Hightower Hotel Ready to Wreak Havoc?

Shreveport Mayor Keith Hightower triumphed when the state Bond Commission approved 11-2 to allow the sale of $40 million to finance the city’s convention hotel. But a larger question remained about the viability study which may have made a difference in the final vote.

At first, the two Louisiana Tech researchers who compiled the report had serious misgivings about the profitability of the hotel. Panicked at this conclusion, the Hightower administration relayed further information to the pair who then revised their results.

The additional information was that the city was going to dedicate sales taxes from the hotel toward debt service, as well as reminding the analysts that the city would not have to pay property taxes on this city-owned property. That turned a projected roughly $355,000 deficit into a $512,000 profit, annually.

Yet let’s think about this for a moment. First, while the city wouldn’t be paying taxes on the land, that also means that the city is beggaring other local jurisdictions out of property taxes such as the Caddo Parish School District and Caddo Parish. You might argue that this may be all come out right for these other bodies because the extra business generated by the hotel from conventions will help out some in the additional sales tax assessments (even if it is unlikely so much could be generated to make up for that lost property tax revenue).

But note the guiding assumption here that the hotel, courtesy of the convention center, will enable additional revenues to be generated above and beyond existing lodging revenues. This is by no means guaranteed, particularly in light of the fact that, as a recent Brookings Institution report made clear, convention business continues to stagnate and as more pressure builds in Texas to legalize some more forms of gambling (oops, “gaming;” gambling is prohibited by the Louisiana Constitution) whose citizens provide 60 percent of Shreveport-Bossier’s casino business, by the time the hotel would open in 2006 the market may be considerably smaller than it is now.

More likely the new hotel would simply steal business from the private sector, in essence taking the sales tax revenues derived from private-sector hotels that would have gone into the city’s coffers to fund other services. In short, this project likely is going to rob Peter to pay Paul, and in its wake shrink the private sector in lodging. This cannot be good in the long run, a city running hotels and driving private interests out of business and not generating any additional revenue for its citizens compared to if it was not a hotelier.

It’s almost certain that the hotel now will be built. And any projected losses to the city probably won’t be detected until, or can be obscured by, Hightower when he leaves office at the end of 2006, itching for a run for the state Senate in 2007 or possibly Congress in 2008. Hightower’s political career may prosper as a result of this, but the odds are a lot longer that Shreveport’s citizens will also as a result of this.