Last March, Houston’s convention bureau held public meetings about the city’s desire to lure a luxury hotel brand to town. The proposal recently passed the initial hurdle and will now undergo more negotiations before getting to city council, which will determine whether taxpayers should be forced to cover the costs of bringing the luxury brand to town.
At Houston First’s March meeting, attendees threw out claims about the hotel’s ability to “reinvent” downtown, saying it was “necessary.” Yet many of those supporters’ only interest is the claim to fame of having a luxury brand in the city. The W Hotel should come to Houston, but shouldn’t receive tax breaks to do so.
When Houston First issued the initial request for proposal in 2014, it said that the developer would own, operate, and finance the hotel and no local rebates or tax abatements would be provided. However, that tune changed when the Houston First board met in late August to give preliminary approval to the proposal. This paved the way for continued discussions between the entity and the developer. The initial agreement with the developer, Texas Hospitality Partners, includes $42.6 million in state and local tax rebates.
According to local reports, developers would receive rebates of the state hotel occupancy tax and sales tax for a decade, a portion of the city’s hotel occupancy tax for 12 years, and city property, sales, and mix-beverage taxes for 12 years, plus a 16-year rental abatement for their lease.
The project is planned to cost $120 million, have 308 rooms, generate over $14 million in revenue annually, and, allegedly, create a minimum of 275 permanent jobs.
But the proposal didn’t win everyone over.
The contract was approved 8-2 with board members Katy Caldwell and Nicki Keenan opposing the agreement. Texas Scorecard reached out to both board members for statements on their votes but did not receive a response by time of publication.
The agreement is set for one more review by Houston First before going to city council for final approval. Council would be wise to hold Houston First to their original request for proposal and disregard any tax incentives requested by the developers. Chapter 312 tax abatements, those given by cities and other local entities, cannot exceed ten years and have only been in existence since 2001. Before these targeted giveaways, cities successfully recruited businesses to set up shop within their boundaries. With the right regulatory climate, they can do so again.