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Mr. Natinsky,At your request, we have been evaluating the potential impact of both Propositions 1 & 2.Keep in mind, we are not attorneys. However, we do have a clear understanding of thetools we use to incentivize economic development and keep our city competitive. It is our determination that many of the tools in our economic development toolbox – tools other cities have - will be eliminated or brought into serious question by passage of either or both Propositions.
Proposition 1:
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Appears to apply to all hotels and other lodging facilities, not just the proposedConvention Center Hotel or publicly owned hotels. This includes
privately
owned hotels, extended stay hotels, and other lodging facilities that providelodging to the general public. It appears it does not affect dormitories, jails,shelters, or halfway houses, and does not appear to extend to apartments and other facilities that utilize rental agreements. It seems to allow assistance for hotels or lodging facilities located wholly within the boundaries of the Dallas/Fort WorthInternational Airport, but not at Love Field where we are just beginning to build anew terminal.
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Prevents the City from directly or indirectly using City money in the form of incentives in connection with the renovation, reuse and redevelopment of existing privately owned hotel projects.
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Prevents the City from providing City funding for mixed use developments thatinclude hotel or other lodging facilities as a component of the mixed use project.
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Prevents the use of façade easements in connection with a hotel project.
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Prevents the use of 380 economic development grants to hotel projects or mixeduse development projects that include a hotel component.
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Also affects City’s ability to offer other incentives (Bond funds, hotel relatedinfrastructure improvements, sale of city property for less than fair market value)for future hotel projects.
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The language does not prohibit the “adoption of a tax increment financingdistrict” but it makes no allowance at all for the use of TIF funds from new or existing districts. Some might feel this is implied, but without a specificexception, we must assume the author meant to exclude the use. At best, it createsambiguity and will likely have to be decided in court, which in itself hinders our ability to negotiate with developers.
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Could affect City’s ability to incentivize historic preservation projects involving ahotel. Several historic structures in Dallas have been restored using hoteldevelopment projects - which required some City assistance. You may recall, theCouncil recently approved a 380 economic development grant of $4.3 million for the Aloft Hotel project at the historic Santa Fe Terminal. Proposition 1 could limitour future assistance if the preservation project involves a hotel.
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Treats hotel projects differently from other economic development and jobcreation projects.
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Prevents the City from providing City funding for infrastructure and streetscapeimprovements in connection with the development or expansion of a hotel projector a mixed use project that includes a hotel component.
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Calls into question ability of City to acquire hotel projects (other than byforeclosure process) for other city purposes.
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Affects City’s ability to utilize state law pledge of certain city hotel taxes insupport of a privately owned convention center hotel located on city owned landwithin 1000 feet of the convention center.
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Affects the Convention Center Hotel project and ancillary development even if the City was to decide to have these improvements privately financed. The Citycould not directly or indirectly use City funding to assist the project.
Proposition 2:
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Requires voter approval of City’s “financial assistance” if within 60 days after posting the Public Notice, a petition signed by at least 500 Dallas residents issubmitted to the City Secretary.
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Applies to a “Private Development Project” to which the City or an entitycontrolled by the City provides over $1,000,000 of financial assistance.
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A private development project is a project
a primary purpose of which
is toconstruct or aid in the construction, renovation repair or alteration or remodelingof a
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Hotel
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Convention Center
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Luxury residential condominium
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Retail facility
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The infrastructure related to a hotel, convention center, luxuryresidential condominium, or retail facility
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Excludes retail development projects with less than 50,000 square feet thatserve subsidized residential development
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Financial assistance includes:
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A grant of tax concessions or relief for the project (tax increment financingor tax abatements)
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Authorization of any form of City debt in support of the project
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Expenditure of public funds or the exchange, grant, sale or lease of Cityowned land for less than fair market value for the project.
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The proposed charter language does not provide clear definitions of terms, creating gray areas that will likely have to be decided by a court.
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Does not define what constitutes a luxury residential condominium projectleaving all condominium projects in questions. Luxury could stretch over any price and quality range, depending on the person making the judgment.
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