THE BIG FIX

A desperate St. Louis pays top dollar to gamble on a risky convention-center hotel

"I think it's a house of cards," McNeill says. "I don't know how they could be putting a financial package together unless they know what they're paying for things."

The project is viewed much more optimistically on the opposite side of the street from Herkert & Meisel, where HRI recently leased a suite of offices. From the vantage point of a second-floor conference room in the renovated Lammert Building, HRI president Pres Kabacoff expresses enthusiasm about the hotel project and the progress being made on it.

"Let me tell you what excites me about this project: We have participated in elevating confidence in this community," Kabacoff says. "We're very proud of that. I think the project has changed from one that would never be built to one that's going to have a hard time finding a way to die. It's moving in the direction where we know it will bear fruit and we know that they (city officials) are committed to it."

The quest for the ever-elusive downtown convention-center hotel has been pursued like the Holy Grail by the past three mayoral administrations. In each case, the impetus for building the hotel has been the city's desire to attract larger conventions, which might otherwise shun St. Louis.

At least half-a-dozen convention-hotel proposals have been floated in the past decade. Some foundered because the city didn't embrace the location; others fell apart because would-be developers pushed for too much public money. But the argument for the hotel never lost momentum, especially after the city paid for a substantial expansion of the old Cervantes Convention Center, adding exhibition space and a 70,000-seat stadium. As a result of the expansion, the city demolished the 614-room Sheraton St. Louis, which had served as a convention hotel. Today, the cavernous America's Center, which boasts 502,000 square feet of exhibit space, is only partially utilized.

"You can't look at the hotel by itself," says Aldermanic President Francis Slay. "We've got a tremendous investment in the convention center. The hotel will help us get a better return on that investment and help it reach its potential."

In part because of the failed efforts of the past, a sense of urgency or even desperation is attached to the current hotel plan. Slay, who has already announced his intention to oppose Harmon in the 2001 mayoral primary, nonetheless expresses qualified agreement with the mayor on this subject, having signed the intergovernmental agreement that approved the HRI proposal in June. He says one of the reasons the city needed to close on the deal was to salvage the reputation and image of the city. At the same time, the aldermanic president acknowledges that saving face has turned into a costly gamble.

"We're paying too much money for this. There's no question about that," Slay says. "(But) I'd say -- not even reluctantly -- that this is an investment that we ought to be making. There's going to be risk involved, but we're willing to take the risk. We've made a decision that we're going to get into the convention business. We should make sure that we make that convention business the best it can be. We can't do that without a first-class convention- center hotel."

Events leading up to this point illustrate how a relatively small out-of-town developer sealed the lucrative deal -- when others couldn't. Much of HRI's good fortune to date seems to have hinged on the serendipitous timing of its entry into the competition.

After helping bring the Rams to town, former U.S. Sen. Thomas F. Eagleton began lobbying in earnest for a downtown convention-center hotel. By early 1996, then-Mayor Freeman Bosley Jr. had tapped Eagleton to head a three-member committee dedicated to securing a deal. Others named to the task force were Bob Bedell, president and chief executive of the St. Louis Convention and Visitors Commission, and Gregory Smith, an attorney with the firm of Husch & Eppenberger. Bedell and Smith also were key players in bringing the Rams to St. Louis.

The Eagleton group began negotiating with Melvin Simon & Associates, the Indianapolis-based owner of St. Louis Centre, and the adjoining Dillard's department store building at Seventh Street and Washington Avenue. Alternative plans were floated that involved either razing the historic department-store building to make way for a new hotel or rehabbing the existing structure.

"I don't think I invented the Dillard's site," says Eagleton. "I think that was what they call "CW' -- that was the conventional wisdom of that time, during the Bosley years. Both Greg Smith and I just thought it was killing two or three birds with one stone."

The concept, says Eagleton, involved locating the hotel at the Dillard's site, which was already attached to St. Louis Centre by a skywalk. The plan called for an additional skywalk to link the hotel with the convention center. Knocking off more than one bird, as Eagleton puts it, would have had the ancillary objective of revitalizing the beleaguered downtown shopping mall. In retrospect, Eagleton says: "That obviously was too much to do in one fell swoop. It did not succeed."

By late 1996, talks with Simon had failed to achieve results, but the Eagleton group forged ahead, announcing the city's plans to formally solicit development proposals for the hotel in February 1997. But when Harmon defeated Bosley in the Democratic mayoral primary in early 1997, the dynamics of the selection process changed. Harmon named a new 15-member selection committee, Eagleton's role in the selection process ended and the city made clear it was seeking proposals for not only the Dillard's site but the abandoned Gateway Hotel at Ninth and Washington.

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