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Downtown Commission gets glimpse of second proposed convention hotel

Thursday, July 21, 2011 by Josh Rosenblatt

The city got its first look at another proposed convention center hotel at last night’s meeting of the Downtown Commission. The 1,100-room hotel from the San-Diego based Manchester Texas Financial Group would be the second large hotel going up over the next few years to accommodate increased tourist traffic downtown.

 

At its June 29 meeting, City Council approved waiving $3.8 million in development fees for a 1,000-room hotel on Congress Avenue between Second and Third streets to be built by White Lodging Services.

 

During a presentation to Council on the White Lodging project, Bob Lander, the president and CEO of the Austin Convention & Visitors Bureau, said that Austin has become such a popular spot for tourism and convention use that developers are willing to give up the usual generous subsidies, believing investment in Austin will pay for itself quickly.

 

In the past several years, Lander pointed out, cities like Denver, Phoenix, and Fort Worth have spent tens, even hundreds, of millions of dollars to attract convention hotels. Real estate developer Perry Lorenz, a partner in ownership of the Manchester project site, said Manchester and White Lodging are two of the very few companies that can afford developing large-scale projects without generous city subsidies.

 

“These companies don’t have to pay a big return to the equity investment, and they’ve both landed in Austin, Texas, which is truly an amazing thing,” Lorenz told In Fact Daily.  “And I think that there’s a feeling in the city now that if people are flocking here to spend that kind of money, why would we ever give anybody subsidies or waivers? People say, ‘They ought to be paying us.’

 

“Austin is in the spotlight all over the world, and to have these individuals wanting to invest downtown is an amazing thing.”

 

The site of the Manchester hotel — which will include 600-800 indoor parking spaces and 100,000 square feet of meeting space, and which the developer believes will cost about $350 million – is in the Waller Creek Tax Increment Finance (TIF) District, meaning the ad valorem taxes on the property will pay for the construction of the Waller Creek Tunnel. Lorenz says that Manchester’s desire to build in the TIF is proof of the value of the tunnel project and the possibilities of downtown development.

 

“From the financial standpoint of the city, the most important thing is that this project is in the Waller Creek TIF,” said Lorenz. “I think this is a signal to everybody that people, even from outside of Austin, understand the great thing that the whole Waller Creek Corridor is going to be. I think the creek has a lot to do with why Manchester is here.”

 

Speaking to the Design Commission as the representative of what he called the “next generation of Manchester Financial Group,” Douglas W. Manchester, president of the Manchester Texas Financial Group and son of Manchester Financial Group Founder and Chairman Douglas F. Manchester, expressed hope that the hotel would be a “catalyst to major improvements on … Waller Creek.”

 

He also said he would expect “the same courtesy to be handed toward us as was to White Lodging” in terms of development fee waivers.

 

It’s still early in the process, so it’s hard to tell whether the Council will agree with Manchester.

 

Group founder Douglas F. Manchester caused controversy three years ago when he donated $125,000 to Proposition 8, the measure banning gay marriage in California, and he could turn out to be a lightning rod in the coming months as the city considers fee waivers for the project.

 

Following a boycott of the Manchester Grand Hyatt Hotel in downtown San Diego, Manchester apologized for his support of Prop. 8 and donated $25,000 in cash and $100,000 in hotel credit to various lesbian, gay, bisexual, and transgender groups. But many gay rights and human rights groups openly questioned the sincerity and timing of Manchester’s apology, claiming he was only concerned about loss of revenue due to the boycott.

 

But Lorenz believes Manchester’s contrition should be taken at face value and should open the door to the city supporting the convention hotel project.

 

“My official position is that I’m disappointed he did that; I don’t support that kind of thing at all,” Lorenz said. “However, two years ago he offered a huge public apology and said he regretted it and wished he hadn’t done it. He has long since paid as much money in in-kind contributions to LGBT causes as he ever gave to the Prop. 8 people. Obviously for some people there’s nothing he could ever do or say to compensate for it, but my attitude is: ‘Isn’t it what we want, for people to concede that they were wrong, to be contrite, to be generous to the cause they used to oppose?

 

“I’m not going to just slam the door in the face of someone who’s apologizing.”

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