KC to announce 800-room Hyatt convention hotel downtown | The Kansas City Star The Kansas City Star (http://www.kansascity.com/news/business/development/article20557803.html)

You're not hearing me on a lot of things, but you obviously understand TIF well enough to be dangerous so don't take that as an insult. The first thing is that TIF usually requires some negotiation, and the reason for that is because you can structure it so that a "fair share" still goes to schools and other holy cows (so we can pretend the affected housing is feeding school enrollment). Because TIF is negotiated, it's been my experience on projects that I've worked on, that the process will allow for a review of project finances and then they will try to get you the TIF you need, and not the TIF you don't. Project finances don't ever plan for profit for this reason; it's called "developer's fee." It's a totally legitimate expense for the developer's time and effort, since he/she usually has a team of employees that also gotta eat.

OKC already has used some TIF money to go to the schools. They've allocated 5.6% for schools. I'm sure they've used some on other CAPEX for entities that would normally use those tax dollars. I think TIF-2 has been incredible and a great use of the resources, and Devon used a TIF to put massive money into P180. TIF has done a lot of great things for OKC and I would be adamantly opposed to stopping its usage.


As for urban context, the funny/sad thing about downtowns as command post is that the land speculation usually prevents, rather than enables, real estate development. The land underneath most downtown buildings, usually, is worth more than the building on top of it, unless it's Devon Tower. Just think about the former Downtown Ford's recent market appraisal. For one, I still can't get my head around the fact that they operated a car lot for decades on land that is worth $100 MILLION. Wow. Only in OKC.

I also thought that OKC did occasionally use the TIF fund to make bridge loans? That's actually a pretty innovative/conservative use of TIF. Most projects just get it. Regarding the Clayco 4-towers, especially with the 2 residential towers that they say will be delivered (and surely the TIF will be structured to ensure), do you really think that entire development is feasible in OKC without subsidy? I hate to say it, but I don't. High-rise residential NEW construction says a LOT about a real estate market.

1st, that car lot wasn't worth $100M for decades. Most of downtown was worth less than half of what it's worth today even 15 years ago.

And I think you're mishearing me too. You seem to think I would be against Clayco or anybody receiving TIF. That is not the case at all. I would be fine with Clayco receiving TIF funds. If they were requesting something in line with what was normal (5.5% to 7%) I wouldn't think twice, just give it to 'em. But to ask for 12.5% of the second largest development project in recent OKC history…I need to know more about what they're doing to benefit the city, other than just building a few (admittedly nice) buildings. Obviously the City is in conversation, and you hope that they're fighting for the right things, but there's no M.O for this as it is all relatively new. Two people in charge of doling out hundreds of millions of dollars.

Again, I come back to C2S. They want to start a TIF on land that is maybe 2% full of development with any longevity. So if C2S takes off in the next 10-15 years, none of the new AV tax revenue coming in is allocated to providing those services for these places.

Anyway, the main point that I'm trying to make is we need to have a conversation about what TIF is (for the interested masses who have no idea) and how it is going to serve OUR city. I don't quite care that people have dealt with this in the past. Our situation is unique, and we need to keep that in mind before we use ideas that may not be the MOST beneficial thing for our city, even if it was a smashing success in others. We need to have this conversation because the city is considering multiple TIFs that address districts that are entirely unlike the areas already in a TIF district. Not all TIFs are created equal, and we need to make sure we're developing these TIFs with the disparate parameters in mind.

We also need to make sure that we're handling the process the way it needs to be handled. To think that most TIF that has passed has gone by the desks of city councilors who don't even know what TIF is should be concerning to everyone. And I don't say concerning because of wrong-doing, which has nothing to do with it. I don't care about whether or not wrong-doing is happening. I care about whether wrong-doing is even possible. These processes need to be open, transparent, and understandable for moral reasons as it pertains to government, and there need to be safe-guard mechanisms that ensure that they can't function any other way than exactly as we want them to.

H
And they paid what for it…like <$400M?

That's >100% return on an obscenely massive investment in less than a decade (and honestly, I think it's pretty close to a 200% return). That's better than any of them could have ever hoped for.

That value is only meaningful if you sell the team. Anyone who can afford to pay that kind of money here is already a part owner. So to realize that kind of profit they would likely have to sell the team to someone wanting to move it. That value is also partly predicated on comps based on what other teams have sold for and the current success of the Thunder. A losing team with lackluster attendance for a few years would put the current owners in the cellar with the other poorly performing small market teams.

I appreciate Ed Shadid's willingness to stand up to powerful interests when he believes they are taking advantage of taxpayers, but I do not believe his siren is warranted about the convention hotel. While it is true MAPS voters were not asked for money for a hotel -- or parking garage, as Pete reminds us -- that in itself is not the overarching offense Ed is making it out to be. I have said for several years that in order to get the quality of hotel we want (like the one that was recently announced in Kansas City) to anchor our convention center investment, it would take some creativity and public involvement.

