Omni Hotel

[Pete]

Besides the $135 million, here are some other things Omni is demanding:

1. A parking garage. City doesn't own the land and already stated they can only borrow $27 of the $37 million that is need to build it, PLUS they have to somehow get the land from OG&E. No garage under construction, no Omni deal.

2. No TIF money for any hotel other than FNC. That alone could kill the hopes or renovating Spaghetti Warehouse.

[shawnw]

So at least $385M for the "convention center complex"? Starting to look a lot closer to the $400M Nashvile paid, if that's their real total cost (I do not know the breakdown).

[Pete]

So at least $385M for the "convention center complex"? Starting to look a lot closer to the $400M Nashvile paid, if that's their real total cost (I do not know the breakdown).

You should also factor in the value of the land the city gave to OG&E to move the sub-station.

And other things as well. I'll have to total all this up.

[shawnw]

Yes please do.

[BoulderSooner]

So at least $385M for the "convention center complex"? Starting to look a lot closer to the $400M Nashvile paid, if that's their real total cost (I do not know the breakdown).

Nashville paid 623 mill for their convention center. And another 128 mil for their Omni convention hotel

[shawnw]

Oh dang, apologies on the mis-remembrance. Not sure where I remember that $400M number from.

I just finished reading the Oklahoman article. There sure is a lot of hostage holding in that agreement regarding future hotel competition. How does this affect the pending Bricktown hotels (new Renaissance, Canopy, etc)?

[Urbanized]

^^^^^
Does not affect them at all. Would affect the suggested (though not formally proposed) boutique hotel in Spaghetti Warehouse building, but not sure that is a great option for that building anyway.

[Pete]

^^^^^
Does not affect them at all. Would affect the suggested (though not formally proposed) boutique hotel in Spaghetti Warehouse building, but not sure that is a great option for that building anyway.

The prospective owners have been pursuing a boutique hotel deal, as that is their preference and have been working with at least two groups.

It is possible this Omni clause could kill the entire deal.

[UnFrSaKn]

http://newsok.com/omni-deal-a-decade...rticle/5556404

[dankrutka]

Great work, Pete. OKC has long had a transparency problem that needs to be addressed.

[gopokes88]

I don't think it's that bad of a deal. Omni is assuming all the risk and if they start turning profits the city can get up to $15 million/year for 20 years. Could easily get all their money back.

[Laramie]

Sooner or later figures about the total cost of the convention center complex (includes hotel) will have to be shared with the public.

Anyway OKC can back out of this deal or is it a done deal or what will the council cut to make the convention hotel a reality?

[OkieDave]

Councilman Ed Shadid's Facebook page comment on Lackmeyer article:

Robert Rowling, the owner of Omni Hotels, is the 67th richest human on the planet with a net worth approaching $7 Billion. He could do this deal without public subsidies. Instead, he engages in predatory, parasitic behavior in which he extracts enormous sums of money from cities like OKC which are struggling to finance core services.
Assuming that the city is able to sell the revenue bonds at 4% interest, the estimated cost to the city is $135 million when you include interest costs. In addition, the city must spend all of its money before Omni spends a dime thereby allowing Omni to shift interest costs to the city. In addition, the city will essentially provide an interest free loan to Omni who will buy the land over a 25 year period. In addition, the city must builtd a $37 million parking garage plus acquire the land for the parking garage from OG&E. But we are not through: the City is prohibited from subsidizing any hotel in an area defined by Omni which includes essentially all of downtown threatening adaptive re-use projects such as those contemplated at Spaghetti Warehouse etc...Finally, and most importantly, if the hotel does not perform as well as projected and there is a shortfall in paying back our loan from the proceeds, then the shortfall must be paid from the city's general fund which will further erode delivery of core services to our citizens. Imagine a scenario in which the owners of the Thunder demand a new arena from taxpayers (coming in the next 2-6 years IMO) or else they would have to consider relocating to a different area within the Greater Metro or even to another city. Our debt on this hotel provides enormous leverage against us.
OKC is running out of time to diversify its economy. We already face the headwinds of nation leading cuts to public education, and by extension, academic research. If we do not want to end up like West Virginia with its over reliance on a commodity which is going to plummet in value over time, we must diversify our economy as quickly and efficiently as possible. Imagine what an investment such as this might accomplish in an Innovation District centered around the OU Health Sciences Center where industries congregate, exchange ideas and technologies, and spin-off/create new companies. One biotechnology company alone (Selexys), which spawned from such a collobaration, recently attracted a $665 milion investment from Novartis. It is heartbreaking to see OKC put all of its incentive eggs in one basket. With this massive investment in a dying industry full of minimum and low-paying jobs, we will have no powder left to help create the 21st century city and economy our people deserve.

[Pete]

Honest question: What is the worst-case scenario if we don't subsidize Omni or another hotel operator?

Currently, we have dozens of hotels popping up and planned... Couldn't we just do an RFP and drop some of the onerous requirements such as minimum # of rooms, amount of meeting space... And just get someone to pay OKC for the land, deal with their own parking and not get a dime in public incentives, just like the 20 other downtown hotels have already done?

