It's about to succeed.
In what history certainly will record as the most inept deal ever made -- anywhere, anytime -- the city is about to marshal more than a quarter-billion dollars in public subsidy and financing (from a variety of sources) to make possible what is for the moment being called a $276 million hotel project.
This is essentially the same project -- a 1,081-room hotel next to the convention center -- for which the city first chose a developer in 1990, just over 10 years ago. The price tag then?
That would be $130 million, or less than half of today's cost.
And that's just the tip of the iceberg in the path of this local Titanic. The original deal with Denver-based Chandler West Development fell apart -- according to both sides at the time -- because the city refused the developer's request for $42 million in public subsidy.
At the time, saying no to this corporate-welfare handout surely seemed the self-respecting and heady thing to do. But now that the smoke's cleared -- and the city jubilantly prepares for a Dec. 14 financial closing on the deal -- do you know what the public is contributing in lieu of that $42 million?
Well, according to a Nov. 17 Post-Dispatch editorial passing out "congratulations" to all involved, $98 million in federal empowerment-zone bonds, a $47.7 million federal loan, $33 million in convention-center bonds, a $21.1 million state subsidy for a parking garage and nearly $30 million in tax credits are being made available to the developers.
Even the cheerleading Post acknowledges that "the cash-up-front part of this deal is only 11 percent of the price" -- and I suspect that's overstated, because some of the developers' "investment" involves purchasing tax credits that give money directly back off their tax returns -- so it's the understatement of the new century to suggest that the city is giving away the ranch.
All this for a hotel project that's a dubious idea at best. In a downtown area that generally runs below 70 percent in hotel-room occupancy -- and in a city that's never going to be a Chicago or a New Orleans in attracting conventions -- one can make the case that this cash-eating monster will never succeed, at any price to the public.
One can also look at other cities with comparable projects to see how out of whack this one has gotten. Indianapolis is slated to open a 610-room convention-center Marriott next year for a total cost of $90 million, with just $23 million coming from the public. In Chicago, an 800-room Hyatt Regency was opened in 1998 at McCormick Place for just $108 million, with ownership retained wholly by a public authority.
But don't blame this madness on the lucky businesses involved in this deal -- including Historic Restoration Inc. (HRI) of New Orleans, Kimberly-Clark and Marriott -- because they have simply fallen into the proceeds of a deal that reflects the compounded incompetence of no fewer than three city administrations. Especially the current one.
Nothing is more revealing about the frightening nature of this runaway freight train than a comparison of its current status with the last two times it was the subject of much celebration by city and daily newspaper alike. Two snapshots in less than three years tell a truly chilling tale:
Dec. 19, 1997: "Mayor Picks Convention Hotel Proposal: He Backs Development with Focus on Street Life: Plan Has $172.5 Million Price Tag." In a front-page story, the Post reports that Mayor Clarence Harmon and a 14-member advisory committee have chosen the HRI group, which will be asking for a total of $74.5 million in subsidies. The lead paragraph says the developers "intend to have it ready for business in 2000."
June 23, 1999: "City Seals Financing for New Convention Hotel: Agreement Moves Downtown Complex Closer to Reality." Harmon says, "We are here to celebrate a major accomplishment for the entire St. Louis region" in announcing a financing agreement for what is now (inexplicably) a $242 million project. It's slated for completion in 2002.
Just follow the money. This monster has gone from $172.5 million less than three years ago to $242 million just 17 months ago to $276 million (and counting, no doubt) today. In every area, the public subsidy has mushroomed. At every turn, the private investment has withered. In every instance, predictions for finishing the project have been a joke.
To put these numbing numbers in perspective, this project has gone up in total cost at the rate of $96,955 per day, including weekends and holidays, for the past 35 months. The Post has dutifully reported these exploding totals with no reference to the ones that preceded them and with no explanation from city officials as to why these numbers have indeed exploded.
In his most recent moment of giddiness, Harmon proclaimed, "Essentially the hotel deal is in the bag. It's a great time to be mayor."
Well, the only "bag" that matters is the one city, state and federal taxpayers are left holding. And it's a great time to review the news clippings of the past decade.
Failure never looked so good.
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