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HomeMy WebLinkAbout2003/06/24-Minutes-HEDC The City of Fort Worth City Council Central City Revitalization and Economic Development Committee Highlights of the Special Meeting Held June 24, 2003 Committee Members Present: Wendy Davis, Jim Lane (until Executive Session), Frank Moss, John Stevenson City Staff Present: Brandon Aghamalian, Bette Chapman, Sarah Fullenwider, Vida Hariri, Tom Higgins, Joe Paniagua, Reid Rector, Kirk Slaughter, Pat Svacina,Betty Tanner, Peter Vaky, Ardina Washington, David Yett Call to Order: Chairwoman Wendy Davis called the meeting to order at 3:35 p.m. Ms. Davis then asked Assistant City Attorney Peter Vaky if the Executive Session could be deferred until later, and then entered into if needed. Mr. Vaky said this was acceptable. Because this was the first Committee meeting to be televised, Ms. Davis welcomed the viewing audience and gave a brief overview of the Committee structure and process. She then introduced the members of the Committee. Discussion and Consideration of the Convention Center Hotel Project: Assistant City Manager Joe Paniagua began the presentation (attached). He introduced Laura Alexander of First Southwest, the City's financial advisor; Dan Settle of Kelly, Hart and Hallman, one of the City's two bond counselors; and Segi Desta, chief operating officer of the Fort Worth Convention and Visitors Bureau. Mr. Paniagua then reviewed key points of the report of the Citizens' Committee for Fort Worth's Future (Citizens' W h,onunittee) and the Minority Report, both of which had been presented to the City Council on June 10. He said at the Citizens' Committee found that in order for Fort Worth to be competitive in the tourist and convention business, a convention center hotel needs to be built. He added that the Citizens' Committee also found that the addition of a convention center hotel might impact the local hotel market in the short term, but that over time, the addition of the hotel would be beneficial to the market. Mr. Paniagua further explained that the Citizens' Committee had reviewed various financing models, including the Certificates of Obligation model that the Council had pursued earlier, and they preferred that the City consider a revenue bond financing structure. In addition, he said, the Committee felt that the City should explore a public/private development structure. Mr. Paniagua also said that the report was approved by 16 members of the 21-member committee and that one of the members did not vote. Mr. Paniagua then explained the key issues of the Minority Report, which was signed by four members of the Citizens' Committee. He said that while these members agreed that a 400-600 room hotel was desirable for the City, they felt that now was not the time to pursue this project. Mr. Paniagua further explained that these members felt the City should support upgrading existing hotels, and that they also supported public/private ventures, but only when the market improves. If the City is to pursue a hotel in the near term, he said, these members suggested that the City use Certificates of Obligation (COs) or General Obligation Bonds because of the lower interest cost and that voter approval should be sought. The next part of Mr. Paniagua's presentation dealt with opportunities and challenges on moving forward with the project. In line with the Citizens' Committee Report, he said, staff believes that the City should continue moving the project forward and taking a more exploratory look at it because of lost convention business. Mr. niagua then explained that for every $1 million in direct spending, 16-17 jobs are created; therefore, he said, nor every convention that would have brought direct spending, both jobs and potential taxes are being lost. Mr. Pamagua added that other cities that have developed these hotels are suggesting that they are getting new Page] of 5 convention business and that there has been an interest by the development community in a hotel project over the last few months. Next, Mr. Paniagua presented a list of conventions that were lost or at risk due to insufficient hotel rooms or otel quality. He explained that the conventions lost due to deficiencies or those that will not come to Fort orth until a new hotel is available represent a loss of$25.6 million dollars in direct spending. He added that he did not have the numbers for the indirect spending that was lost, and he suggested commissioning an economic impact study to look at both the direct and indirect spending and the overall impact a convention center would have. For the sake of the viewing audience, Ms. Davis asked Mr. Paniagua to explain what was meant by direct and indirect spending. Mr. Paniagua said that direct spending occurs when a person comes to the City and spends money on a hotel room, food, attractions, and the like. Indirect spending, he explained, is the job created by direct spending and the dollars spent by the person who works that job. Mr. Paniagua then presented a list of conventions that were pending, with the likelihood of Fort Worth's selection being diminished without the new hotel. He