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Hotel and Conference Center "Deal in the Works"

Jun 07 2012 03:24 PM | Mark Gommesen

http://www.cityofden...x.aspx?page=945

The city is only on the hook for the convention center not the Hotel/Restaurant or land. The goal is a proposal that is self funded by a combination sources including hotel/motel taxes, convention center rentals, etc. UNT will lease the land for the project. The O'Reilly Family (O'Reilly Autoparts) will finance the hotel and restaurant. People need to get the facts. They hope to begin construction in January 2013, and complete by summer 2014.

This facility will result in increase in hotel/motel and sales tax.

Unfortunately, there was no break out the convention center cost. One has to assume that the12 story luxury hotel and restaurant would be the lion cost of the 85 million.

93 Comments

Harry

Jun 05 2012 02:48 PM

http://denton-tx.gra...d=3&event_id=36

http://denton-tx.gra...d=3&event_id=36

shaft

Jun 06 2012 06:29 PM

1. Of course they are negotiating behind close doors. That's where negotiations take place.
2. What tax increase? The item would likely be paid out of hote occupancy taxes which can only be used for things that enhance tourism. Denton had enough HOT money to waste on the Super Bowl committee, they have money for a conference center.

DallasGreen

Jun 07 2012 12:59 PM

1. Of course they are negotiating behind close doors. That's where negotiations take place.
2. What tax increase? The item would likely be paid out of hote occupancy taxes which can only be used for things that enhance tourism. Denton had enough HOT money to waste on the Super Bowl committee, they have money for a conference center.

Amen Brother this City had plenty of funds to throw at the A-train and the DISD at the building of C.H. Collins. Why not at something that has such great potential as this? Little "d" is brought into the real world of the metroplex though it may be kickin' and screamin'.

cwb

Jun 07 2012 01:15 PM

Am I the only one who would rather have green space for tailgating where the hotel will sit?

glick1980

Jun 07 2012 01:35 PM

1. Of course they are negotiating behind close doors. That's where negotiations take place.
2. What tax increase? The item would likely be paid out of hote occupancy taxes which can only be used for things that enhance tourism. Denton had enough HOT money to waste on the Super Bowl committee, they have money for a conference center.

With a price tag of $85M, from what the person in the DRC wrote, it would be pretty hard to fund from only Hotel/Motel Tax. Denton has a fund balance of just over $500,000 currently in its Hotel/Motel fund. Last year revenues were about $1.5M while expenditures were about $1.2M. Bonds would have to be issued and it could be funded partially by Hotel/Motel Tax and partially by the General Fund.

Harry

Jun 07 2012 01:51 PM

With a price tag of $85M, from what the person in the DRC wrote, it would be pretty hard to fund from only Hotel/Motel Tax. Denton has a fund balance of just over $500,000 currently in its Hotel/Motel fund. Last year revenues were about $1.5M while expenditures were about $1.2M. Bonds would have to be issued and it could be funded partially by Hotel/Motel Tax and partially by the General Fund.

Good info Glick +1

NorthTexan95

Jun 07 2012 01:57 PM

Am I the only one who would rather have green space for tailgating where the hotel will sit?

I'd rather keep the green space and have the convention center where Fouts is right now. I bet most people would agree with that as it just makes the most sense. However, there may be good reasons why the it can't go there.

From the first link:

UNT will own the facility and the city of Denton will pay the bills.

Stupid people say stupid things.

forevereagle

Jun 07 2012 01:58 PM

I'd rather keep the green space and have the convention center where Fouts is right now. I bet most people would agree with that as it just makes the most sense. However, there may be good reasons why the it can't go there.

I believe that the plan is to put a parking garage and academic buildings on the Fouts site.

Mark Gommesen

Jun 07 2012 02:56 PM

With a price tag of $85M, from what the person in the DRC wrote, it would be pretty hard to fund from only Hotel/Motel Tax. Denton has a fund balance of just over $500,000 currently in its Hotel/Motel fund. Last year revenues were about $1.5M while expenditures were about $1.2M. Bonds would have to be issued and it could be funded partially by Hotel/Motel Tax and partially by the General Fund.

Right now is all speculation. I think we need to see the details and proposed plan that was produced by negotiations between all parties. These types of projects are often funded by a variety of sources. I am sure bonds will be a part of the funding. The general fund by definition cannot and will not be used. We do expect that UNT will contribute the land for the project. The developer and other investors will contribute also to funding of project. It is unclear exactly how much of the 85 million total cost will be funded by city. Of course negotiations were conducted in private. How else can a proposed plan be developed. Be assured the public will have an opportunity to have input.