But it is patently untrue to suggest that TIF funds are "diverting money from schools." It is an intellectually dishonest exaggeration. How can funds that don't currently exist for schools be "diverted?" Secondly, TIF funds are the only property tax funds controlled by the CITY, allowing the city's representatives to decide how they are used. Property tax flows to the county otherwise.

As Spartan has pointed out, any TIF funding requires a negotiation with the City. I'm comfortable that we are not going to find an enterprising developer who wants to speculate on building a major convention hotel without some public backing. As to now, (and possibly to Ed's point), we are a somewhat unproven convention destination.

None of this is to say that I don't think we should carefully scrutinize every TIF recipient. We should demand high standards. We should use TIF to stimulate investment when we would not otherwise get it. And, when we do elect to provide TIF assistance, we should ask for as much as we can from the recipient.

I'm actually more comfy providing TIF assistance to the hotel than I am to the OG&E development, because I believe OG&E is probably going to build its building regardless of TIF investment.

More to the point, if we are going to build a convention hotel, let's entice a leading brand and build something that will still be in demand (and meet convention needs) a decade or more from now.

I believe Ed is much more interested in public awareness and discourse than the specific financials of these projects. It's all about the public process versus something akin to oligarchy. These town halls are meant to spark healthy debate more than anything else and in so doing, holds the City more accountable for their decisions.

I believe Ed is much more interested in public awareness and discourse than the specific financials of these projects. It's all about the public process versus something akin to oligarchy. These town halls are meant to spark healthy debate more than anything else and in so doing, holds the City more accountable for their decisions.

I agree, but I think Ed would be more effective if he were to avoid exaggeration or intellectual dishonesty.

H

That value is only meaningful if you sell the team. Anyone who can afford to pay that kind of money here is already a part owner. So to realize that kind of profit they would likely have to sell the team to someone wanting to move it. That value is also partly predicated on comps based on what other teams have sold for and the current success of the Thunder. A losing team with lackluster attendance for a few years would put the current owners in the cellar with the other poorly performing small market teams.

Harold Hamm is not a part owner and he could afford to trade CLR stock for half the NBA…

There are plenty of other people in this town (and others) who could afford to be minority owners who are not. If someone pitched in $100M for x shares, and sell x÷5 shares for $50M, they have $50M cash (minus Capital Gains taxes) and still own a significant portion of the team. (Assuming of course that the ownership group and the NBA are okay with such a transaction).

But it is patently untrue to suggest that TIF funds are "diverting money from schools." It is an intellectually dishonest exaggeration. How can funds that don't currently exist for schools be "diverted?"

This is patently untrue. Your assumption is based on 1. The idea the no development would happen sans TIF. 2. An errant denial that taxes on properties that are already built, whose values are increasing every year in downtown (and subsequently their AV taxes), aren't being diverted. If Building A had a tax liability of X in year 2000, and in year 2015 that tax liability is x+15i, then of that 15i, 50% is going to TIF and 50% is going to its normal purposes. That value was going to increase regardless of the TIF, especially considering that most of the TIF that was doled out in the first 12.5 years was not a major contributor to the increase in value of downtown real estate. So, unequivocally without question, YES, that money was diverted from schools (and other functions).


None of this is to say that I don't think we should carefully scrutinize every TIF recipient. We should demand high standards. We should use TIF to stimulate investment when we would not otherwise get it. And, when we do elect to provide TIF assistance, we should ask for as much as we can from the recipient.

Yes, all 2 of us that are in charge of the hundreds of millions of dollars should do that…hopefully they do. But there's not a lot of margin there to remove error.


I'm actually more comfy providing TIF assistance to the hotel than I am to the OG&E development, because I believe OG&E is probably going to build its building regardless of TIF investment.

Just their building or all the buildings in the complex?

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Nobody is seeing this TIF thing as something in its infancy. Nobody is talking about what the future of TIF looks like. And nobody is saying that Ed Shadid is the savior of OKC with this "town hall". But if you can name me one other notable OKC figure other than Pete Brzycki who is trying to start a two-way conversation about this publicly where there is counterpoint to those in charge of what is now a 15-year old project, I'll give you $5.

You seem to be using optimistic numbers to make a somewhat obtuse argument. How often does the value of empty dirt increase, and regardless of its increasing valuation, is it not in our city's collective best interest to develop that dirt into something we can use?

You seem upset by TIF. What are you proposing we do besides vent? Should we just bag the hotel and hope for the best? Should we do away with TIF altogether and just let the county control all of our city's contributions to the area property tax base? What do you think should be done differently?