said that the estimated direct spending that would be lost is $35.4 million. Mr. Paniagua next presented a list in reply to a previous question by Ms. Davis as to what conventions had made the decision to come to Fort Worth contingent on a convention center hotel being in place. The estimated loss of direct spending on these conventions was $64.7 million, Mr. Paniagua said. Ms. Davis asked if these conventions had signed or made a verbal commitment that their coming was contingent on the hotel being available. Mr. Paniagua said that was correct. Mr. Paniagua said that the Citizens' Committee conducted a panel that included developers and each outlined alternative financing structures that could be used to construct a hotel. He added that since January, the City has received a number of unsolicited verbal proposals from private sector developer/hotel operators who were interested in the project. He then introduced Public Events Director Kirk Slaughter who reviewed and explained Ospects of the public/private partnership and local development corporation financing models. Mr. Paniagua next explained that since developers had recently shown interest in the project and the Citizens' Committee had recommended exploring a structure that would minimize the City's risk, staff was recommending the issuance of a Request for Proposal (RFP) for immediate release after City Council approval and with a 30-45 day response time. Mr. Paniagua then presented key provisions of the proposed RFP, which were (1) develop a 400-600 room hotel property; (2) the City of Fort Worth will work with the developer to obtain a hotel operator that delivers a brand name and service that is recognized by the meetings market; (3) respondents will be asked to offer a minimum of two development ownership structures, including public/private partnership and local development corporation ownership structure; (4) leveraged investment; and(5)job creation. Mr. Paniagua then presented a timeline for the review of the RFP and its presentation to the City Council. Ms. Davis said that it was her understanding from reading the majority report of the Citizens' Committee that they had not made a clear statement on going forward with a public/private partnership. She therefore recommended reconvening the Citizens' Committee before the RFP is finalized and brought back before the Central City Revitalization and Economic Development Committee for consideration. She added that she thought the Citizens' Committee had some reservations about the public/private partnership, and she wanted to insure that whatever RFP was created reflected their concerns. Mr. Paniagua said that he would work on reconvening the group. He added that he thought staff might have inadvertently created some confusion about the way a public/private partnership operated because of the way they had explained it to the Committee. However, he said, there was some discussion toward the end of the Citizens' Committee process that indicated at some of the members saw value in the public/private partnership, and they thus suggested that the City 4xplore that. Mr. Paniagua said that he felt this interest was partly because Citizens' Committee members began Page 2 of 5 to hear from developers that a public/private partnership that would minimize the City's risk and that would not require the City to invest a lot of money up front could be done in Fort Worth. Committee Member Jim Lane said that while this issue had been discussed during the last two or three years, ere had never been an indication that anyone was interested in a public/private partnership. He asked why ere was now such an interest. Mr. Slaughter explained that one of the original RFP respondents had presented two different options: (1) a 63-20 financing plan, which was tax exempt revenue bonds; or (2) a public/private venture. He added that at that time, it appeared that the City would have to come up with significant cash to do the public/private financing, and he felt that was why the City had moved toward the tax- exempt type financing. Mr. Lane asked if the answer to his question was that the public/private partnership had not really been explored in this instance. Mr. Slaughter said that at the time, there was no money to contribute to offset the funding gap on a public/private project. Mr. Lane asked if such funding was now available. Mr. Slaughter said that it was not. Mr. Lane requested further clarification as to why developers were suddenly interested in the project, when it had been previously concluded that the project could not be completed by that model. Mr. Paniagua said that he felt that the point was that developers were now coming forward saying that the project could be done without the City investing a large amount of money up front, and he added that the RFP had been suggested to see if the project really could be completed by this method. Committee Member Frank Moss asked how the project would be moved forward in a feasible time frame if, after going forward with the RFP process, a deal could not be successfully negotiated. Ms. Davis said she had been considering this issue and had spoken previously