Tuesday, May 22, 2007

Council Approves $66 Million Public Subsidy For Billionaire White

Billionaire Dean White and his White Lodging Services won approval for a $66 million public subsidy for his 1,000-room, J.W. Marriott Hotel next to the Indiana Convention Center at last night's city-county council meeting. Only two members voted against the proposal. Councilor Patrice Abduallah voted against it because he thinks White Lodging discriminates against Muslims. According to the Star's Brendan O'Shaughnessy, Abduallah wanted a written assurance from White Lodging there would be no discrimination. "Female Muslim workers in Louisville, Ky., said the company would not allow them to wear a traditional head scarf, called a hijab, at work," O'Shaughnessy wrote. The article doesn't name the other no vote on the council.

A comment by Republican councilor Marilyn Pfisterer caught my attention. She "said the project probably would go forward whether the city offered its help or not. But she said it wouldn't have the features that the city wants." The primary feature she speaks of is the large ballroom. Anyone familiar with our current convention center knows it has a large ballroom. In fact, it's the only part of the convention center that is regularly used by area residents for high school proms, charity fundraising events, class reunions, etc. Apparently seeing no benefit in having a facility for use by local residents, the Capital Improvement Board of Managers decided to eliminate the ballroom despite its several-hundred million dollar expansion planned on the site of the current RCA Dome scheduled to be demolished. That decision precipitated the need for a hotel with a large ballroom to replace the ballroom being eliminated in the expanded convention center design.

The decision to eliminate the ballroom in the convention center is inexcusable. That decision was nothing more than a ruse to provide an excuse for providing this huge subsidy for a hotel even the proponents agree was going to be built with or without a public subsidy. And the self-serving convention industry assures us the city will win more conventions as a result of the expansion--a promise made every time the convention center was expanded in the past. The problem is that our city's expansions cannot keep pace with the expansions in cities like Orlando, Las Vegas and Chicago.

"This is so much more than a Super Bowl hotel," declared Jackie Nytes. I agree, but the words I would use to describe it I would prefer not to print.

16 comments:

Anonymous said...

Well AI, we all knew the CCC would rubber stamp this deal just like all the other deals that were cut by the Capital Improvement Board and Indianapolis Bond Bank with private developers. No surprises here.

Here is a simplified way of looking at the entire scope of this hotel complex monstrosity:

COST OF HOTEL COMPLEX:$325,000,000

TOTAL NUMBER OF HOTEL ROOMS: 1,568

TOTAL COST PER HOTEL ROOM:$207,270

I think it's fairly obvious based on those numbers why White needed to hedge his bet using taxpayer money. Quite honestly, I fail to see any return on investment to equal the cost for many many many years, if ever.

The Indy Star stated:
Michael Wells, president of REI, said his team THINKS there will be a demand for the new rooms.
He said he DOESN'T THINK the extra rooms will create a GLUT downtown.
"You always have that worry when you make an investment this big," Wells said. "But we BELIEVE there will be an INDCUCED demand".
___________________________________
Gary,
Please correct me if I am wrong or simply not reading Mr.Wells' statements correctly but it certainly sounds like these guys haven't got much of a business/marketing research plan considering this is a $325 million dollar venture supported by a $66 million dollar bond issue that taxpayers are responsible for.

This entire project is moving forward on a wing and a prayer both from the City's view and the Developer's.

I don't think I'd invest $325 million hoping that "induced demand" will cover my butt given the total risk.

This going to be a real debacle I'm afraid. If Indianapolis were a stock I'd short it without hesitation.

Anonymous said...

Every one of the expansions of the Convention Center has been successful and demand has met, then exceeded, supply.
The issue is not Indianapolis competing with Chicago, Orlando or Vegas, but competing with Cincinnati, Louisville, St. Louis, Columbus, Cleveland, Denver etc., which we do very well.
Indianapolis draws more than 20 million visitors a year. They spend more than $3 billion here. The hospitality industry employees 63,000 Hoosiers. This is and will continue to be a success story for our city.

Anonymous said...

"This going to be a real debacle I'm afraid. If Indianapolis were a stock I'd short it without hesitation."

It could always be converted to Section 8 living. Oh wait, poor families are not allowed to live within the mile square anymore!

Anonymous said...

12:06 pm,
Please pass the bong down this way.I think you've had enough for now.
Success is NOT a city's bond rating being lowered and then that same city adding more and more debt onto the fire.

If the future of Indianapolis rides on minimum wage jobs based tenuously on convention entertainment venues and the like then god help us all.

Let the out of towners travel 1/2 mile in any direction out of our downtown Land of Oz and they'll see exactly how successful our City's been at dealing with REAL issues. Hell, they may even be so fortunate as to become a crime statistic. Better yet, they can see what kind of conditions that those 63,000 people who serve them coffee and clean their hotel rooms live in.