This is also a problem I often have with Ed. He can point out problems he sees but never seems to offer a solution other than talking and venting.

Why is this an Ed debate? You guys are doing this thing you always do whenever someone tries to change thinking.. You all do it to me, whenever I throw something critical out, the response is about Spartan and not what Spartan said.

Krisb - instead of saying "Well Ed said this..." Why don't you just own the comment yourself? Let's have a debate about TIF, and let's welcome anyone to contribute to our understanding (especially Ed who has a lot to offer here), but Ed himself is NOT the issue.

This drives me crazy that you all ALWAYS do this. Separate the person from the issue.

I haven't mentioned this yet but I will be speaking at the Town Hall on TIF's scheduled for 5/21 at the Tower Hotel.

Cathy O'Connor was invited but she declined (nothing against Ed, just didn't feel like it was appropriate) so Shadid asked me since I had researched all the details about OKC.

I will just be presenting on how TIF's work in OKC; not taking a stand for or against.

The event starts at 6:30 on that Thursday and will also feature Greg LeRoy, Executive Director of Good Jobs First.

Would love to see some OKCTalk turn-out:

https://www.facebook.com/events/1382378602090337/

You seem to be using optimistic numbers to make a somewhat obtuse argument. How often does the value of empty dirt increase, and regardless of its increasing valuation, is it not in our city's collective best interest to develop that dirt into something we can use?

You seem upset by TIF. What are you proposing we do besides vent? Should we just bag the hotel and hope for the best? Should we do away with TIF altogether and just let the county control all of our city's contributions to the area property tax base? What do you think should be done differently?

This is also a problem I often have with Ed. He can point out problems he sees but never seems to offer a solution other than talking and venting.

1) The value of empty dirt does increase. At the very least it will increase with inflation, all other things being equal. Remember we're talking about a 25 year period. Let's say we had a TIF that started in 1990, with a property that was worth $100,000 (so roughly a $1000 in property taxes each year). Today it would be worth $186,000, but you'd still be paying the same dollar amount you did in 1990. So by the end of the TIF, you'd be getting about half the tax income (in value) from the land that you did before. You're also not getting any benefit if property values go up in general. Empty dirt in Bricktown is a lot more valuable today than it was in 1990, but the schools aren't getting any of that increase.

2) The city is obviously better off getting a big hotel or skyscraper or whatever on that lot rather than empty dirt. But now that downtown is growing quickly and we've got empty lots rapidly filling in, are we better off using TIF funds rather than letting things develop naturally? In other words, you have a big piece of dirt. Joe the builder wants to put something there. With TIF money, he plans to build a 20 story building. Without TIF money, he'll only build a 10 story building. Is the city better off skipping out on 25 years of tax dollars to get those extra 10 stories? The choice downtown is no longer between a big empty patch of dirt and a skyscraper -- it's now between a cool development and a less cool development + 25 years of taxes.

You seem to be using optimistic numbers to make a somewhat obtuse argument. How often does the value of empty dirt increase, and regardless of its increasing valuation, is it not in our city's collective best interest to develop that dirt into something we can use?

Half of Deep Deuce filled in with projects that received no TIF funds. Of the over $200 million dollars invested (or proposed to be invested) in DD in the last 15 years, developers have received less than $10M, and most received it simply because they applied for it. It was not the difference between the project happening or not (though maybe it helped increase scale). TIF was not the driving force behind Deep Deuce's success, yet maybe 5% of the district is paying 50% of their taxes to TIF while the rest are paying 100% of taxes to TIF, and that's a substantial amount of money. A conservative estimate says that's around $2M/year out of those 15ish blocks.

TIF receives money from every building in downtown OKC whether it was built in 1915 or 2015, not just the new builds.


You seem upset by TIF. What are you proposing we do besides vent? Should we just bag the hotel and hope for the best? Should we do away with TIF altogether and just let the county control all of our city's contributions to the area property tax base? What do you think should be done differently?

This is also a problem I often have with Ed. He can point out problems he sees but never seems to offer a solution other than talking and venting.

So because we don't have solutions ready in hand, you propose we just not talk about it, most especially because Ed Shadid is the one trying to start a conversation?

I have at multiple points in this thread said I'm not opposed to TIF. Indeed I support TIF, and I would prefer the money be in the city's hands rather than the county's provided we have a plan in place that makes *best* use of the funds. That plan is not currently in place. TIF in OKC is haphazard at best, as evidenced by quite a few instances not the least of which is the fact they predicted $47M in TIF-2 Budget and we're now sitting at $126M budget and climbing every year. That's nearly a 200% margin-for-error.