with Mr. Paniagua about it. She suggested developing a simultaneous track that included staff's getting some input from the Citizens' Committee on the RFP and moving forward with crafting that, while at the same time holding a series of Town Hall meetings to dialogue with the citizens on the pros and cons of the various options and issues related to the project. She emphasized doing this in a very public way and presenting all the financing options in great detail. Wr. Moss reminded the Committee of the new state legislation that allows the use of hotel occupancy tax funds , the hotel to help with the financing, and he said this needed to be considered, along with what kind of impact this would have on the overall process. Committee Member John Stevenson asked staff about their own convictions on moving forward with the project based on their professional knowledge of it and of the convention center. He also asked if staff felt that Fort Worth was a destination city and said that he did not agree with the concept that people will not look at Fort Worth as a destination city. He added that an issue that needed to be fully addressed is Fort Worth's need for another 400-600 hotel rooms to accommodate mid-size conventions. He agreed with moving ahead with the simultaneous plan, but said that there were some essential points that he thought needed to be made as underpinnings of going forward with the RFP, including the belief that people do want to come here, and that they will come if the amenities that they want are made available in Fort Worth. Ms. Davis agreed that this was the basic question of the issue, and she said it had been answered to her satisfaction. She added that the Citizens' Committee Majority Report indicated that the question was answered to their satisfaction. However, she said, the purpose of the dialogue with the public was to be sure that the question was answered to their satisfaction. Mr. Lane suggested moving forward with the simultaneous plan. Ms. Davis asked Mr. Paniagua if he thought the project could be moved forward simultaneously in the way that had been discussed. He said that the projected date of July 8 for Council to authorize the release of the RFP (9-ould have to be moved back if public participation was desired prior to that date. He asked Ms. Davis if her request to reconvene the Citizens' Committee would be the initial part of the public process. Page 3 of 5 Ms. Davis suggested communicating in writing with the Citizens' Committee and informing them of the plan to go forward with the RFP process and asking for their input. As to the concern that the RFP might get ahead of the public dialogue, Ms. Davis emphasized that a Request For Proposal is for the purpose of gathering information only and this information would empower the citizens to help the City make the best possible cision. She added that if staff goes forward with the RFP, that can be explained in the first community and then the next community meeting can be constructed around responses to that RFP and a comparison between the CO structure, the revenue bond structure and a public/private participation structure. By that point, Ms. Davis said, there should be some real data at hand which would demonstrate a possible public/private partnership structure, and which would be an important part of a second community dialogue to give opportunity for public input on a comparison of those structures. Mr. Lane said that because he had heard from some constituents that they did not want the City to own a hotel, he felt that the public/private partnership should be the priority and that an effort should be made to get an acceptable proposal as quickly as possible. He emphasized that the issue really was one of creating jobs and a greater economic base for Fort Worth. Mr. Stevenson agreed with both Mr. Lane and Ms. Davis and said that he had no problem with the simultaneous plan as long as it was made clear that the additional data was being sought for the purpose of making a final judgment. He added that he was not prepared to make a decision until he saw the financial plan for the project. He said he felt it was important for the public to understand that the Committee is engaging in fact-finding, rather than in giving final approval to the project. Mr. Moss said that he was concerned about potential convention business, but he felt there was much misinformation in the community regarding the hotel, and that it was important to insure that the citizens understood the options. Mr. Lane said that it was necessary to be cognizant of time regarding this issue, and that it was important to Olove forward on seeing if a developer has a quality plan to build a hotel here. He added that he felt the community would support such a plan. Mr. Paniagua said he felt that the broader convention community would support Fort Worth having another hotel here, and that they would utilize it. He said that information staff had received from Austin indicated that they had received a significant number of new bookings simply because they had built an 800-room hotel. He added that staff feels that Fort Worth is a better market