City official spins for hotels that owe Houston big bucks
The Chronicle's Matt Stiles reports that the White Administration is still dealing with another of the Lee P. Brown administration's messes:
Two downtown hotels that have fallen seriously behind repaying $15 million in city-sponsored loans could get a break from Houston City Council this week.
City officials said giving the Crowne Plaza and Magnolia hotels more time to pay was better than foreclosing on them.
"We decided that the better course of action was to restructure the loans," said John Walsh, Mayor Bill White's deputy chief of staff for neighborhoods and housing.
Walsh said the hotels suffered from the economic downturn after the Sept. 11 attacks and the collapse of Enron.
Really, Mr. Walsh?
In February 2005, Anne Linehan linked to a KHOU-11 story with these interesting tidbits:
It starts with the Magnolia Hotel, downtown's self-proclaimed new standard for luxury complete with a lavish lobby, a beautiful billiards room, and rooms that can rent for $200 a night.
"Our mission is to revitalize downtown with beautiful new hotels," says the owner Steven Holtze.
He's a hotel tycoon.
"We have three: Denver, Dallas ...," he says.
But at the Houston location, it turns out he had some help -- a $9.5 million dollar loan backed by the city three years ago. The only problem? In all that time, the Magnolia hasn't paid a dime of it back, missing payment after payment even though Holtze says the hotel's making a profit.
"We actually had a pretty, real good year last year," says Holtze.
[snip]
The general manager of the Crowne Plaza Hotel told 11 News they're not having money problems either, but said for now their lawyers have advised they don't have to pay the loan.
John Walsh's excuses for the hotels simply don't match statements from the hotels' own executives. The hotels may have had problems after Sept. 11, but the hotels' executives admit their finances were fine by 2004, and that they were not paying for other reasons. Perhaps it was unintentional, but it is nonetheless annoying when city officials mislead the public through the news media about public finances.
Tom Kirkendall sums up this mess left behind by Lee P. Brown perfectly:
[T]he 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.
Posted by Kevin Whited @ 08/08/06 11:57 PM | Print |
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