There are literally no rules regarding who gets TIF money, except that a request that receives approval be located within specific boundaries. If I applied for $35M in TIF funds to build the world's largest brothel to be placed in C2S, all I have to do is convince 7 key people that it's a good idea. That's the extent to which our established parameters safe-guard us. (BTW, I imagine a pretty great business argument could be made for that idea...:eek:)

I'm "dying on this cross" not because I'm opposed to TIF. I'm doing so because I'm opposed to the astounding opposition to this discussion being started just because it's by Ed Shadid. That's preposterous. Right now OKC-TIF is this random thing that very very very few people really know anything about…Just $125M+ that "the city" can use at its complete discretion. Once again, All I'm saying is we need to put parameters and safeguards in place to make sure that this increasingly massive amount of money is serving the city to its very best interests. The problem with you asking for me to give solutions is that we haven't even identified potential problems. We're living in a dream world where hundreds of millions of dollars change hands with no potential for waste or error.

And to be clear, I would prefer someone other than Ed Shadid start this conversation, but, well, no other city leaders are stepping up to the plate.

If we would just stop subsidizing spawl we wouldn't need TIFs because higher density development would be the default free-market choice.

Kansas City just announced an 800-room convention hotel. Looks like their max obligation is $50 million.

New 800-room convention hotel coming to downtown Kansas City - KCTV5 (http://www.kctv5.com/story/29022114/kc-may-be-getting-new-convention-center-hotel)

https://pbs.twimg.com/media/CEvK8neUUAAVyXH.jpg

The article says, plus other city and county tax incentives. What would those incentives be?

The article says, plus other city and county tax incentives. What would those incentives be?

Sales tax reinvestment, tax abatement, financing help, grants, etc.

Will be very interesting to see the full details as it will help provide a window into what OKC is going to have to do.

The $50million cap appears to cover operating losses over the next 25 yrs. How much does Dallas subsidize for the losses on the Omni convention hotel?

http://frontburner.dmagazine.com/2014/11/24/how-government-subsidies-are-hiding-the-omni-convention-center-hotels-losses/

I can't speak for this specific project, but Kansas City has been extremely aggressive in its use of TIF's and incentives. My guess is this developer is probably spending very little of his own money here:

http://www.showmeinstitute.org/document-repository/doc_view/523-urban-neglect-kansas-citys-misuse-of-tax-increment-financing.html

To answer you question Motley, the city of Dallas is subisdizing around $22.5 million a year for the Omni Convention Hotel. The grand plan is to sell the hotel to a private company after a few years but it seems based on some highly optimistic assumptions.

How Government Subsidies Are Hiding the Omni Convention Center Hotel?s Losses | FrontBurner | D Magazine (http://frontburner.dmagazine.com/2014/11/24/how-government-subsidies-are-hiding-the-omni-convention-center-hotels-losses/)

If even Dallas has to subsidize, TIF assistance is an unfortunate, but necessary, cost to compete with other cities. I hope the OKC hotel is better looking than the one planned for KC.

I think the KC hotel looks fantastic, and to only be on the hook for $50M is a big deal as well. We should be so lucky to get a deal like they appear to have.

Of course KCMO is a solid Tier 2 destination. Half of my office was at a conference there just last week...

If even Dallas has to subsidize, TIF assistance is an unfortunate, but necessary, cost to compete with other cities.

But at the same time, doesn't the necessity of a TIF to complete a project indicate that the project is not in line with current market demand and will be unsustainable without continuing subsidy?

At the end of the day, if the ROI isn't there for the hotel developer, it won't be there for the city.

If the CC and its supporting infrastructure are built to a scope that goes beyond community needs, then that increased capacity should generate enough revenue to operate itself without subsidy. The CC and hotel are unique amongst MAPS 3 projects, imo, because its intended purpose goes beyond simply serving the immediate community and it has an inherent revenue potential. It has a direct economic component, and I think because of that, it should be held to a higher level of economic principles than, say, a big park that everyone can enjoy, but has no inherent revenue stream.

That is what I don't get either BDP. Why are cities lining up to lose money?

That is what I don't get either BDP. Why are cities lining up to lose money?

I'm not sure that a lot of them are lining up to lose money, but a lot of them certainly do lose money. But like anything else, it could just be about scaling. If building bigger to try and attract 2-3 large events a year makes every other event lose money, result in net negative operating revenue, then we're just being stupid and vain.

I also do get the secondary economic benefit of drawing people to your economic center, but if the facility itself operates at a net loss, then there needs to be away to funnel some of that indirect revenue gain back to the facility itself. I think usually this is done through hospitality taxes. The benefit of that is that it is more closely tied to the user and we don't have to increase sales tax or give up ad valorum taxes to pay for it.

The problem I continually see with hospitality taxes is that they never seem to go to reimburse the general fund or fund the subsidy, it just accumulates to be spent on other subsidized facilities. The expense is forever public and the profit is private. For example, the AICCM is said to have a $2 billion impact but you don't see anyone proposing $170 million in new taxes on that money to pay back construction costs.

