Hotel Team, Dallas Officials Set Meeting

"For this project to get in real high gear it is going to require the city to issue an RFP," says Michael H. Anderson, the Dallas partner for Cincinnati-based Chavez Properties. He says he's been told that the proposal is being drafted, but he and his team will do the "meet and greet" with city officials as they prepare to go head to head with their chief competitor for the facility--Woodbine Development Corp. of Dallas and Marriott International Inc. of Washington, DC, which met with the city in June to propose a hotel atop Reunion Arena's parking garage positioned to the rear and southwest of the convention center. When the meeting's done, Anderson says he will plead the merits of the cause as he individually lobbies city leaders.

Anderson tells GlobeSt.com that he welcomes competition, but that Chavez's land was "destined to have a hotel on it." Now used for convention center parking, the Chavez site is 11 feet from the center's main entrance. Anderson and Chavez Properties own 26 acres in downtown Dallas, much of it in a holding pattern with a present-day use as parking lots until its draw-down, as has been the case for several key expansions around town. The convention center land was assembled in the early 1990s from five owners, Anderson says.

Anderson pegs the value of his land at $100 per sf. The value of Chavez's signature hotel vision has yet to be calculated although a basic rule of thumb, he says, is land normally costs 8% to 12% of a commercial project's total bottom line. "If it's the right location, it's hard to overpay for land," he says, stressing that the deal, should it come to fruition, isn't the proverbial pot of gold at the end of rainbow due to property taxes in the last 13 years and soft costs necessary to reach the vertical stage.

The issue at hand is how much of a risk is the City of Dallas willing to take to get an attached convention center hotel. The financing mechanisms run the gamut from committing occupancy taxes to more traditional bond sales and TIFF backing.

Anderson says the first decision, much like one being weighed to the west in Fort Worth, is whether a convention center hotel is actually needed. "When and if the RFP comes, you can bet I'll be soliciting the support of the downtown community," Anderson says. "That's when the race really begins." And, he adds, it should be about "who's going to build the best hotel."

The Chavez plan has Austin-based FaulknerUSA in the driver's seat as developer; Hilton Hotels Corp. of Beverly Hills, CA lined up as operator; and Arquitectonica of Miami and RTKL of Dallas teaming on the design. UBS Financial Services of New York City has committed to financing while the Houston-headquartered Vinson & Elkins' Dallas office is handling the legal work.

For 25 years, the city has mulled over the plan to attach a hotel to the often-expanded center, which now has more than one million sf of exhibit space, 105 meeting rooms, a 1,770-seat theater, two ballrooms and the nearby 9,816-seat Reunion Arena. The Chavez proposal will have a minimum 1,000 hotel rooms with a skywalk connecting to the center's second-floor meeting rooms. He acknowledges Marriott's schematic includes a skywalk, but aesthetically speaking Chavez seemingly has the upper hand with a skywalk that crosses a street versus the competitor's plan that crosses a railroad track.

Dallas has ample stock in the room count, Anderson readily admits, but they aren't attached--a turnkey must-have for today's convention goers. Meeting planners say hotels should be "a short, pleasant walk," he recounts, "but what's a short pleasant walk on a 108-degree day."