Why all the hubbub?

April 21, 2019

Regardless of which way you fall on the proposed downtown convention headquarters hotel, this week should be a big one.

On Thursday of this week, the Abilene City Council will take on the hotel Master Development Agreement (MDA), which comes on the heels of two other Council actions including the creation of a Local Government Corporation (LGC) and the creation of bylaws that will guide the LGC.

It’s been three and half years, folks. That’s the entire time I’ve been privileged to call Abilene, Texas, my home. I’ve watched, I’ve listened, I’ve learned, I’ve gone through the ups and downs that come with most development projects. Here’s a bit of perspective from where I’ve sat through this process of helping to build a model that will bring value to our city, our taxpayers and those who call Abilene home.

Before I go into my view, let me say this: I don’t know of one single person who stands to gain anything financially from the deal that has been assembled. Except, perhaps those who might choose to buy the bonds. This opportunity is about Abilene, Texas, and the long-term sustainability of a livable city where businesses flourish and private investment can be made. It’s about progress, leverage and creating a place where current and future workforce want to live and invest.

So here goes:

One: the idea that our market can support a full service hotel has been confirmed not only by the sheer numbers of groups and organizations who’d like to conduct their meeting or convention in Abilene, but there are two market analyses that have been completed by world-renowned firms that substantiate that belief. These firms don’t make stuff up – if they did, they’d be out of business. Lending institutions, private investors, communities and many others rely on the accuracy of their data every day to make risk-based decisions. Do their opinions make a project foolproof?  No. Things happen that can disrupt a market. However, it is highly unlikely that something occurs that completely melts-down the Abilene and United States markets. No one made this stuff up. No one “winged” the conclusion that Abilene can support a convention hotel. It’s based on fact.

Two: the Development Corporation of Abilene (DCOA) rolled out a plan in 2016 that provides an economic development roadmap for our city. That plan, which you’ve heard me refer to as the TIP Strategy, says we should pursue “strategies that stretch Abilene’s leadership to embrace an approach that moves the community beyond economic development as it is traditionally practiced. It is our view that Abilene’s long-term future prosperity will not be secured through industry attraction. The area already enjoys low unemployment. In actuality, the biggest economic development challenge facing the community is not generating new jobs; it is developing, retaining, and attracting the talent that can fill existing and future need.” Again, those words were written by a third-party, world-class authority. 

What that means is this: communities that Abilene competes with for jobs and capital investment know that companies go where the workforce is. And, like many other cities in the United States, Abilene is nearly 2,000 short of what we need to fill current openings alone. How do we reverse that? Well, there are many ways actually, but one is to invest in the product we’re selling (which is our city) to those looking to invest.

We also know from tremendous research that young folks, your kids and my kids, want to be in a place that’s alive. The careful and prudent investment in our city’s heart helps to make that happen. I’ve read and heard that downtown is dead, and I’d beg to differ. Last week alone, we met publicly to talk about all the energy and investment that’s taking place in our city. More than $100 million is either in the pipeline as potential public/private investment or it’s already underway. 

In fact, a whole bunch of people went to Austin during the last legislative session and did something some folks said couldn’t be done – they got the legislature to agree that the occupancy tax and the sales tax that the hotel generates can stay in Abilene, rather than being sent to Austin and can ONLY be used toward bringing this project to bear. The funds can’t be used for the Expo Center, they can’t be used for roads or police or fire. And, thanks to the generosity of local Foundations who love our city as much as we do, the city’s risk has been minimized.

Here’s what one such young, local downtown investor said:

“I believe that in order for Abilene to thrive, we need to attract and keep young people who have opportunities to live and work elsewhere. Abilene faces tough competition for this demographic. And a large portion of this demographic wants to live and work in an urban (as opposed to a suburban) setting. I believe the (proposed) hotel will provide crucial momentum to the development of our urban core that excites, attracts and retains a new generation of Abilenians.”

-John Scott, Parramore Square (located at North 7th and Orange Streets)

John said it well. The harsh reality is that until we attract workers, companies who are looking for a site location will continue to look at markets where they can find people to fill the new jobs. And with them go the taxes they pay. And the opportunity for our neighbors to work. And other businesses to do businesses with them.

Another question I’ve heard is this: “if Abilene is such a great place for a downtown hotel, why isn’t there one already here?” So you know, people in our community likely had a similar conversation more than 60 years ago when local leaders went to Washington to bring an Air Force base to our city. I’d bet people thought they were crazy. What if they hadn’t done that? What would our community look like today without the hundreds of millions of dollars generated by Dyess that flow through our community? There is no great city – let me repeat that – there is NO GREAT CITY anywhere that doesn’t invest in itself.

Finally, let’s talk about leverage. The only funds that can be used for general purposes account for just 3.6 percent of the total project cost. That’s roughly $2.4 million out of an investment totaling more than $66 million. In other words, if you gave me less than four cents and I gave you a dollar, wouldn’t you think that’s a pretty good deal? And even with that kind of leverage, the city hopes to repay itself for that $2.4 million over time.

Before I close, I’d like to point out two things. One, the jobs created by this hotel are only jobs created by this hotel. At an average wage of roughly $36,000 annually (many will pay more), that isn’t the real impact of the project. This hotel will buy things. Insurance. Linen. They’ll have it laundered. They’ll buy food and beverages. The trickle-down impact is significant. In fact, just in the early economic impact analysis alone the hotel project is projected to generate more than $376 million in direct economic impact in our city and another $201 million in indirect impact over the next 20 years. I believe those numbers are conservative.

Here’s the last thing. There are six active members of our city council who need to hear from you, regardless of where you stand on the issue. The vote is Thursday, and a simple email with support or one to express concern can and will go a long way for these public servants. Take a moment to weigh in by writing all six council members (including the mayor) at one email address: Council@AbileneTx.gov.

They want and need to hear from you. Please email the city council today – and encourage others to do the same.

Onward!

Doug

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