by Joe Sullivan
The political winds are blowing hard against plans for a new convention headquarters hotel to help attract more bookings to the city's ailing convention center. Three of the four new City Council members elected on Tuesday have voiced opposition to any city financial backing of a new hotel, even including city assumption of the cost of a site and a garage that Mayor Victor Ashe has proposed. Add their votes to those of three holdover members of Council who've also gone on record against any such city outlay, and you would appear to have a clear majority of opponents on that nine-member body.
At the same time, the four existing downtown hotels that have been spearheading the opposition to a city-subsidized competitor are claiming success in getting the 15,000 voter signatures needed on a petition to force the issue to a referendum. The Knox County Election Commission has 30 days to validate the petition that was submitted last week. If it does so, the referendum would be held next August on a proposition that would prohibit any form of direct or indirect city financial assistance to a new hotel.
But there's a catch. Under the City Charter, City Council could forestall a referendum by acting within 20 days to approve the proposition in the form of an ordinance. In that event, council could also rescind the ordinance at a later date whereas if the prohibition were approved by referendum it would take another election to lift it. Because the 20 days runs out just prior to the end of the term of Mayor Ashe and the presently constituted Council, the ball is on their court.
For all his advocacy of the need for a new headquarters hotel to keep the convention center from becoming (or remaining) a white elephant, Ashe talks as though Council approval of the ordinance that would forstall a referendum is a foregone conclusion, while ducking the question of whether he supports it. Although the ordinance would preclude the city backing that a new hotel is believed to require, it would preserve a way for Council to provide some form of backing at some future date, or so the reasoning goes.
Amid all this turbulence, the city's Industrial Development Board has gone into a holding pattern on the selection of a convention hotel developer. When the IDB was initially mandated to make this selection, it proceeded with great urgency. At a marathon meeting in August, the IDB heard elaborate presentations from the five developers who had responded to its request for proposals. The IDB's timetable then called for picking one of them in September with whom to negotiate the terms of a hotel deal.
Now, November has rolled around, and a developer has yet to be selected. At an IDB board meeting last week, its chairman, Alex Fischer, ventured that he felt the board's hands were tied when it comes to negotiating terms involving any city financing. But he went on to say that the board could proceed with selecting and negotiating with a developer on terms that don't. "I have no idea if that's a pipe dream or if that's within the realm of possibility, but I think the only way we're going to find out is to roll up our sleeves with an individual developer that we think has the best team to meet the needs of the project and begin the process...," Fisher opined without calling for any board action at that point.
The one key player in all these matters who has yet to assert himself, at least publicly, is mayor-elect Bill Haslam. In an interview, Haslam expresses his belief that the IDB should proceed without its hands tied. "I'd like to see the IDB go ahead with their recommendation because I think that as a community we need to be able to say here's what the alternative looks like, here's what the cost would be," he says. "Right now, we're comparing doing nothing with the undefined cost of what the alternative would be in public money to build a new hotel or to renovate an existing one."
Three of the five proposals submitted to the IDB were for building a new 400-room hotel on the site recently vacated by the state Supreme Court that's just across Henley Street from the convention center. Their proposed costs ranged from $60 million to $80 million, and they all sought city backing in the form of a partial guarantee of the hotel's bond financing. Any city outlay under the guarantee would only come into play if the hotel's revenues fell far short of projections.
The other two proposals were for 100-room additions to the two existing hotels closest to the convention center that would enlarge each of them to about 400 rooms and also renovate their facades and their interiors. One from the Holiday Inn Select sought a $1.1 million annual tax abatement for 20 years to help finance its expansion through acquisition and conversion of the state office building that adjoins it. The Hilton sought a $10 million contribution from the city in a form to be determined. While the referendum they've been pushing would preclude city backing of a new hotel, it wouldn't place any constraints on aid to an existing one.
Where Ashe has branded the Holiday Inn's owner Franklin Haney as untrustworthy and refused to have anything to do with him, Haslam is known to have had at least one recent meeting with Haney. "Given the political and financial situation we're in, we have to look at it [the Holiday Inn proposal] as an alternative as well as whatever option the IDB may recommend," the mayor-elect asserts.
As for the impending referendum, Haslam says, "I would hate to have the city's hands tied for maybe a long, long time from doing something that might make sense at some point." On the other hand, he does not look favorably on an attempt to forestall a referendum by rushing through an ordinance that would tie the city's hands in the short run. "I would rather have the community wait and see what all the alternatives are and let the process be thought through so that we know what we're talking about," he says.
I agree with Haslam on all accounts and hope that he will begin exerting leadership on them even before he takes office Dec. 20.
November 6, 2003 * Vol. 13, No. 45
© 2003 Metro Pulse
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