Mark Gommesen

Jun 07 2012 03:24 PM

glick1980

Jun 07 2012 03:29 PM

Right now is all speculation. I think we need to see the details and proposed plan that was produced by negotiations between all parties. These types of projects are often funded by a variety of sources. I am sure bonds will be a part of the funding. The general fund by definition cannot and will not be used. We do expect that UNT will contribute the land for the project. The developer and other investors will contribute also to funding of project. It is unclear exactly how much of the 85 million total cost will be funded by city. Of course negotiations were conducted in private. How else can a proposed plan be developed. Be assured the public will have an opportunity to have input.

When I say General Fund, I mean where the money will essentially come from. It would be funded from a Capital Projects fund. However, the debt service on the bonds would decrease the City's M&O portion of its property tax and increase its I&S portion essentially reducing General Fund Revenues and increasing Debt Service Fund Revenues. And many times a City will issue debt based on the good credit of its General Fund to fund projects associated with other funds and transfer the money for the debt service from the other fund to the Debt Service Fund. This is done to reduce the financing costs of debt issuance as most of the time debt issued on the good name of a City's General Fund has a much better bond rating than debt issued on the back of another fund.

glick1980

Jun 07 2012 03:35 PM

http://www.cityofden...x.aspx?page=945

The city is only on the hook for the convention center not the Hotel/Restaurant. The goal is a proposal that is self funded by a combination sources including hotel taxes, convention center rentals, etc. UNT will lease the land for the project. People need to get the facts.

It is a nice goal, but how do you pay for the construction of a convention center when you only have $500,000 in your hotel/motel tax fund? Now are they saying that they plan to issue bonds which will be paid back by hotel taxes, convention center rentals, etc? If that is the case then they are looking at large financing charges associated with this project.

GrayEagle

Jun 07 2012 04:00 PM

Admittedly, I got bored reading the Denton City Council agenda but I didn't see anything to warrant the comments by the Denia Park type poster in the DRC.

However, I did find one interesting item on the agenda...that of buying property located at Bonnie Brae and Willowbrook (I believe that it was 1800 Bonnie Brae). What makes that interesting is pure speculation on my part (and maybe wanting it to be true) but that piece of property would be critical to tying in a bypass around the west end of Mean Green Village as Adler had suggested. I certainly can't substantiate that it is so but I'm in the dark as to why the city would otherwise need that property. They could eminent domain the small portion that would be needed to widen Bonnie Brae.

Mark Gommesen

Jun 07 2012 04:23 PM

It is a nice goal, but how do you pay for the construction of a convention center when you only have $500,000 in your hotel/motel tax fund? Now are they saying that they plan to issue bonds which will be paid back by hotel taxes, convention center rentals, etc? If that is the case then they are looking at large financing charges associated with this project.

Yes, there will be the need to issue construction bonds to finance this project. However, the final cost of the construction center has not been determined. The goal is to have the convention center be self funded, that is, to have future increase in hotel/motel taxes as result of increase in hotel usage and convention center rentals, etc to repay the bonds. This model that has been successfully used by any communities. I haven't seen an estimate for the cost for the convention center, itself. Remember, plans have not yet been finalized. Any construction project has finance charges associated with it, ask Donald Trump. Again, until a more specific proposal is made as to the cost of the proposal and financing, this all speculation. The City's contribution to this project is relatively minor compared to the contribution made by private investors. UNT is exposure is almost not existent. UNT will lease the land for the project. The city is not financing the hotel, the restaurant or the land.

oldguystudent

Jun 07 2012 06:38 PM

If it's going up on UNT property, will it be the first convention center in the nation with absolutely no designated outdoor smoking area?

shaft

Jun 07 2012 09:38 PM

As exciting as the public policy sub-debate is the numbers are wrong.
Denton pulls in $2 million dollars a month in taxable hotel revenue, that's something like $1.7 million a year in hotel occupancy taxes. So I'm betting Denton can pay the debt service on it's share of the convention center without tapping the General fund.

Cooley

Jun 08 2012 02:02 AM

I believe that the plan is to put a parking garage and academic buildings on the Fouts site.