I know all the studies say the convention center needs a hotel but really, what is the downside of just letting market forces find a private hotel developer and run with that site with some degree of coordination?

Good grief, we have the Canopy and Marriott Renaissance both getting ready to start with zero public assistance and with that Marriott, there is zero parking.

It's not like we don't have tons of hotel developers looking to build more.


We are just so far off the reservation. Remember when it was going to be $50 million in assistance? Now $135 plus the garage plus restrictions on incentives to any other hotel, plus, plus, plus.

[bradh]

We don't get one because everywhere else does this?

Not saying it's right, nor do I even know if that's the case. But that's "worst case."

[Pete]

We would get a hotel there... They are popping up everywhere without any public incentives at all. The Bricktown Marriott Renaissance or similar would probably fall all over themselves from that spot on the boulevard, directly across from the arena and next to the convention center... And facing a huge new park.

It wouldn't be an Omni, might be a bit smaller, etc. But is that difference really worth $200 million in tax dollars when we can't even fund our core servcies?

Just seems especially twisted to through nearly $200 million (once you count the parking garage and everything else) at a hotel operator when we have tons of them doing this all around with zero incentives.

[OKCRT]

Good luck booking decent conventions with no staple hotel with at least 500+ rooms. The phones will go silent. The emails will go unread and the convention center will end up as a local gathering place for the homeless.

[Pete]

Good luck booking decent conventions with no staple hotel with at least 500+ rooms. The phones will go silent. The emails will go unread and the convention center will end up as a local gathering place for the homeless.

Right, I understand that is important and a fair point.

I will also say that this convention center is being built and paid for; no debt to service. So is it the end of the world if we do less convention business?

We are already going to be miles better than we were with the Cox Center *and* will have gained the ability to redevelop the Cox site.

It seems this has always been presented as a false binary: Either we give tons of money to someone like Omni or the convention center will fail.

There is no way it will fail. Likely not get as many conventions as with a cc hotel, but how can you even measure and put a value on that? And it would have to be compared to say a 300-room directly adjacent hotel with some sort of block-booking arrangement, because it seems like just offering the land would result in a line of hotel developers who to date have not needed a dime in public money to build these dozens of hotels in the core.

Everything regarding 'economic development' is presented in these types of terms. Either we gift tens and hundreds of millions to developers and corporations or we get nothing at all. And we all know that is not the case because we have tons of examples to the contrary.

[dankrutka]

Good luck booking decent conventions with no staple hotel with at least 500+ rooms. The phones will go silent. The emails will go unread and the convention center will end up as a local gathering place for the homeless.

Correct me if I'm wrong, but aren't most conferences OKC hosts local or regional? Is there evidence that a new convention center will attract national or international conferences? I attend about 6-8 conferences a year and none of the big ones will likely ever consider OKC. Just curious how much a new convention center hotel really moves the needle.

[BoulderSooner]

We don't know that this is 135 mil. If they take the money from an existing okc fund we don't pay ourselves interest. 2 weneed a parking garage either way and that money 27 mil of the 37 will come from the copta budget for building parking garages. (Nothing to do with core services)

The worth of the CEO of Omni is not relevant in any way.

[dcsooner]

Councilman Ed Shadid's Facebook page comment on Lackmeyer article:

Robert Rowling, the owner of Omni Hotels, is the 67th richest human on the planet with a net worth approaching $7 Billion. He could do this deal without public subsidies. Instead, he engages in predatory, parasitic behavior in which he extracts enormous sums of money from cities like OKC which are struggling to finance core services.
Assuming that the city is able to sell the revenue bonds at 4% interest, the estimated cost to the city is $135 million when you include interest costs. In addition, the city must spend all of its money before Omni spends a dime thereby allowing Omni to shift interest costs to the city. In addition, the city will essentially provide an interest free loan to Omni who will buy the land over a 25 year period. In addition, the city must builtd a $37 million parking garage plus acquire the land for the parking garage from OG&E. But we are not through: the City is prohibited from subsidizing any hotel in an area defined by Omni which includes essentially all of downtown threatening adaptive re-use projects such as those contemplated at Spaghetti Warehouse etc...Finally, and most importantly, if the hotel does not perform as well as projected and there is a shortfall in paying back our loan from the proceeds, then the shortfall must be paid from the city's general fund which will further erode delivery of core services to our citizens. Imagine a scenario in which the owners of the Thunder demand a new arena from taxpayers (coming in the next 2-6 years IMO) or else they would have to consider relocating to a different area within the Greater Metro or even to another city. Our debt on this hotel provides enormous leverage against us.
OKC is running out of time to diversify its economy. We already face the headwinds of nation leading cuts to public education, and by extension, academic research. If we do not want to end up like West Virginia with its over reliance on a commodity which is going to plummet in value over time, we must diversify our economy as quickly and efficiently as possible. Imagine what an investment such as this might accomplish in an Innovation District centered around the OU Health Sciences Center where industries congregate, exchange ideas and technologies, and spin-off/create new companies. One biotechnology company alone (Selexys), which spawned from such a collobaration, recently attracted a $665 milion investment from Novartis. It is heartbreaking to see OKC put all of its incentive eggs in one basket. With this massive investment in a dying industry full of minimum and low-paying jobs, we will have no powder left to help create the 21st century city and economy our people deserve.

