A Boondoggle for the Ages

Remember that sweet deal St. Louis made for itself by luring the Rams here, and how we shrewdly took advantage of owner Georgia Frontiere, who only got several hundred million dollars to grace us with one of the top 30 or so teams in pro football?

Remember how we did the same to poor old Harry Ornest, whom we tricked into selling us our Blues hockey team and our Arena for a mere $20 million or so?

Remember how we so outwitted Pittsburgh entrepreneur John Connolly, who was so confused that he only sold us our beloved Admiral five or six times before waddling away with some paltry millions?

Remember how we brilliantly convinced New Yorker Harold Glasser to bring us a Miss Universe pageant for just several hundred thousand taxpayer dollars, a move that would give St. Louis international fame and admiration not accorded it since the triumph of the Spanish Pavilion in the '60s?

Well, my fellow wheelers and dealers, get ready to raise a glass of fresh Mississippi River spring water for a real celebration this time. We've got a deal that makes all those past triumphs look like something Warren Buffet would have had to settle for.

Meet the new convention-hotel plan.
It will be called the Marriott Renaissance, and it will sport 1,081 rooms -- after renovation of the historic Gateway and Lennox hotels -- for a total cost of $242 million (including an 850-space parking garage). It is one of the most complex deals ever, so much so that the public's bite could range anywhere from a claimed $91 million to as much as $200 million, if you score empowerment-zone bonds, the sale of tax credits and the like as at least an indirect form of public support.

I probably should qualify this by saying it's $242 million as of June 29, 1999. After all, when the same project was hailed in a Post-Dispatch editorial 18 months ago, it was said to cost just $172.5 million. At this rate of increase, I'd say they ought to just hurry up and build it.

Deputy Mayor Mike Jones, who orchestrated a web of funding sources to make the deal possible, says the increases were attributable to the addition of the parking garage, upgrading of the Gateway Hotel rooms and higher financing costs. That's all well and good, but it does make one wonder what the owners will be saying about today's costs 18 months from now.

Those owners are Historic Restoration Inc. (a New Orleans developer), the Kimberly-Clark Corp. and local businessmen Eric Bachelor and Clifton Gates. Perhaps more significant is who doesn't own a piece: That would be the general public, "we the people," the ones whose "gap funding" is making it all possible.

Officially, the city would share in the hotel's cash-flow upside if the property covered all its costs, including debt service, and made more than $2 million in profits. In reality, a variety of hotel sources tell me, the bottom line should be headed in the opposite direction.

If, as noted economist Murray Weidenbaum suggests, public subsidy of private developments is a "slippery slope," we are about to construct one well-greased Mount Everest on Washington Avenue.

If there's a convention hotel with this much public subsidy -- in exchange for no ownership -- I can't find mention of it anywhere. The best comparisons I could find to St. Louis' project suggest that we have indeed been taken to the civic cleaners once again.

Consider these projects:
* Indianapolis: Ground was broken less than a month ago for a 610-room Marriott by the Indiana Convention Center. Total cost of the hotel, slated for completion in 2001, is $90 million, of which public support is just $23 million. Now I'm told by Jones that their Marriott is nothing like our Marriott. Neither is their bill.

* Chicago: Last year, a 33-story, 800-room Hyatt Regency was opened adjacent to McCormick Place at a cost of $108 million. The entire cost was footed by a state body, the Metropolitan Pier and Exposition Authority. One small detail you might throw into the mix: The state authority owns 100 percent of the hotel and contracted with Hyatt only for management. But I'm sure their Hyatt is nothing like our Marriott.

* Minneapolis: All the way back in the late 1980s, the city tossed in $45 million to facilitate a $145 million Hilton convention hotel with none other than St. Louis' own HBE Corp. Get this, however: For its trouble, the city holds a 50 percent stake in the hotel's cash flow, which is doing so well that HBE wants to buy its share out. Then again, I'm sure their Hilton is nothing like our Marriott.

* St. Louis: Yes, St. Louis. Go back to December 1990, and you find a 1,100-room Hilton convention hotel to be developed for $140 million by Chandler West Development Corp. of Denver. That deal fell through, a Chandler partner said, because "we had requested $42 million and it became evident that the city wasn't going to be able to deliver that kind of money, and we wouldn't take a considerably lower amount that the city wanted us to take. We thought it was a viable project with the level of financing that we requested." Anyone got Chandler's number? Oh well. I'm sure our Hilton would have been nothing like our Marriott.