than Austin for convention business because of its larger metropolitan area and the many amenities it offers. Therefore, he said, staff believes that similar results would be seen here that would benefit the downtown local hotel market, as well as the business market. Ms. Davis said that she felt this information about the experience of other cities was an important part of the dialogue that needed to be held with the community. She added that one of the concerns that had been expressed was that because the tourism market is down after September 11, 2001, people were concerned about investing in hotel space that would not be occupied. She said that evidence needed to be presented that building the hotel is a sound decision, if that is the decision that is made. Mr. Lane said that everyone needed to be reminded that tourism includes people in the United States, rather than just travelers from Europe and Asia. He said that he had always thought of Fort Worth as a great weekend destination, and that there was still a tremendous tourist market in the US, and that this needs to be kept in mind. Mr. Stevenson said that he thought that Segi Desta of the Convention and Visitors' Bureau would agree that Ak umver the last year and a half the market has been focused more regionally than internationally, and that some of the City's hotel revenue has been a little above last year's because people are driving here. Page 4 of 5 Mr. Slaughter said that from his experience in the hotel industry, Fort Worth was a treasure for a meeting planner because of its major airport, south central location, and many amenities. However, he said, problems continued to occur with the number of rooms that can be blocked and with the quality of those rooms, both of which are issues that could be addressed. He added that in his conversations with the Hilton, who is managing We new hotel in Austin, he had been told that they had 450,000 new future room nights coming in and that 73% that new business would not have chosen Austin, except for the new hotel/convention center development. He also said that he had spoken to a group that had just opened a convention center hotel in Charlotte and their convention size had grown by 23%. Finally, he said that he envisioned Fort Worth being like Indianapolis, which has a beautiful convention center with three great convention properties adjacent to it, and a downtown market that benefits from the finances of the conventions that come there. Ms. Davis referred to Mr. Slaughter's comment about Indianapolis having "three great convention properties," surrounding the convention center hotel as a reminder of one of the important recommendations of the Citizens' Committee, which had recommended moving forward with negotiations to make improvements to existing hotel properties. She said that making decisions on how the City might partner with existing properties to make improvements would be an important part of the work of the Central City Revitalization and Economic Development Committee. Executive Session: The Central City Revitalization and Economic Development Committee conducted a closed meeting to seek the advice of its attorneys concerning legal issues regarding any current agenda items that are exempt from public disclosure under Article X, Section 9 of the Texas State Bar Rules, as authorized by section 551.071 of the Texas Government Code. Reconvene: Ms. Davis reconvened the public meeting and proposed a dual approach to the project which would (1) structure an RFP, while seeking input from the Citizens' Committee on the structure of the RFP, and then bring that back 0 the Committee for its consideration at either its next regular meeting or a special-called meeting; and (2) at the same time prepare a very detailed public presentation to be held as a Town Hall meeting, to which all the neighborhood associations, other interested groups, and the media would be invited. She added that the structure of the meeting should provide enough time for significant public input, and that it should take the form of presenting where the hotel project started, the findings of the Citizen's Committee, where the project stands today, and the pros and cons of each alternative that has been considered up to this point. Mr. Moss so moved. Mr. Stevenson seconded the motion, with the understanding that this dual process was for the purpose of fact-finding, and that it does not predispose any movement toward any particular plan at this time. Ms. Davis called for a vote on the motion, which carried unanimously. Mr. Paniagua asked if there were any other key elements that the Committee would like to see in the RFP in addition to those already presented. Mr. Moss said that he would like for a description of the status of financing to be included. Ms. Davis asked staff to include the City's preference for the location and reasons for that preference in the RFP, but said that input from developers who responded would be received on this issue. Requests for Future Agenda Items: There were no requests for future agenda items. 4Jdjourn: he meeting adjourned at 5:00 p.m. The next meeting is July 8, 2003. Page 5 of 5