Wow, a sane councilman. This is a BAD "investment of the people's money". OKC growth should warrant investment by a hotelier that believes in the upward trajectory of the city. I wholeheartedly agree with Ed Shadid as should any fiscally responsible citizen. Reject this nonsense, period.

[OkieDave]

We don't know that this is 135 mil. If they take the money from an existing okc fund we don't pay ourselves interest. 2 weneed a parking garage either way and that money 27 mil of the 37 will come from the copta budget for building parking garages. (Nothing to do with core services)

The worth of the CEO of Omni is not relevant in any way.

This is incorrect. Omni does not pay a penny until the City of OKC has exhausted its $85 million commitment. We don't have the money. We have to go borrow it and use future revenue (the property tax the as of yet unbuilt Omni hotel will pay into the TIF, the sales tax from the as of yet unbuilt hotel, some of the hotel/motel tax from the as of yet unbuilt hotel etc..) COTPA has said they do not have enough borrowing capacity to build a $37 million parking garage and that is before we talk about acquiring the land from OGE (I'm sure they will be generous

The worth of the owner of the privately held Omni Co. is relevant in that he has accumulated an amount of wealth which would allow him to complete the deal without a subsidy. It's not that he needs all this public money, its that he wants it while espousing and financing innumerable far right political candidates who espouse whining about government largesse.

[BoulderSooner]

This is incorrect. Omni does not pay a penny until the City of OKC has exhausted its $85 million commitment. We don't have the money. We have to go borrow it and use future revenue (the property tax the as of yet unbuilt Omni hotel will pay into the TIF, the sales tax from the as of yet unbuilt hotel, some of the hotel/motel tax from the as of yet unbuilt hotel etc..) COTPA has said they do not have enough borrowing capacity to build a $37 million parking garage and that is before we talk about acquiring the land from OGE (I'm sure they will be generous

The worth of the owner of the privately held Omni Co. is relevant in that he has accumulated an amount of wealth which would allow him to complete the deal without a subsidy. It's not that he needs all this public money, its that he wants it while espousing and financing innumerable far right political candidates who espouse whining about government largesse.

Actually the city has money in all different pots. And copta has said they have 27 mil of the 37 mil in capability

We need a convention hotel. Period. And our deal with them is better than most

[d-usa]

At this point, why shouldn't the city tell Omni to pound dirt and build and run the hotel themselves? We are already paying for it, why give any company a free contract to operate it and keep the profit?

[Urbanized]

I have mentioned this repeatedly in this thread. Not only do we need adequate room blocks to be able to book conferences and conventions, but to be competitive the prices of these rooms MUST be discounted below market rate. This is standard in the industry. And you CANNOT force a privately-funded hotel to build beyond their natural booking capacity (an Omni would probably build 200-300 rooms if they came at all), and you CANNOT force discounted rooms unless the city is a partner. Public participation allows for more rooms, and allows for discounted blocks.

Regarding not having an attached HQ hotel, if you don't build one it truly WOULD be a massive waste to build the convention center itself, in the first place. You're out of the game, period.

Regarding bookings, even our currently sorry facilities attract national conferences. We lose many many many events currently because of inadequate facilities. Planners want to come here because of our central location and exciting, walkable downtown, but they just can't. Plus, regional and statewide conferences themselves are very good business. These people are bringing money to our economy and dropping it off. It is incredibly clean economic development, which grows our tax base using other people's money. Nobody talks about the influx of taxes and lodging/entertainment conferences and conventions bring when criticizing this effort. By doing so they are being intellectually dishonest.

And it's not just conferences we miss out on. The NCAA and other sports organizations want desperately to make OKC a regular stop for events like wrestling championships, volleyball championships, cheerleading, gymnastics, but the Cox Center doesn't have adequate ceiling heights or clear span. We will see a flood of these events upon completion. Several years ago the NCAA suspended some of their technical requirements for wrestling championships because they wanted so badly to be here. Ask downtown merchants or the City's budget director about the economic impact of THAT event. I'll promise it blew away Thunder games; even playoff games.

As long as we're talking about building inadequacies, we'd might as well discuss the loading dock situation. Currently the Cox Center can't host simultaneous events that require load-in, because they are on top of each other. Our event dates are likely to double or triple with the new facility, and that's not Chamber-driven blue sky election promises. These are real things the CVB sales staff deals with daily.

So, to summarize: incentives are not being used to make some rich guy richer. They are used to entice a hotel to build larger than they would otherwise, to sell rooms below market rate, all while guaranteeing success for all parties concerned, INCLUDING taxpayers. And if we don't build the hotel, we'd might as well not build the CC. Which would be a MASSIVE mistake, and which would turn away ongoing, very substantial economic impact, jobs and increased sales tax revenue all paid for by people who don't live here.