Mr.

Natinsky,

At your request, we have been evaluating the potential impact of both Propositions 1 & 2.
Keep in mind, we are not attorneys. However, we do have a clear understanding of the
tools we use to incentivize economic development and keep our city competitive. It is our
determination that many of the tools in our economic development toolbox – tools other
cities have - will be eliminated or brought into serious question by passage of either or
both Propositions.

Proposition 1:

• Appears to apply to all hotels and other lodging facilities, not just the proposed
Convention Center Hotel or publicly owned hotels. This includes privately
owned hotels, extended stay hotels, and other lodging facilities that provide
lodging to the general public. It appears it does not affect dormitories, jails,
shelters, or halfway houses, and does not appear to extend to apartments and other
facilities that utilize rental agreements. It seems to allow assistance for hotels or
lodging facilities located wholly within the boundaries of the Dallas/Fort Worth
International Airport, but not at Love Field where we are just beginning to build a
new terminal.
• Prevents the City from directly or indirectly using City money in the form of
incentives in connection with the renovation, reuse and redevelopment of existing
privately owned hotel projects.
• Prevents the City from providing City funding for mixed use developments that
include hotel or other lodging facilities as a component of the mixed use project.
• Prevents the use of façade easements in connection with a hotel project.
• Prevents the use of 380 economic development grants to hotel projects or mixed
use development projects that include a hotel component.
• Also affects City’s ability to offer other incentives (Bond funds, hotel related
infrastructure improvements, sale of city property for less than fair market value)
for future hotel projects.
• The language does not prohibit the “adoption of a tax increment financing
district” but it makes no allowance at all for the use of TIF funds from new or
existing districts. Some might feel this is implied, but without a specific
exception, we must assume the author meant to exclude the use. At best, it creates
ambiguity and will likely have to be decided in court, which in itself hinders our
ability to negotiate with developers.
• Could affect City’s ability to incentivize historic preservation projects involving a
hotel. Several historic structures in Dallas have been restored using hotel
development projects - which required some City assistance. You may recall, the
Council recently approved a 380 economic development grant of $4.3 million for
the Aloft Hotel project at the historic Santa Fe Terminal. Proposition 1 could limit
our future assistance if the preservation project involves a hotel.
• Treats hotel projects differently from other economic development and job
creation projects.
• Prevents the City from providing City funding for infrastructure and streetscape
improvements in connection with the development or expansion of a hotel project
or a mixed use project that includes a hotel component.
• Calls into question ability of City to acquire hotel projects (other than by
foreclosure process) for other city purposes.
• Affects City’s ability to utilize state law pledge of certain city hotel taxes in
support of a privately owned convention center hotel located on city owned land
within 1000 feet of the convention center.
• Affects the Convention Center Hotel project and ancillary development even if
the City was to decide to have these improvements privately financed. The City
could not directly or indirectly use City funding to assist the project.

Proposition 2:

• Requires voter approval of City’s “financial assistance” if within 60 days after

posting the Public Notice, a petition signed by at least 500 Dallas residents is
submitted to the City Secretary.
• Applies to a “Private Development Project” to which the City or an entity
controlled by the City provides over $1,000,000 of financial assistance.
• A private development project is a project a primary purpose of which is to
construct or aid in the construction, renovation repair or alteration or remodeling
of a

o Hotel
o Convention Center
o Luxury residential condominium
o Retail facility
o The infrastructure related to a hotel, convention center, luxury
residential condominium, or retail facility
o Excludes retail development projects with less than 50,000 square feet that
serve subsidized residential development
• Financial assistance includes:
o A grant of tax concessions or relief for the project (tax increment financing
or tax abatements)
o Authorization of any form of City debt in support of the project
o Expenditure of public funds or the exchange, grant, sale or lease of City
owned land for less than fair market value for the project.
• The proposed charter language does not provide clear definitions of terms,
creating gray areas that will likely have to be decided by a court.
o Does not define what constitutes a luxury residential condominium project
leaving all condominium projects in questions. Luxury could stretch over
any price and quality range, depending on the person making the
judgment.
 o Does not define “primary purpose.” Many mixed use projects will have
apartments, retail, office or other components. Some might be allowed,
others not. But without a specific determination as to what the primary
purpose is, it creates ambiguity. When competing with other cities,
ambiguity does not work in our favor.
• Delays development projects significantly. It requires the City to provide at least
65 days public notice prior to approval of such “financial assistance” over
$1,000,000 to a hotel, convention center, luxury residential condominium or retail
project and related infrastructure. Then delays projects further because elections
can only be held on uniform election dates in May or November. This drives up
construction, material and funding costs, and means the developer would likely
have to fund an election campaign as well.
• Affects City’s ability to issue debt or expend city funds in excess of $1,000,000
for the construction, renovation, repair, alteration or remodeling of its own
Convention Center or related infrastructure improvements to the Convention
Center without first providing the 65 day Public Notice and a possible election. If
the Convention Center were damaged or needed critical expensive repairs, we
probably could not proceed until an election was held.
• Potentially affects the City’s ability to offer similar types of incentives (tax
increment financing, tax abatements, 380 grants, bond funds, etc.) previously
authorized or used in support of hotel projects (such as the Reunion Hotel, Joule
Hotel, Stoneleigh Hotel, Tower Petroleum Hotel, Santa Fe IV Aloft Hotel, Adams
Mark Hotel), luxury residential condominium projects (such as Lake Cliff Tower,
The Beat, and Metropolitan), retail facilities (such as Sierra Vista), and,
potentially, mixed use projects (such as Lake Highland Town Center, Park Lane
Place, One Arts Plaza).
• Could seriously hamper the City’s ability to assist with restoration and
preservation of historically significant structures. The City has assisted with
numerous preservation projects that involve hotel, condominium and retail
components (Dallas Power & Light, the Mercantile, the Metropolitan, the Joule
Hotel, Lake Cliff Tower, The Aloft, the Interurban/Urban Market, the Davis
Building, the Kirby Building, and others.) Future preservation projects that have
retail, condo or hotel components will likely be impacted.
• In many areas of the City we are contemplating projects that include retail. As is
stated in the proposition, any of those including more than 50,000 square feet
would be subjected to the questions and delay cited above. These additional
challenges would be added to the already difficult barriers we currently face in
making these investments possible.

Again, from our study of the proposed Charter Amendments, these are the concerns we
have regarding its impact on economic development.

A.C. Gonzalez