Stick It to 'Em!

Want to throw the fear of God into Phoenix elected officials, downtown business tycoons and their self-serving cheerleaders at the Arizona Republic?

Want to get them to finally pay attention to you, the little guy, whose taxes keep getting sucked up into massive big-box projects that line the pockets of the wealthy and do nothing to make downtown Phoenix more beautiful, much less more livable?

Want to save taxpayers more than $600 million for the construction of the new convention center and from the huge operating losses it will certainly generate for decades to come?

Want to screw with the elite -- just for the hell of it?

Well, now's the time to strike.

And here's how.

Back in 1989, a group of angry citizens, honked off over plans by the city to build a domed stadium and an amphitheater, launched an initiative drive that resulted in the passage by Phoenix voters of Proposition 200.

The proposition became Chapter 27 of the Phoenix City Charter, and it puts a tight clamp on how much money the City Council can spend on grandiose projects without voter approval.

"The city shall not expend public funds, grant tax concessions or relief, or incur any form of debt in an amount greater than three million dollars . . . to aid in the construction of any amphitheater, sports complex or arena, stadium, convention facility (emphasis added)or arena without approval of the majority of the electorate voting thereon at the next general election."

Well, folks, the Phoenix City Council last month approved a $350 million project to own and build a massive, 1,000-room luxury hotel that is absolutely an essential part of the city's $600 million expansion of the convention center at the Phoenix Civic Plaza.

Recognizing the restrictions imposed by Chapter 27, the city obtained voter approval in November 2001 to spend $300 million to triple the size of the convention center. The Arizona Legislature agreed to advance another $300 million in 2003 to cover the balance of the four-year construction project that has just begun.

But the City Council never brought the hotel before voters, despite the fact that it clearly is an essential part of the convention center expansion project.

More than 70 percent of the business at the city-owned hotel is projected to be tied directly to the convention facility. In fact, the city's hotel consultant says that the center will fail without the hotel.

"The renovation and expansion of the Civic Plaza and the development of the [hotel] are reliant on each other for their ultimate success," stated Richard Warnick, a hotel consultant hired by the city to review the project, in a December 1, 2003, memo I obtained through the Arizona Public Records Law.

"The [hotel] would not be viable if the Civic Plaza were not upgraded and expanded as currently planned," Warnick wrote in the memo to Pat Grady, director of the city's Economic Development Department. "Conversely, the lack of any substantial new hotel development in downtown would seriously undermine the success of a newly expanded Civic Plaza."

If that's not enough to demonstrate that the extravagant hotel is joined at the hip to the convention center, listen to what David Krietor, Mayor Phil Gordon's chief of staff, has to say:

"This is a convention hotel. This thing has to work!"

Hmmm. So if the hotel is a "convention hotel," and the success of the convention center hinges on construction of the hotel, it sure seems to me that a reasonable argument could be made that the hotel is, in fact, a convention facility.

And, if that's the case, it would appear that Phoenix voters, not the City Council, must approve the issuance of $350 million in bonds to be sold to raise money to build said hotel.

Why haven't you heard anything about this nifty provision in the city charter? The answer is distressingly simple. The state's largest daily newspaper has conveniently ignored Chapter 27 to avoid giving wary citizens a powerful tool that could derail the long-sought-after third hotel.

Councilman Tom Simplot was the only no vote when the City Council approved the hotel project 8-to-1 on June 16. Simplot tells me that he is philosophically opposed to the city going into the hotel business.

The question of whether voters should approve the hotel project did come up during council debate, Simplot says, but the city attorney told the council that the hotel wasn't technically a "convention hotel," but rather a "downtown hotel."

Simplot says the city "is splitting hairs" in a game of semantics to keep the hotel from going to a public vote. Simplot says he has no plans to personally seek a public vote, but that he would support others who do.

Thing is, it only takes one Phoenix resident with a smart lawyer to muck up the city's fast-track plan to build the luxury hotel on the northwestern corner of Third and Van Buren streets.

Are you hearing me correctly, concerned citizens?!

Any Phoenix taxpayer can file a special claim in Maricopa County Superior Court, challenging a city expenditure believed to violate Chapter 27. If the court upholds the claim, the city cannot spend the money.

It's as simple as that. And if the hotel project goes down, the entire civic center project could be thwarted, given the premise advanced by city hotel consultant Richard Warnick that the two are inextricably linked.

Yet Mayor Phil Gordon says he doesn't believe the hotel project is subject to voter approval. Gordon points to a 1999 Maricopa County Superior Court ruling that said a proposal by the city to enter into a joint venture with developers to build two downtown hotels was not subject to voter approval under Chapter 27.

That ruling took place four years, however, before the city and state approved construction of the $600 million convention center -- and long before city officials and their consultants publicly proclaimed that the success of the convention center hinges on construction of the 1,000-room hotel.

Satya Thallam, a fiscal policy analyst with the Goldwater Institute, a Phoenix conservative think tank, is strongly opposed to the construction of the convention center and the city-owned hotel. Thallam didn't know about Chapter 27 of the city charter until I told him, and he was thrilled at the news.

"I am going to be looking at this very closely," he vows.

Thallam became immediately convinced that the hotel is indeed a convention facility under the spirit of Chapter 27, but that doesn't mean a court will agree.

"Now, the question is whether legally a hotel of any kind is a convention facility," Thallam says.

It's time to find out if the city's latest foray into the private marketplace must first be approved by voters. A lawsuit seeking to enforce Chapter 27 would trigger a tumultuous public debate over the merits of a city-owned hotel and stymie civic center construction.

Talk about bringing the city to its knees.

The current convention center has long been a catastrophe for taxpayers, losing more than $35 million a year. The convention center sharply discounts its booking fees to lure conventioneers, who have long complained about the bleakness of downtown Phoenix.

Even with the sharp discounting, the existing center has barely been able to keep one of the two major downtown hotels in the black. The Wyndham emerged from bankruptcy in 2002 and has had six different operators in last two decades.

Despite the massive operating losses of the current facility, the city is taking the absurd position that, by tripling its size, the operating losses will somehow disappear. This is nothing more than wishful thinking based on rosy economic projections that have repeatedly failed to materialize in convention center expansion projects in other cities across the nation.

Indeed, the nation is awash in convention space at a time when business travel is stagnant, partially because the Internet has seriously reduced the need for big conferences.

Of course, voters didn't know how much money the convention center was losing during the 2001 campaign led by former Mayor Skip Rimsza, who claimed that a bigger convention center would somehow be better. The Republic never bothered to report that significant fact.

During the propaganda campaign staged by the city and the Republic, there also was never any public discussion about the city getting into the hotel business. In fact, it was assumed that, once the convention center expansion was approved, hotel operators from across the country would be banging on doors of city hall to build a luxury hotel in downtown Phoenix.

Whoops! The private market came back with bad news. No private developer on the planet was willing to build a 1,000-room convention hotel in Phoenix -- even with construction of the new convention center -- unless the city kicked in $60 million to $70 million in cash.

Why? Because downtown convention hotels don't make friggin' money!

"The hotel projections do not provide sufficient cash flow to meet the return requirements of private debt and equity investors," concludes a report prepared by the city last winter.