Kevin Whited and Cory Crow continue to express amazement at the delusional nature of county officials and the Houston Chronicle over the proposed Astrodome hotel project that is now in its fourth year of being bandied about. The latest Chronicle effort to breath life into this boondoggle is this weekend article that carries the following headline:
“Dome plan could bring in millions”
“Report also says hotel would have 72 percent occupancy rate”
More realistically, the headline could have read as follows:
“Dome plan could cost County millions”
“Report says that hotel would have only 72 percent occupancy rate”
All depends on one’s point of view, eh?
Given my extensive blogging on this boondoggle, I won’t go into all the reasons why converting the Astrodome to a destination hotel is unlikely to happen without a large public subsidy. Suffice it to say that if private financing for Astrodome hotel could not be arranged over the past several years when the market for such financing was quite good, then it’s not going to happen in the foreseeable future now that credit and equity markets have pulled back from such speculative investments. So, if this deal is going to proceed, then get ready to provide a bountiful public subsidy for it.
However, one name mentioned in the Chron story reminded me of an instructive legal matter I handled back in the mid-1980’s. The matter involved an Astrodome-area hotel that had been promoted to investors and built immediately before the bottom fell out of the local commercial real estate market when the price of oil and gas tumbled to record lows at the end of 1985. I ended up representing the promoters, who had guaranteed a large portion of the construction financing on the hotel.
During the year or so that my clients owned the hotel, it never came close in any month to generating enough revenue to cover the operating expenses of the hotel, much less generating anything for my clients to use to pay debt service on the construction financing. Not surprisingly, the bank eventually foreclosed on the hotel. The promoters and investors lost their entire investment in the hotel.
Guess who the consultant was who prepared the glowing feasibility study that helped persuade my clients to promote and finance that boondoggle?
Yup. John Keeling.