Kristen Mack reports on the latest idea to help developers of the Astrodome Hotel get financing for the boondoggle:
Sen. Kyle Janek, R-Houston, amended a House bill to qualify the project for hotel and sales tax rebates, which could total $150 million over 10 years.
“We have a national icon sitting unused,” Janek said. “They want the ability to convert the Astrodome into something useful. If you build a hotel, it lets you keep the taxes you generate. The money wouldn’t be there, but for the existence of that hotel.”
Astrodome Redevelopment Corp., the private entity seeking to transform the so-called “Eighth Wonder of the World” into a luxury hotel, is counting on the future rebates to help it secure financing for the $450 million project.
“This could be the critical piece that puts them over the top, that allows this to work,” County Judge Ed Emmett said. “If it’s something that will help make it work, I’m willing to throw that in the mix.”
Emmett noted that the county won’t receive any money until the hotel is up and operating, and says it is a “long shot” such rebates would make a big difference in the overall scheme of things. “We’re not putting the money into it, it’s the people who choose to stay there,” he said. “The county should not put any taxpayer dollars into it.”
There you have two competing sentences from appointed County Judge Ed Emmett: the plan to let developers count on potential tax revenues could put them over the top for financing, but it’s a long shot the tax rebates would make a difference. Well, which is it, Judge?
Getting financing based on projected revenues would be fine if this were a completely private enterprise. But it’s not. The fact that developers are having problems getting private financing, even with a supposedly rosy feasibilty study in hand, does not bode well for Harris County taxpayers.
The good news is that not everyone is sold on the plan:
Harris County Commissioner Steve Radack said the county should not be in the hotel business.
“They couldn’t put a deal together in a timely fashion. Now they want these tax incentives,” Radack said of Astrodome Redevelopment. “If this project could stand alone, we wouldn’t have this conversation. You have people who want to see the county help fund a hotel and I disagree.”
Neither Radack nor Harris County Commissioner Sylvia Garcia knew the county was pursuing the rebates. Garcia said it was premature to count on the estimates. She supports redevelopment, but not at the expense of the county.
“This whole venture, from the beginning, has been to try and get the private sector to come up with its own financing,” she said. “I’m not for spending any tax dollars on this project.”
Let’s not forget that the chairman of the Harris County Sports & Convention Corp. said it has ALWAYS been an option for Harris County to develop the boondoggle:
“From day one, we have always known that it is an option to do this as a publicly developed program,” said Mike Surface, chairman of the Harris County Sports & Convention Corp., which manages Reliant Park.
Kristen Mack’s story notes that there is precedent for this:
The city of Houston used the same approach, known as the Texas Enterprise Zone program, as a vehicle to help develop the Hilton Americas next to the George R. Brown Convention Center. The program is being updated this session with House Bill 3694, which already has passed the House.
Janek changed the bill’s language to qualify a county-sponsored hotel. His amendment passed out of the subcommittee on Emerging Technologies & Economic Development, which he chairs. It must now go to the Business & Commerce Committee before heading to the full Senate for a vote.
As explained here, the Hilton Americas was built with bonds secured by the city’s hotel occupancy tax:
In a uniquely unusual financing strategy, the board raised development funds through the sale of AAA rated tax-free bonds secured by the city’s hotel occupancy tax. This strategy enabled the corporation to raise the significant amount of revenue needed to build a first class hotel. Even more importantly, the plan ensured that the project would be free and clear of a mortgage on the day the Hilton Americas-Houston opened.
Then Mayor White used the hotel to prop up the city’s underfunded municipal pension plan, and a glut of hotel rooms in Houston kept the Hilton Americas from meeting projections.
So Astrodome Hotel developers are counting on future, potential tax revenue to secure funding. And when things don’t pan out, Harris County taxpayers will be stuck with the mess.
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