Anonymous said...

Indianapolis did not get the Super Bowl for 2011. What is Mayor Bart going to do now!

Anonymous said...

12:49
Those 63,000 jobs go all the way across the socio-economic strata and you insult servers and housekeepers as somehow less worthy.
But you've already convinced yourself the sky is falling. So make sure to carry an umbrella.

Anonymous said...

1:23,
The unworthy they are not! The unworthy are those who refuse to pay them a living wage like yourself.
The sky falling? Everywhere but the Mile Square area where the $$'s being dumped!
Get in your Lexus and take a drive around the inner ring suburb of this town and see for yourself who has and who has not. Who benefits and who doesn't.

Anonymous said...

Promises Promises...

Has anyone really measured how successful Indianapolis is in landing conventions and filling the current convention center?

I suspect the current occupancy level is very low.

Anonymous said...

Did taxpayers get an equity interest in this project for $66 million?

Anonymous said...

It is true. No SuperBowl for Indy.

http://www.ftimes.com/main.asp?SectionID=1&SubSectionID=1&ArticleID=39911&TM=46413.83

Will this change anything for the downtown development, or does Indy just submit a bid for the 2012?

Anonymous said...

No Superbowl for Indy. All the justifications for the new stadium, expansion of the convention center, those trips to Miami for the Super Bowl, and this massive, uneccessary hotel... gone.

How embarassing for our esteemed Mayor.

Anonymous said...

4:15,
I too suspect occupancy is low. A few days ago a reporter remarked how many conventions are going elsewhere and not because of Indy's ability to accomodate them.

In years past pre-Tony George era, the Indianapolis Motor Speedway would have no less than 250,000 people for the 1st weekend of qualifications. The number attending now is to embarrasing to say. In the past, many fans could be expected to stay for damn near the whole month of May, not now.

I really question these economic impact studies as they are so often refuted by many outside scholars who don't have a stake in the deals.

The Super Bowl is never going to happen without some serious global warming in Indianapolis. Perhaps we can get a bond issue to build a dome over all of central Indiana. Makes as much sense as nearly 1600 new hotel rooms that are going to sit vacant.

Who covers that $66 million bond if White goes belly up?? Reminds me of that airline repair facility deal that Goldsmith did. We got our pee pee's whacked good on that one. Then there was that Cubs Food store in the Meadows the city paid for, shootout at the OK Corral then closed.

Hell, it's only taxpayer money.

Anonymous said...

4:15 and 4:40, you obviously know very little of which you speak.

I attend conferences and conventions for two different professional associations. I help plan one. (Neither is here) (The local convention center and hotels are not large enough for either...only a handful of US cities can host the mega-conventions)

Indianapolis is known among association managers as a top convention destination for the second-tier of conventions. That's the service club, church, not-for-profit and related businesses. Dial in the hardware show three times a year, and our convention business is huge. And multiple conventions had crossed the threshold and were unable to stay here because of convention space...there's not enough of it now. There will be with the expansion.

People who plan these things, including the professionals at one of the associations to which I belong, continually cite: friendly locals, lower princes and proximity of the larger hotels to the convention center/downtown and retail/restaurant business.

We needed this larger hotel. White wanted to build one, with little or no subsidy, that was approx. 25% smaller. It was also a damned ugly design.

The city asked that White build a 1,000-room hotel with more convention space. White complied. More subsidy was offered up and accepted. And the design is a huge improvement.

Listen, folks--the incentives will be repaid entirely with taxes generated by the hotel itself. That does have a ripple effect on the rest of the community...whatever taxes they don't put into the largert general coffers, the rest of us have to make up.

But let's try to have some sense of proportion and hoensty about this debate.

SOS said...

More of the same, subsidizing millionaires and billionaires in order to increase the number of jobs in one of the lowest paying job sectors. I can't think of a better strategy.

Anonymous said...

PricewaterhouseCooper's Indiana Convention Center & RCA Dome Expansion Study

http://www.indygov.org/NR/rdonlyres/evap356u4auu37ufma7fyd7r5llzgaotqkbhepuewjz7npjjvfg4u6tc2o3vjoakdxzeealakarjrmpobht5p453cyc/PWCConventionCenterFinalReport.pdf

Page 48 reflects a steady decline in CIB's Operating Revenues.

Page 13 & 41 discusses Occupancy Rates. Interestingly it is missing the years after 2002, when rates were expected to drop by at least 5% by loosing two convention events.

Anonymous said...

Indianapols Bond Bank Website:

PricewaterhouseCooper's Indiana Convention Center & RCA Dome Expansion Study

http://www.indygov.org/eGov/City/BondBank/Home.htm