There's enough land at Fouts for the hotel/convention center, mega parking garage and academic building. Additionally, a basketball practice facility. Overall, enough room for a nice size junior college. With a pedestrian bridge, the hotel makes more sense at Fouts.

ntmeangreen11

Jun 08 2012 04:08 AM

1. Build hotel & convention center
2. ???
3. Profit

glick1980

Jun 08 2012 05:35 AM

As exciting as the public policy sub-debate is the numbers are wrong.
Denton pulls in $2 million dollars a month in taxable hotel revenue, that's something like $1.7 million a year in hotel occupancy taxes. So I'm betting Denton can pay the debt service on it's share of the convention center without tapping the General fund.

As I wrote in a previous post, last year Denton had revenues over $1.5M in hotel/motel tax and expenditures of over $1.2M. They could pay it off with that if they scrap everything else they are doing.

shaft

Jun 08 2012 09:37 PM

The city doesn't have to carry the entire note, just the public portion of the project (the convention center). The city has 300k-500k room in the hotel/motel fund to carry the debt service on the public portion of the project. Plus the city will likely dedicate all the taxes generated from the project toward covering the project.

The project may even get an assist from the state legislature like the new CC in Amarillo is getting.
Point is this not break the bank and cause a property tax increase.

Mark Gommesen

Jun 09 2012 10:38 AM

If it's going up on UNT property, will it be the first convention center in the nation with absolutely no designated outdoor smoking area?

UNT will lease the property to an outside concern. As such, it will not technically be part of the campus. The lessee will establish the "smoking policy." Many public facilities including convention centers prohibit outdoor smoking.

Mark Gommesen

Jun 09 2012 11:26 AM

As I wrote in a previous post, last year Denton had revenues over $1.5M in hotel/motel tax and expenditures of over $1.2M. They could pay it off with that if they scrap everything else they are doing.

You are looking out the window on a Tuesday seeing that is raining and concluding that the picnic on Saturday has to be cancelled. The debt service is to be paid by FUTURE revenues. First if a developer builds a new 12 story, 300 room state of the art hotel it will generate a substantial increase in hotel revenues.. Second Denton is one of the fastest growing areas in the country again hotel tax revenues will increase. Third, the convention center will generate an increase hotel taxes from all the hotels n the city. Fifth will UNT and TWU continuing to grow resulting in an increase in hotel taxes. With UNT moving to the C-USA, there will be an increase in sports tourism that will increase hotel taxes. Sixth, the convention center itself is a revenue generator. The convention center generates rent income. Denton is located perfectly for DFW regional convention activity.

If you were to examine the current expenditure of 1.2 million, you would realize that much of that is directed to developing future projects to encourage tourism and economic activity including a convention center. Although, the total cost of this project is $85 million only a small portion of this project is the convention center. The twelve story hotel/restaurant will be financed by the O'rielly family. We're not talking about a huge amount of debt to be financed by the city. UNT gains lease revenues and use of the convention center.

The Hotel and Conference Center project will be a great revenue generator for the city of Denton. Many university meetings and events must be shuffled to other metroplex cities because Denton has no comparable hotel and meeting facilities. The new convention center will result in a huge cost savings for University meetings and events and provide new revenue opportunities for the University and the City.

It is extremely shortsighted not to realize the business that will "trickle down" to all merchants and service businesses in Denton. This is not to mention the boost to sales tax revenue. Any passed on costs will be far exceeded by the expansion of business that this project brings.

This a project that has joint participation with the city of Denton and UNT. The City will have a vested interest in the area west of I-35 on and near the UNT campus.

The City of Denton will have to widen bridges and access roads to Apogee and the west campus facilities as economic activity expands. The Hotel and Conference center project will result in other businesses locating near to the convention center and UNT sports venues.

kingwoodgreen

Jun 09 2012 12:29 PM

if the convention center is to be built near the stadium then it would be great if this was taken into consideration as far as the layout. I think the "hill" area makes our pregame experiance rather unique. And having amenities that are condusive to the gameday atmosphere is a real plus for us attracting our fair weather fans. And that is what we have to a degree. I would like to see the design of the hotel/restuarant/bar be to where it is part of the stadium grounds to a degree. Certainly to where spending the weekend at the hotel and walking out to the tailgate experiance is a natural. Sure they would sell out the hotel on game weekends.

Green Crazy

Jun 09 2012 03:25 PM

1. Build hotel & convention center
2. ???
3. Profit

Well done, sir!

shaft

Jun 09 2012 04:35 PM

Mark G is going bit overboard on the sell job for a convention center.
I agree that the new hotel and convention center will be an economic boast. But saying it will create a cost savings because University and City events are booked somewhere else is a stretch. When was the last time you saw a UNT booked at the Lewisville convention center?