Hotel plan worthy of council’s support

THE Oklahoma City Council will consider a proposal Tuesday to use taxpayer money to help build a convention center hotel. The plan will generate pushback in some quarters, but was well constructed by one of the city’s leading officials, and merits the council’s approval.

As head of The Alliance for the Economic Development of Oklahoma City, Cathy O’Connor led negotiations more than a year ago with seven development teams before Omni ultimately was selected.

Then came 10 months of negotiations with Omni, a privately held company based in Dallas. O’Connor’s proposal is for construction of a 19-story, 600-room hotel with a price tag of $235.5 million — $85.4 million of that coming in the form of public assistance. The agreement is for 45 years.

“We chose Omni because they were bringing $150 million of investment to Oklahoma City,” O’Connor said. Other developers wanted the city to provide larger subsidies.

The $85 million in public financing equals 36 percent of the total, which O’Connor noted is in line with other projects around the country. Portland, Oregon, is paying 32 percent of the bill for a 600-room hotel project with Hyatt Regency. In Kansas City, a Hyatt project includes 51 percent public funding. Omni projects in Fort Worth and Louisville included 38 percent and 47 percent public funds, respectively. Nashville funded 61 percent of an Omni project in Nashville in 2003.

Taxes wouldn’t increase in order to pay for the city’s share of this project. Instead, the revenue would come from a recently approved property, hotel and sales tax increment financing (TIF) district, proceeds from lease and mortgage payments paid back to the city by the Skirvin Hotel and Bass Pro Shops for the city’s public assistance in those projects, and a potential long-term ground lease for the Omni.

Under this plan, the city would approve a bond issue to be paid from revenues from three existing downtown TIFs. Beginning five years after the hotel is completed (target date: summer 2020), Omni would pay $200,000 a year for 25 years. The hotel also would pay minimum annual tax payments of $1.4 million for 30 years.

Some cities also gotten into trouble by entering into agreements that have them owning or operating hotels. That won’t happen here. Omni “will construct, own and operate the hotel,” O’Connor noted. “Once the public contribution is provided, the city will have no obligations for the operations of the hotel going forward.”

Instead those duties will fall to Omni, which owns and operates 43 hotels nationwide and has a long record of success.

The council is sure to hear from opponents who believe the $85 million should have been part of the voter-approved MAPS 3 plan, which included construction of the new convention center; or that TIF money shouldn’t be part of the equation. One council member rejects the idea of building a new convention center at all, never mind an anchor hotel.

But as it stands, Oklahoma City is losing convention business not just to like-size cities but smaller cities. And in cities where convention center projects haven’t performed as advertised, a key reason has often been the lack of a complementary hotel.

O’Connor has put together a responsible plan, one that puts the city’s best interests first and one that is worthy of the council’s support.