One of the biggest questions about the convention center hotel is its cost. The city has been vague about it, and those who have tried to get some sort of answer have also been frustrated. Really frustrated.
Add us to the latter list. I have spent the past week trying to find a municipal bond lawyer who can talk me through the bond selling process and how it will work for the hotel. And, apparently, no one wants to do it.
After the jump, my hunt for an expert and why I can’t find one:
The first thing to know is that there’s a price to build the hotel, but there is also a price for paying off the bonds. It’s similar to buying a house, says SMU economics professor Mike Davis. The price it costs to own the house, which includes interest, is much more than the price of the house. You wouldn’t buy the house unless you had an idea about the interest rate. But that’s missing from almost every discussion of the hotel, including the city’s voluminous hotel web site and FAQs.
In other words, if it costs $350 million to build the hotel and another $150 million for the land, how much revenue will the hotel have to take in so it can make the monthly mortgage payment?
So I wanted a lawyer to help me with a couple of things:
• How does the municipal bond market look right now? Will the city be able to sell the bonds at the beginning of next year, which appears to be the plan? In Portland, for example, city officials have all but given up on a convention center hotel because the municipal bond market is so fragile.
• If the city can sell the bonds, what will the interest rate be? Is there a way to estimate what the total cost will be?
• How much cash will the hotel have to generate to pay off the bonds?
Then, armed with those numbers, I can call hotel operators and ask them them if it’s feasible, in this economy, for a convention center hotel to do those numbers.
The catch? I can’t find a bond attorney in Dallas who will answer those questions. I’m told (and I need to be a little vague here, to protect a source) that the attorneys who would normally be able to answer those questions don’t want to. They don’t want to take a chance that their cooperation will antagonize the city and cost their firm a chance at future business. I’m trying to track down someone in Houston, but that isn’t looking good either.
What does this say about the hotel deal when lawyers, who will normally talk about anything at any time, don’t want to talk to us — and we’re hardly the New York Times? It says that Mayor Park Cities and his allies are using all their considerable muscle to keep opposition to a minimum, and to keep any possible bad news out of the news until after they cobble together their deal.