I’m voting YES on Proposition 1 because I am concerned with the risk to Dallas taxpayers. Proposition 1 will prohibit the city from owning a convention center hotel, as the Mayor has proposed.
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.
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.