In an era of tightening credit and equity markets, the Astrodome Hotel idea — which never gained enough traction to become an official boondoggle — finally appears to be on the ropes:

The developer endorsed by Harris County to transform the Astrodome into a 1,000-room destination hotel complex has missed two deadlines to show suitable proof of a financial partner for the $450 million project.
An August 2006 letter of intent signed by the county and Astrodome Redevelopment Corp. outlined various milestones to be met in the process.
When proof of funding did not meet the specified December 2006 deadline, the county granted an extension to March 1.
Scott Hanson, president with Astrodome Redevelopment, found a New York bank interested in backing the mammoth development. County officials were not satisfied with the commitment as presented. [. . .]
Says Hanson: “It’s happening. It’s just a timing issue. Sometimes the wheels don’t turn as fast as we’d like them to.” [. . .]
The developer wants to enter into a definitive agreement with the county this year on the project, and hopes to begin construction by early 2008.
“I think that’s probably aggressive,” says Mike Surface, chairman of the Sports & Convention Corp.
“These projects wind up taking a lot more time than you anticipate,” he adds. “There are still a lot of approvals that have to take place.” [. . .]
“We’ve come a long way … but there is a long way between now and getting a deal inked,” Surface says. “For people to start booking their rooms today is a bit premature.”

Translation: This deal, which always has had earmarks of being a pipe dream, is on life support. The problem with procrastinating about demolishing the Dome and using the land for a better use (i.e., badly needed parking at Reliant Park) is that the Dome continues “to eat” — that is, Harris County continues to pay between $1.5 and $2.0 million a year just to maintain it on a mothballed basis. That’s an expensive price to pay while Harris County Commissioners chase rainbows. The only thing surprising to me about all this is that we’ve been talking about it for almost three years now!
Update: A very bad idea.

The dubious economic nature of Houston’s light rail system is a common topic on this blog, so I took interest in this insightful Warren Meyer post that ponders why a light rail system is being built in Warren’s hometown of Phoenix, which is one of the few metro U.S. areas that may be even less conducive to such a system than Houston.
Given the inefficiency and inflexibility of such systems, Warren wonders who supports such boondoggles and suspects that a few powerful businesspeople are using the rail line in an effort to jumpstart the misguided goal of establishing a dominant downtown area in the decentralized Phoenix metro area. Add in a few high-minded environmentalists and many others who are simply ignorant of the enormous cost relative to the benefit of such systems and, as Peter Gordon wryly-noted awhile back:

“It adds up to a winning coalition.”

Unfortunately, as another Phoenix-area resident — Nobel Laureate Ed Prescott — reminded us recently, once such coalitions are successful in establishing a governmental policy subsidizing such boondoggles, it is much more difficult to end the public subsidy of the boondoggle than to start it in the first place.
By the way, Houston Metro’s subsidy of its light rail system has other perverse effects, such as the lack of security for one of the transit options that actually makes sense for the Houston area.

Following on posts here and here from last year regarding the City of Houston’s ill-advised investment in several downtown hotel properties, this Matt Stiles/Chronicle article reports that the City had decided to “restructure” (translated: Can you please pay us something?) $15 million in second lien loans on the Magnolia and the Crown Plaza hotels in downtown Houston rather than attempting to foreclose on the properties and deal with the messy business of attempting to eke out a profit from the two highly-leveraged properties in an overbuilt downtown hotel market.
As noted in this previous post, the Magnolia and Crowne Plaza are poster projects for why local governments should rarely get involved in financing projects that private financing sources will not support. In reality, the City is nothing more than a preferred equity investor in these highly-leveraged properties and, thus, its entire $15 million investment is at serious risk of being lost. That type of loss is not going to break the City of Houston finances, but the quality of the City’s investment decision should give one pause when considering the amount of money the City is throwing around in regard to these equally dubious investments.