Editorial: Hoteliers’ objections up pressure on city to be more transparent

Keywords Editorials / Opinion

Mayor Joe Hogsett’s administration so far isn’t blinking on its support of the Capital Improvement Board bill, which would pave the way for construction of 1,400 additional hotel rooms on Pan Am Plaza, as well as construction of a $120 million Indiana Convention Center expansion on the plaza and fund improvements to Bankers Life Fieldhouse that are needed to keep the Indiana Pacers in town.

There’s a lot to digest in that first paragraph. The legislation—which has cleared the Senate and is now in the House—is like one big Jenga game. Remove one piece, and everything collapses. That’s because the funding scheme relies on the extra tax revenue the hotels would generate to raise the cash needed to make bond payments.

Major pushback surfaced this month when the owners of several downtown convention hotels said they opposed the addition of 1,400 Hilton-branded hotel rooms, arguing that additional demand stoked by the convention center expansion would be insufficient to absorb the deluge of new rooms.

We’re not ready to side with the hoteliers, though we are hopeful their uprising forces the Hogsett administration and CIB to make a more compelling case for its grand plan by lifting the veil of secrecy and becoming more transparent. Many huge questions remain unanswered—including how much the two new hotels would cost, how much the city would subsidize the project, and how much it would need to chip in for Bankers Life Fieldhouse upgrades to get the Pacers to commit to a 25-year lease extension.

Without that information, we’re also not ready to side with the city.

The city so far has dismissed the hoteliers’ concerns. Hogett’s chief of staff, Thomas Cook, told IBJ: “Any time you’re proposing a large transformative project, there are going to be concerns from those that are natural competitors.”

We don’t take their concerns as lightly. Those owners are seasoned pros who have served downtown well. If not for the commitment by White Lodging Services—backed by billionaire Dean White—the risky JW Marriott project never would have come together in the throes of the financial crisis.

Yet, if the city would be more forthcoming, we’re predisposed to back the project. The city’s convention industry has grown into the juggernaut it is by embracing a go-for-it mindset. Past leaps of faith—the addition of the downtown Marriott in 2001 and the JW Marriott in 2011—were monumental successes that helped the city retain conventions and attract new ones. Meanwhile, Marriott used its sales and marketing firepower to draw events and guests who otherwise wouldn’t have come to the city.

It may be that the city is holding back on the numbers because those numbers are painfully big. No one is putting a dollar figure on Bankers Life Fieldhouse upgrades, but it is worth noting that the Atlanta Hawks last year wrapped up nearly $200 million in improvements to its arena, which opened in 1999—the same year as the Pacers’ arena.

Experts tell IBJ that the hotel project, which would be developed by Indianapolis-based Kite Realty Group Trust, likely would cost at least $400,000 per room, or a total of $560 million.

They say convention hotel projects in the United States that don’t include gambling always require a city subsidy to make the numbers work, often a hefty one. For example, the 612-room Omni hotel and apartment tower that opened last spring in downtown Louisville cost $300 million, with the city and state providing $139 million.

It’s time for the Hogsett administration to put all the numbers on the table. They may be justifiable. But keeping the public in the dark isn’t.•

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