The problem I continually see with hospitality taxes is that they never seem to go to reimburse the general fund or fund the subsidy, it just accumulates to be spent on other subsidized facilities. The expense is forever public and the profit is private. For example, the AICCM is said to have a $2 billion impact but you don't see anyone proposing $170 million in new taxes on that money to pay back construction costs.

There's a disconnect for sure, but just because it's been done wrong, doesn't mean it can't be done right. We've gotten good at TIFs and overlays. I don't see how this couldn't be done for a specific purpose in a specific area that directly or indirectly benefits from a large scale project or improvements. That is, hospitality taxes in the CBD and BT help cover CC operating losses. I think the CC was one of the least popular items, because fewer people could see a direct benefit from it, economic or otherwise. Well, how about the people who are pushing this thing, the ones that stand to benefit from it financially, step up and contribute (and in the case of hospitality taxes, it would really be their clientele that pays for it, making it fairly painless).

It's funny because this made sense to some people who basically pushed for private assistance for a quiet zone, which is as much a public safety issue as it is an economic one, but no one suggests that business owners who will benefit from CC traffic to step up and fill the gap between what it takes for the CC to go from being just a community hosting facility to being an economic engine.

The problem I continually see with hospitality taxes is that they never seem to go to reimburse the general fund or fund the subsidy, it just accumulates to be spent on other subsidized facilities. The expense is forever public and the profit is private. For example, the AICCM is said to have a $2 billion impact but you don't see anyone proposing $170 million in new taxes on that money to pay back construction costs.

Somewhere between the total negativity of you and the total bs on the other side is the truth. There will be an impact. If that impact only replaces what would have happened anyway, you are correct and the taxes received are neutral, or worse. So the issue isn't impact, but the NET POSITIVE impact. On that activity, taxes are paid which wouldn't have been paid if nothing was done. Since you never think anything done as an incentives ever results in anything positive, in your world that is definitely a loss. Economic development people tend to think EVERYTHING is a plus. Wish everyone would quit the BS and just give a reasonable, pragmatic evaluation without the agendas.

Well Rover, I assume that when these economic projections are done that says the CC Hotel will generate $X of economic impact that they already took into consideration outside dollars already being spent as well as local dollars that don't represent new spending in the area. If they aren't doing that then I suggest they start because it is their data.

Alas, my gut instinct is that there isn't enough new dollars to cover construction/operating costs even if they were taxed at 100%.

Well Rover, I assume that when these economic projections are done that says the CC Hotel will generate $X of economic impact that they already took into consideration outside dollars already being spent as well as local dollars that don't represent new spending in the area. If they aren't doing that then I suggest they start because it is their data.

Alas, my gut instinct is that there isn't enough new dollars to cover construction/operating costs even if they were taxed at 100%.

So, before we even know the amount or how it is to be assisted, you are convinced that it will fail. Judgement before facts?

Constant negativity is just as much a killer of progress as overreaching optimism. Emotion and prejudice vs. emotion and prejudice. Both sides thinking they are smarter than everyone else. It is obvious you feel that any government support of any economic development is doomed. The chamber feels that no amount is too much and no project is too risky. Both sides would fail spectacularly in the real business world.

A government subsidized program like the cc and cc hotel brings intangile benefits that are not necessarily measured in revenue. If the cc hotel results in some larger conventions and increased national exposure, and the ability to be considered with the larger cities, I think it increases the gravitas of OKC and brings value. Not sure the Peake brings in enough to full support its costs and run expense, but it has absolutely been worth every cent of investiment by OKC. The cc hotel won't be as important as the Peake, but it might be the next step up the ladder for OKC.

Interesting that San Diego has the same issues with regard to subsidies for private ventures, but this is for keeping the Chargers. In today's paper, we find the city has been basically subsidizing the team by $25million over the past years in lease payment concessions.

Cities must invest to compete. And if you don't compete, you stand the chance of being left behind, like OKC was for decades.

...Constant negativity is just as much a killer of progress as overreaching optimism. Emotion and prejudice vs. emotion and prejudice. Both sides thinking they are smarter than everyone else. It is obvious you feel that any government support of any economic development is doomed. The chamber feels that no amount is too much and no project is too risky. Both sides would fail spectacularly in the real business world.
Which is why my comments on the CC and CC hotel are generally only related to the controllable factors that will determine their relative success; (1) correct, walkable-to-rooms-and-amenities location that makes the facility and market as appealing to convention planners as possible and (2) correct CC hotel size that offers the proper block of rooms to support the events we are capable of, without being TOO big, which would require significant subsidy (Goldilocks principle). These are real-world, business-oriented factors over which we can exert influence, though impacted by the real estate market, which is obviously NOT as controllable. Everything else is just noise.

