It probably is not fair for me to think that we will be taken advantage of again before a deal goes bad. For my part I guess that I can’t help it since it happens so frequently.
We recently learned that a local developer and former city alderman wants to build a $17 million dollar Marriott right next to his Hilton Doubletree hotel. His Hilton might turn out to be the biggest beneficiary of the new ball park.
The developer already operates a hotel downtown that has received tax breaks from us. Insider’s club was about how our most recent former mayor tried to lobby for the developer in spite of a city ordinance prohibiting him from doing so.
Now the developer has come forward and publicly stated that he wants to build a $17 million dollar hotel right next to the one he already has. I believe that they would then be the two closest hotels to our new ballpark. He will need $3 million dollars in concessions from local government. The concessions will need to be “virtually identical” to the ones his other hotel received.
His other hotel received concessions and a contract was executed. Then the developer came back to city council and claimed that the contract was too stringent — he needed relief. My recollection is that he got it. Then as I recall he came back to city council again and needed more relief which council dutifully gave him. This is the classic two step we see frequently in town. Start with one set of promises and then change them once you have gotten what you want.
Nothing certain
The developer is in negotiations with the city. We are told that the hotel will be a Marriott, he will spend $17 million to build it, that it will have 140 guest rooms, and that it will have a 90 space parking garage.
Given past history we might wake up one morning and find that it is not a Marriott, that the cost was not $17 million, that it does not have 140 guest rooms, and that there is not parking garage. What it will have is whatever turns out to be most advantageous to the developer regardless of was promised in order to get the tax concessions.
Competing with ourselves?
There is already a Marriott in town, located near the airport. Is El Paso a large enough market to support two? I hope so. Will a new one take business away from the existing one? Would that put us in a position where the existing Marriott has less business and thus pays lower taxes? I hope not. The developer says that no market study has been done.
The existing hotel does not contribute to the Hotel Occupancy Taxes that are being used to finance our new ball park even though it looks like the hotel will be biggest beneficiary of the construction.
This sentence comes from the 2005 staff report to city council:
Approximately 75 percent of the projected Hotel Occupancy Tax revenue is to be derived from business shifted from other El Paso hotel properties.
We deserve better
Brutus
elpasospeak 
Mathew McElroy, director of the City Development Department is quoted in today’s El Paso Times saying: “The consultant will tell us what the occupancy rate would be, what the rate per night would be, what the construction costs are, what the management costs are. If there’s a gap, a need, that’s where the city would participate.”
That sounds all too familiar. It reminds me of the ballpark process in which consultants were paid to create numbers, which ended up being not just wrong, but way wrong. (It must be nice to get paid big bucks to produce wrong numbers.)
McElroy makes it sound as though a consultant can forecast accurately what the occupancy rate will be. Anyone in their right mind knows that simply is not the case. McElroy didn’t even have the common sense or discretion to use the phrase “might be”.
The consultant — not the owner or construction company hired by the owner — is going to tell the city what the hotel rates and construction costs are going to be? Again, absurd.
There is a pattern here. The city and private parties make up numbers and present them as revenue that will actually be realized. Case in point: the city and the media have failed to accurately explain that the city’s income from ballpark ticket sales and parking revenues might not be realized if the attendance is less than projected. They always make it sound as though those amounts are certain. If the construction cost estimates are any indication of the quality of the forecasts, there could well be a serious revenue shortfall, which McElroy prefers to label as a “gap” which leads me to my next point.
With regard to the proposed hotel development, it’s absurd for McElroy and the city to say that the taxpayers’ role would be to “fill the gap” and basically insure that the developers would break even or make a profit. As Brownfield commented yesterday, this doesn’t sound like capitalism or free market economics. As Brownfield or someone else also commented yesterday, it’s another classic case of a developer passing its risk off to the city. We’re supposed to carry them and take on their risk until such time that they can sell the property to a REIT or someone else. If they then sell the property, will the city share in the profit? I didn’t think so.
The scenario that Brutus describes today is indeed all too familiar. People ask for incentives and breaks and then continually come back to the table for more. Hotel developers. Mall developers. Ballpark people, who just happen to also be developers.
Can I renegotiate my property taxes? Can I get some relief on my property taxes if my income is not what I projected it would be when I bought my house?
Oh, and one last question. Did John Cook simply feign concern about the ballpark, knowing full well he intended to vote for it and try to benefit by participating in ancillary businesses that would be built around the ballpark. This hotel, like the ballpark was probably being planned for a long time. My bet is that Cook fully intended to represent his good friend Mr. Hotel Developer after he left office and he thought the ballpark would help to move his friend’s hotel along. Hey, maybe Mr. Hotel Developer is also the person Cook referred to as the potential backer of the bar he said he hopes to open.
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Brutus,
You have forgotten that the guy asking for the money is a local Democratic rainmaker – with “rain” being money. If you want to be a succesful progressive in El Paso – he’s the guy you go to when you need money to run.
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David — Good point. Now let’s flip the coin. The guys who asked for the ballpark money and the guy building the ballpark are among the biggest Republican donors in the entire state. Just ask Rick Perry and Dee Margo, both of whom have those guys on speed dial. So why aren’t the guys asking for the money for the ballpark considered progressives rather than conservatives? I find it all so confusing (wringing of hands), which is one of the problems when we look at what people say rather than what they do; when we put more stock in what people say they are, rather than what their actions prove they are.
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It’s simple. In El Paso, the guy with the money talks. It doesn’t really matter where he is on the political spectrum.
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Maybe you should start featuring the best line of the day. Balmorhea’s comment “I know all 7 conservatives in El Paso” would take the cake for yesterday.
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El Paso has no future as long as it persists in pursuing “vampire economics” as the way to growth, a sort of reverse Robin Hood effect in which the city takes from the many (tax base) and transfers it to the few. They always have a good reason to do so but it always amounts to the same thing in the long run and the tax base becomes “Swiss cheese” with carve outs (handouts in the case of the stadium) for politically-connected developers.
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The New Double Tree Hotel downtown El Paso has mast difficult & Hazardous indoor parking..will the Marriott be mo’better?
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