $500 million “minimizing” public money? How is $500 million anywhere close to “zero”?

Then, on May 6, just a week ago, the whole concept of public ownership was first discussed. Before, we’d only been talking about a public subsidy to encourage a private developer to build a convention center hotel. For example, the city could have purchased the land and given it to a private developer to construct and run the hotel. Now, instead, the city’s suddenly getting into the hotel business.

Here’s what really bothers me about this: the process, or lack thereof. There was NO public discussion about the city owning a hotel. Supporters keep saying “We’ve had months of discussion!” But they know that’s not true. We may have had months of discussion about buying the land, but we have not had ANY public discussion about public ownership.

Even the Dallas Morning News — a convention center hotel supporter — agreed the vote on public ownership was all going too fast:

[F]or those playing along at home – the taxpayers – this appears to be a dizzying sequence of events that did not allow for their participation.

Some council members have asked: Why wait? After all, their questions were answered during last week’s meeting. But Dallas residents who were left on the other side of that closed door might not share their view.

Because these were separate items, Councilmember Hill moved, and I seconded, “dividing the question” so that the two matters (purchase of land and public ownership) could be voted on separately.

The two issues (land purchase and city ownership of the hotel) should not have been combined. Councilmember Hill brought up a very important point: While the first issue — land purchase — may be time-sensitive (we might lose our $1 million option fee if we don’t purchase the property now), the second issue — public hotel ownership — is NOT time-sensitive. There is no urgency to approve public ownership. We didn’t have to do that today, and I can guarantee you we didn’t have enough facts to support it.

To me, this is a no-brainer. If someone really wanted to vote for the hotel, they’d get to vote twice — which is twice the fun. But we lost 7-6, with Hill, myself, Koop, Salazar, Medrano, and Atkins voting to divide the question. Unbelievable.

So forget about transparency. Forget about public discussion. Let’s just do it.

So we voted on both issues, together, even though they are not properly the same question. It passed 11-2 (Rasansky and Garcia could not vote due to a conflict).

The problem with this process is two-fold: One, there has been no public discussion. There has been no real vetting of the pros and cons of the city’s OWNING a convention center hotel.

Two, the city’s core competency is NOT hotel ownership. The city’s core competencies are, or should be, public safety and public infrastructure. We should be focused on providing the safest city, the smoothest streets, the cleanest neighborhoods. Once we master those basics, then we could consider moving on to things like hotel ownership. But to my knowledge, we’re not there yet.

When we began discussing paying $42 million for the convention center hotel site, one of the primary questions I asked city staff was: Why would we pay six times the appraised value set by the Dallas Central Appraisal District? Why would we pay $42 million for land valued at only $7 million, particularly when the property owners protested to DCAD last year that $7 million was too much?

This $35 million difference meant one of two things: Either the city was being duped into paying six times what that property was actually worth and the city’s appraisals were wrong, or DCAD had seriously undervalued this commercial property, resulting in years of lost tax revenue to the city. And if it were the latter, if DCAD had undervalued this property, then it stood to reason that it had done the same for other commercial properties across downtown and across the city, and the City of Dallas had lost millions and millions of tax dollars from these undervalued commercial properties. That, of course, meant the tax burden was shifting more and more to residential property owners.

The problem is, under Texas state law, DCAD can obtain the sales prices for residential properties, but not commercial. I, along with Mitchell Rasansky (before he was instructed by city attorneys not to participate in this discussion), had requested that city staff work with DCAD to figure out why there was such a disparity between the city’s appraisals and DCAD’s for the convention center hotel land.

The thing is, the owner of the proposed site for the convention center hotel can’t have it both ways. They can’t claim that the property is worth a whopping $42 million when they want to sell it to the city, but a measly $7 million when they want to pay taxes. I’m glad city staff worked with DCAD to try to more accurately reflect the market value of the property at issue and better gauge the property values of other commercial properties downtown. It makes the asking price for this property somewhat more credible, and, looking at the bigger picture, I am hopeful that we’ll see greater equity in our property tax system so that we are all paying our fair share, not just residential property owners.

At the end of the day, this is all a matter of fairness. It’s not fair for residential property owners to pay more, year after year, to see their appraisals rise every year, and for commercial property owners not to pull their weight due to a loophole in state law that prevents transparency and disclosure.

I understand that DCAD is revising its appraisals for several downtown properties, and perhaps others. Will commercial property owners enjoy seeing their taxes rise? Will they like paying taxes on the full market value of their properties rather than some deflated, undervalued price? Probably not. I sure don’t like paying taxes on my house. But I, along with my neighbors, have to pay taxes on the actual market value of our homes, and it should be the same for commercial property owners across our city. And if the owners of the land for the hotel want the city to pay $42 million, they damn sure better be willing to pay taxes on that amount.