If a 600-700 room hotel is risky, why not split the rooms between two towers so if the need is not there, convert one to residential?

Which is why my comments on the CC and CC hotel are generally only related to the controllable factors that will determine their relative success; (1) correct, walkable-to-rooms-and-amenities location that makes the facility and market as appealing to convention planners as possible and (2) correct CC hotel size that offers the proper block of rooms to support the events we are capable of, without being TOO big, which would require significant subsidy (Goldilocks principle). These are real-world, business-oriented factors over which we can exert influence, though impacted by the real estate market, which is obviously NOT as controllable. Everything else is just noise.

But again, we only have so much money. The more walkability a chunk of land has, the closer it is to already existing amenities, the more it costs.

Honestly, it would be cheaper for the city to build the convention center a few blocks further away from Bricktown, and then just pay out of pocket to redevelop the area immediately around it.

I didn't say anything about Bricktown specifically. And expecting new stuff to magically pop up around the CC is not real-world either. Since Dallas has been cited as an example, let's go with it. They built their CC just outside of what was considered walkable. There is a train that runs to it. But since people couldn't cram their meals in during the time allotted (including time waiting for trains), now the city has had to subsidize new restaurants in the convention center complex. Read about this here: http://www.wfaa.com/story/money/2014/08/20/14155302/ While the Dallas CC is indeed bringing business, it has also become a moving target and a huge money pit. In large part because of a poorly-chosen location.

Regarding money, we still don't know what types of assistance the City of OKC can bring to bear on this project (though we do know SOME of them), but I can tell you that there are a few that wouldn't even require direct taxpayer payouts, and that wouldn't be especially controversial, if at all. Locating the CC on an island far from everything else and expecting the area to rise up around it is magical thinking, not based in reality. The reality is that it would make the venue far less marketable, it would bring much fewer events and economic impact, and the resulting subsidies down the road to make it right (or even to operate the building) would be the kind of subsidy that NOBODY wants to pay. The same holds true for building the hotel too big. You would have to subsidize the extra rooms, the ones that weren't being booked on a regular basis.

Far better to right-size the hotel and to locate the entire complex walkable to the many other hotels that already exist in the market. The result is a more appealing market, more bookings, and a full hotel that doesn't require ongoing subsidy.

Here is the text of that article, for anyone who cares:


DALLAS Members of the Dallas City Council Budget, Finance, and Audit committee will get a look (and taste) Tuesday of what's being added to the Omni Hotel and Dallas Convention Center complex.

Developers say they are in talks with restaurants, but can not yet reveal who could be signing leases. They will tell Council members to expect a sushi restaurant, a Tex-Mex establishment, and a third eatery that features pizza and wine.

Construction on the 15,000-square-foot retail and restaurant addition has just started, and it will likely take a couple of years, but it could be a fix to the number one complaint at a convention the lack of nearby restaurants.

'At lunch time I took a walk around... there's really no place to eat,' said Mike Sedlak, who traveled to Texas from Chicago for an energy conference at the Dallas Convention Center. 'I think an area of this caliber needs something that will allow people to get a selection and some good pricing.'

'Typically, we're at hotels where within walking distance, you have a wide selection of restaurants. That's always nice when you're away from home,' he added.

Another complaint heard often is about the dimly-lit transportation hub under the convention center. A makeover also starts this spring on DART's Convention Center Station, making walkways to and from trains and buses brighter, easier, and safer.

Commuter Kordelious Jefferson welcomes the upgrade. 'I think it's a good idea,' she said. She's also looking forward to the new Omni restaurant offerings.

'We sit here and wait on our trains and we can go grab a bite to eat,' she said. 'Sometimes you get to the end of the line and you've been on the train so long, you get hungry!'

The retail and restaurant space is going in on the side of the Omni that faces Lamar Street. It is being built above an underground parking garage that's currently under construction as well. The $27 million being spent on the project comes from previously-funded bonds that were not used to build the hotel.

Just to be clear, the city of Dallas is spending $27 million, over and above what they've already spent on a CC and on a hotel, just to fix access-to-dining complaints from convention-goers (which are surely costing them bookings...even more lost money). To me it makes more sense to eliminate this problem on the front end.

You want to spend a whole bunch of public money for a long time to come? Build the CC and hotel in a ****ty location.

If a 600-700 room hotel is risky, why not split the rooms between two towers so if the need is not there, convert one to residential?


I like this... At least the average citizen could benefit under this plan.

How does the average citizen benefit if the developer goes broke? You assume a private developer wants to build more than what is prudent and pay for the losses until such time as they have to pay more to convert it to another use. We would have to pick a pretty dumb developer and be pretty dumb ourselves. I'm with Urbanized...just build what is prudent. No pie in the sky.

