THE BIG FIX

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

The St. Louis hotel is most bothersome, says Sanders, because the city plans to use empowerment-zone bonds to help finance a hotel. But similar projects are cropping up across the country. "This is getting to be a very common phenomenon," says Sanders. "This is not just St. Louis. This is every St. Louis in the country. We have achieved hotel socialism in American cities."

Ronald Utt, of the conservative Heritage Foundation in Washington, D.C., concurs. "You've got a lot of desperate cities like St. Louis which have been convinced that tourism and entertainment is the way to go and are prepared to use taxpayer dollars to fund these things," Utt says. But the convention and hotel trade create only a modest number of low-wage jobs, Utt says. "The business community always has some scheme that involves subsidizing some business activity. The meeting and conference business (have) become the target of this kind of corporate welfare. What is happening in your city is literally happening in every city around the country."

Utt calls the resulting intercity competition for convention trade "the equivalent of an arms race." Ironically, as cities subsidize bigger convention-related facilities, market demand is declining, Utt says. "This is not a growing industry. Things like Internet and other forms of immediate communication and information-sharing have diminished the necessity of professionals to utilize conventions as a way of getting information in their field. So you have a flat business confronting more and more space. What this means is that people who do have conventions are in a stronger bargaining place, to the point where sometimes you actually have to pay them to come as opposed to them paying you."

Wallace McNeill, whose business stands in the way of the convention-center hotel: "I can't get a straight answer out of anyone."
Jennifer Silverberg
Wallace McNeill, whose business stands in the way of the convention-center hotel: "I can't get a straight answer out of anyone."

Jones concedes as much: "In order for the convention center to be at a sort of break-even operation -- because it ain't ever going to make money -- you would probably have to get 58 to 60 major meetings. The economic activity that the city wants will come from the spending that conventioneers will do once they arrive."

The difficulty with attracting those conventioneers to St. Louis is that it's St. Louis, says Jones. And that's what makes the hotel project more expensive to pursue here than elsewhere. Denver has the mountains and 300 days of sunshine a year; Chicago has Lake Michigan. These are natural advantages that make these cities more appealing destinations.

All hotels are speculative investments, Jones says. But the St. Louis market is more risky because it doesn't have a track record. "You're not talking about how much a project like this costs in a market that people perceive to be on the uptake, you're talking about how much this costs in a market that people perceive to be troubled. To be honest, we only had two bids," Jones says. "If we were doing the same project in Chicago, you'd have people falling over themselves, trying to position themselves to do this hotel deal, because they know it's guaranteed to be successful and make money. So I think in light of who we are and where we are in time, I think it's a good project.

"The public needs to understand about this kind of transaction," Jones says. "Why it's difficult and why it takes so long is that it's all about money. Fundamentally, what a developer is trying to do is develop a project and use as little of his money and as much of your money as he can. They all do that. Everybody does that. Our job, and mine principally, was to get a hotel built and use as little of the public money as possible and try to get the best return."

Legend has it that a small room on the second floor of the Herkert & Meisel building served as a gambling den for the original owners of the company and some of the civic leaders of the day, including the mayor. There is no way of telling, of course, the kinds of schemes that may have been hatched as the bets were made and the whiskey flowed. But the card games would have likely spanned the period of time at the turn of the century, when St. Louis gained notoriety for its political chicanery. Bribery and kickbacks were then endemic to the system. After Lincoln Steffens, a prominent muckraker, reported on the scandals in the pages of McClure's magazine, reforms were adopted. But the profiting of private business at the public's expense has never really gone away.

On the third floor of the Herkert & Meisel building, production continues for now. Connie Bivens, a nine-year employee at the company, crafts the frames for the shoe-sample cases by the natural light that streams through the old window glass onto his workbench. He is surrounded by the tools of his trade: a rivet machine, air compressors, staple guns. A 6-foot stack of finished frames rests by his side.

"It seems like a slow process, but once I get going, I go through them like hotcakes," Bivens says. His portable radio is tuned to an oldies station that is playing Hugh Masekela's 1968 hit "Grazing in the Grass." The calendar on the wall, which advertises industrial rubber and plastics, is dated December 1980.

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