Defying The Law Of Gravity…
The Political Class In Crisis!
Private-Sector Developers "Abandon" Politically Inspired Downtown Hotel Projects
By
John F. Sugg5.17.97
Brought to You By
Tamarind Associates Inc.Let's face it: You can renounce the law of gravity for only so long. When charlatans posing as entrepreneurs pull a rock out of a hat and call it a bird, reality-challenged politicians may be deluded for awhile. But, however good the legerdemain by which the illusionists perpetuate their claim that a stone can fly,
truth ultimately cuts through the smoke, shatters the mirrors and pulls aside the curtains, revealing the self-proclaimed economic wizards as nothing more than very bad snake-oil salesmen.The rock then hits the ground with a resounding THUD!
What did we hear from downtown Tampa last Thursday? Listen carefully, the echoes are still reverberating -- THUD-thudthudthudthudthudthudthudthud!
That was Tampa's convention center hotel crashing and leaving a giant crater in the reputations of its developers, Mayor Dick Greco, the Tampa City Council, a panel of self-serving architects headed by County Commissioner Joe Chillura, The Tampa Tribune and the St. Petersburg Times.
If you want to know what really happened, when your ears stop ringing from TH-thud, cock them towards the Bayshore Boulevard manse of Tampa's arch free-market proselytizer, Harry Teasley. Ever since Thursday's implosion of the plan to build a 700-room Sheraton on a block of land just to the east of the Tampa Convention Center, there has been a roar from Teasley: " I TOLD YOU SO!"
At a Thursday afternoon press conference, Greco and the developers feigned consternation that the ITT Sheraton Corp. had backed out of the $92.8 million deal, after revealing that the only way the project would work was for the hotel chain to ante all of the financing. Taking a look at the numbers, ITT Sheraton did what local officials should have done more than a year ago: Thumbs down.
The press conference had barely concluded before Teasley was on the phone, proclaiming, "They couldn't finance that turkey hotel."
Teasley, a retired Coca-Cola executive and chairman of the Reason Foundation, a Libertarian think tank, is very sensitive to tax dollars being used for welfare. He has good reason for tenderness on the subject -- his annual $50,000 tax bill on his Bayshore home is the highest in Tampa. But Teasley is no hypocrite (generally a de rigueur condition for Tampa's "business leaders."
"I oppose welfare to the lower economic groups because it destroys people," he says. "But I'm equally opposed to welfare to the wealthy and to corporations."
In 1994, Teasley charged onto the Tampa political scene, the last sword defending taxpayers against then-Mayor Sandy Freedman's hotel deal. That scheme would have allowed her friends to cart off millions of dollars each year from the publicly funded hotel. Her cronies would have had no risk and after a few years could have walked away from the deal, dumping a strip-mined hotel and $140 million in debt on your lap. It would have been a fine companion project to Freedman's other legacy, the Florida Aquarium.
Almost the entire power structure was lined up behind Freedman -- other than local hotel owners who would have been devastated by unfair competition from the mayor's tax-exempt inn. The Trib relentlessly pushed the plan. But a slim majority on the council voted down the deal, largely due to behind the scenes efforts by Greco, who was running what amounted to a government in exile at the time, and Teasley, who paid for a poll that showed overwhelming taxpayer discontent with Freedman's plan.
A year and a half later, Greco had his shot at a hotel plan. He asked Teasley to analyze four proposals. " I want to be sure the market will support the hotel we choose," the mayor told me at the time. But forces were lining up against a truly market-driven plan. One of the deals favored by Teasley, the Hilton, initially asked the city to build a $21 million annex, primarily for parking. Eventually, the Hilton group agreed to absorb that cost, making it essentially an entirely privately funded plan. Another deal also was privately financed but had problems with a design that would have placed the hotel atop the convention center. The other two proposals, including a resurrection of Freedman's grotesque Marriott plan, called for substantial public subsidies. So, the Hilton should have been the winner right? Wrong. You forget that this is
The Insiders Socialist Republic of Tampa, where the rule is: " From every citizen according to however much can be squeezed, to each member of the downtown Establishment according to their current favor with local politicians."First, the Hilton design was attacked. The designer was a Tampa architect, Carlos Alfonso, and that created twitching envy among his local competition. Thus, an architectural review panel, assembled by Chillura, an architect, came back with an illogical and self-contradictory report that said the best design was one by an out-of-town firm -- no local toes would be stepped on. For astoundingly unclear reasons, the panel objected to the Hilton site, a lifeless piece of city land and a useless fountain next to the convention center.
Freedman's hotel would have been planted on a block controlled by her pal Joe Taggart, whose multitude of failed projects made him a poster child for the real estate debacles of the late 1980s. Taggart had powerful friends, as did his successor on the hotel site, Mac Greco Jr., the incredibly wealthy heir to the Kash 'n Karry fortune (no relation to the mayor).
The Sheraton group also picked that site -- because of the political pull of the landowners. Both the daily newspapers gushed editorials praising the location and the deal, despite the unholy cost to the taxpayers.
Ultimately, Mayor Greco bowed to such pressure and selected the Sheraton, despite, as Teasley's analysis noted, the deal had little real equity and the cost of the land (Taggart and later Mac Greco Jr. wanted about treble the market price) was prohibitive. The public subsidy was in the form of annual payments of $1.44 million to $2.44 million for 19 years -- supposedly offset by increased real estate taxes the city would receive.
Does the city send you a check to offset your property taxes on your home or business? Should a particular business get such a break? Of course not. And, as Teasley says, " It proves that this deal couldn't work in a free market."
Once the Sheraton's developers -- the Garrison Place Partnership -- got the deal, they started trying to change it. According to city officials, they covertly attempted to get Greco to have the city buy the land --even though one of the developers had become a partner in the dirt and had then jacked up the already exorbitant price. Conflict? Hell, just business as usual.
For months, the developers have been seeking extensions in city deadlines, promising that financing would materialize any day. Teasley, who knows the financial markets, laughed at the promises. For that matter, so did the Weekly Planet. While the daily newspapers were pandering to the ill-conceived Sheraton deal, the Planet said in February, March, April and December 1996, and in March of this year that the financial dead weight of the Sheraton just wouldn't fly.
The fact that the deal has failed should only provide momentary comfort. The Marriott developers are sure to push for their project again -- complete with the city underwriting the bonds. They say that "someone…" probably the Marriott chain, will guarantee the bonds for as many as 15 years, but they will still be bonds for which you and your children are ultimately responsible. And there will be additional costs to the city, you can be sure.
The Hilton developers, meanwhile, still have the only feasible clean deal. If they had been selected in February 1996, the hotel would be nearing completion. The Hilton group also redesigned their project so that it will be on a parcel adjacent to the convention center and won't take out the city's underused park and fountain. Which makes it very logical and very free enterprise. That's a damna
ble offense in Tampa.
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