If a 600-700 room hotel is risky, why not split the rooms between two towers so if the need is not there, convert one to residential?

Bc the point is to have 600-700 rooms. The private sector does a fine job of bringing 300 room hotels to fruition ASAP.

Here is the text of that article, for anyone who cares:



Just to be clear, the city of Dallas is spending $27 million, over and above what they've already spent on a CC and on a hotel, just to fix access-to-dining complaints from convention-goers (which are surely costing them bookings...even more lost money). To me it makes more sense to eliminate this problem on the front end.

You want to spend a whole bunch of public money for a long time to come? Build the CC and hotel in a ****ty location.

And if they saved $28 million or more on location, then it was a good move.

Convention centers by their very nature are anti-walkable because they are built way outside the human scale.

As for predicting failure - it isn't that hard. For every financially sound CC hotel I can find 20 operating at a loss. Maybe like the rail transit tax we could do a CC proximity tax to fund the operating subsidy and reimburse the general fund.

And if they saved $28 million or more on location, then it was a good move.

You assume this project will finish fixing the location-related problems (unlikely), and your math doesn't account for additional rail, associated improvements OR for lost bookings due to less-than-optimal location (a cost that is completely hidden/unknown). All of this could have been avoided through better up-front planning. Better the devil that you know rather than the devil that you don't know.

Bc the point is to have 600-700 rooms. The private sector does a fine job of bringing 300 room hotels to fruition ASAP.
Correct, though slightly larger than 600-700 probably. The formula for rooms is essentially the amount that a new full-service hotel flag would bring on its own (seems to be around 300 in this market), PLUS the amount of rooms needed to ensure that a discounted block can be reserved for a convention of the size that the CC would support. In our case that is somewhere around 500. It's pretty simple math at that point.

Calls to build bigger, taller etc., just for the sake of doing so, would create rooms that that the hotel flag would not book in the course of natural business or would be needed for a convention. Therefore those rooms would be underutilized on a regular basis, and THAT is where unnecessary subsidy would be required. Again, Goldilocks Principle.

Just stick a 200' spire on top and height problem solved.

Correct, though slightly larger than 600-700 probably. The formula for rooms is essentially the amount that a new full-service hotel flag would bring on its own (seems to be around 300 in this market), PLUS the amount of rooms needed to ensure that a discounted block can be reserved for a convention of the size that the CC would support. In our case that is somewhere around 500. It's pretty simple math at that point.

Calls to build bigger, taller etc., just for the sake of doing so, would create rooms that that the hotel flag would not book in the course of natural business or would be needed for a convention. Therefore those rooms would be underutilized on a regular basis, and THAT is where unnecessary subsidy would be required. Again, Goldilocks Principle.

I agree with you on all this. I think the cry to build bigger just for the sake of bigger is misguided.

You assume this project will finish fixing the location-related problems (unlikely), and your math doesn't account for additional rail, associated improvements OR for lost bookings due to less-than-optimal location (a cost that is completely hidden/unknown). All of this could have been avoided through better up-front planning. Better the devil that you know rather than the devil that you don't know.

What I am saying is that there's a certain break point at which the cost to develop a new area is cheaper than the cost to put the convention center in an already established place.

Didn't all the bidders universally come up with 600 rooms? Or was the specified in the rfp?

What I am saying is that there's a certain break point at which the cost to develop a new area is cheaper than the cost to put the convention center in an already established place.
I don't disagree with this in principle, what I am saying is that too many people here are only considering the one-dimensional aspect of the basic land cost. It is more complex than that. Putting it in the wrong location JUST to save on land costs could negatively affect the City's bottom line in other areas, including:


Lost bookings, which increases likelihood of need for long-running operating/hotel subsidy
Requirement to sink public subsidy into hotels/amenities near CC in attempt to increase bookings and satisfy convention planners and attendees (see Dallas)
Need to alter streetcar route to serve more remote CC location, which can negatively impact efficiency and add cost of streetcar track/construction. If this cost is borne by streetcar project it is an unfair burden to streetcar, but if it is borne by CC it negatively offsets land savings
Increased longterm streetcar operating cost when more equipment must be dedicated to shuttling convention attendees who could instead be walking (who pays for THIS, by the way?)
By the way, despite the fact that everyone here wants and BELIEVES it to be, streetcar is NOT a magic fix to the lack-of-walkablity challenge, due to capacity vs. large crowds exiting simultaneously, so...repeat points 1 and 2
Additional parking structure requirement beyond what is planned, as more conference attendees will drive

My point is that it isn't quite as simple as "move it further away from everything and save on land costs." Your hidden (and long term) costs increase geometrically when you do this.

The logical conclusion to the case you are making is that the CC should be located on some raw land the City owns out by the airport or something (FREE LAND!!). Why is nobody advocating this extreme solution? It's because they know in their hearts that the whole project would be an abject failure. Even people who don't care for the CC don't want THAT. Well, there are also DEGREES of failure.

Yes, we need to find a way to minimize land costs, within reason. Yes, we need to weigh perfect location vs. cost. Yes, we need to make sure that it is integrated as thoughtfully as possible into the urban fabric (which is more possible than some here think). But we need to remember that the more functional the location is, and the more marketable the CC and its surroundings are, the better the chances are that we can avoid long-term, painful subsidy to an under-performing venue.

Just stick a 200' spire on top and height problem solved.

Portland did!

600-700 rooms are what the experts said to build correct? Ok then, build a 600-700 room hotel. Problem solved. Why hire an expert and then not go with their recommendation? A nice new 30 story hotel tower would sure look nice in downtown.

Ok then, build a 600-700 room hotel. Problem solved.

That doesn't solve the problem of how to pay for it.

Also, if it requires a large subsidy, then I think there's good reason to question that recommendation. At the very least, the private sector doesn't agree with that number.

Oklahoma City is at the crossroads. Do we make that break to the next level or do we continue to maintain the status quo?

I guess I don't get what OKC is trying to accomplish with the CC and hotel? Are we just trying to attract as many conventions as we can, or are we trying to bring more net revenue to the City, because those two items are vastly different. It seems to me that we hit diminishing returns real quick.

Just for fun I wonder what size CC would have been proposed if every potential visitor came from metro OKC and what the cost would have been. Then we would know if the additional cost to make it a national facility was worth the additional visitors or not. I assume a CC hotel wouldn't be needed at all for a metro-only crowd (Jax doesn't have a CC hotel).

I wouldn't settle for anything less than 1000 rooms. If necessary, have twin branding/towers - say JW Marriott and Marriott, or Grand Hyatt and Hyatt Regency. Shoot, we could even go Omni on one side and Westin on the other.

Anyway, having a 1000+ room convention hotel would get OKC over the hump and allow us to book medium-sized conventions while still having the rest of downtown to service business and visitors. Assuming this will be highly successful, we can allow more brand name hotels and turn the E Central Park are into a real convention district.

We need to think big and stop settling for 2nd (or 3rd) best.

KC has 14,000 hotel rooms in their inner core; I think OKC should shoot for at least half of that and be very successful in doing so.

Assuming we start attracting 4 or 5 national conventions, at what point does it become impossible to fly to OKC? On a given day how many unsold seats land at WRWA? 200? 500? 1000?

I wouldn't settle for anything less than 1000 rooms. If necessary, have twin branding/towers - say JW Marriott and Marriott, or Grand Hyatt and Hyatt Regency. Shoot, we could even go Omni on one side and Westin on the other.

Anyway, having a 1000+ room convention hotel would get OKC over the hump and allow us to book medium-sized conventions while still having the rest of downtown to service business and visitors. Assuming this will be highly successful, we can allow more brand name hotels and turn the E Central Park are into a real convention district.

We need to think big and stop settling for 2nd (or 3rd) best.

This is what should happen and would be the best thing to get OKC into a solid tier 2 convention city.

I wouldn't settle for anything less than 1000 rooms. If necessary, have twin branding/towers - say JW Marriott and Marriott, or Grand Hyatt and Hyatt Regency. Shoot, we could even go Omni on one side and Westin on the other.

Anyway, having a 1000+ room convention hotel would get OKC over the hump and allow us to book medium-sized conventions while still having the rest of downtown to service business and visitors. Assuming this will be highly successful, we can allow more brand name hotels and turn the E Central Park are into a real convention district.

We need to think big and stop settling for 2nd (or 3rd) best.

OKC continues to half step; if we ever hope to reach the full potential to become a solid tier II convention city--we need to take that step. Understand that a study determined that we could manage a 600-735 room conference hotel. Make sure there's room for growth, because well will need a second 600 room facility post 2020.

This seems to be turning into a "mine is bigger than yours" type thing. I think the question asked about the real purpose behind the Convention Center & Hotel is a valid one. It seems like such a competitive type thing over what's really needed and why. There's a lot of talk about reaching our "full potential," "The best way to be a solid tier 2 convention city," "I wouldn't settle for less than 1000 rooms and have twin branding towers," "Can't settle for second best," and many others like it. This almost sounds like municipal narcissism. So, why? What's the real purpose and why is bigger better? These are legitimate questions anyway, but especially when the "free market" supporters expect public subsidies.

Reading some of the latest comments and the only thing I can think is that many don't realize that what they desire or want is completely different from reality and real world conditions.

Basically, it's always fun to play Sim City.