Dallas council member questions using CARES Act money for hotel debt payment

A Dallas City Council member on Thursday called out the city manager's office for seemingly trying to hide a proposal to give nearly $2 million in COVID-19 relief money to a prominent hotel developer.

The agenda item was described in a presentation as a $1.8 million debt payment, with no mention the money would be for the Lorenzo Hotel in the Cedars.

“I did not recognize what this was and I don’t think it was properly notified in agenda. Because this is about repayment of Lorenzo Hotel,” councilwoman Cara Mendelsohn said. “It doesn’t say any that in agenda presentation.”

A deal the city council reached in 2013 used federal money to turn a blighted abandoned building into the Lorenzo Hotel. But like many hotels right now it is struggling and the owner may not be able to make the payments it owes the city.

That puts the city on the hook with HUD.

“This is a shocking deal. The people of Dallas did not do well with this deal,” Mendelsohn said.

She took issue with the plan that would funnel $1.8 from the CARES Act to help pay the debt of the Lorenzo Hotel.

“You don’t get to use this money that is for people suffering from coronavirus to pay off a four-star hotel. We should be helping small businesses stay alive, feed people, provide mental health housing,” Mendelsohn said.

Other council members were thankful city staff found a way to use federal CARES Act money now in case the city is still forced to make payments later.

“Whether or not the developer pays the city, we are obligated to pay HUD,” said councilman Tennell Atkins.

City staff assured city council members it won't get into this situation with a developer again. The council said it still wants the developer to pay.

“We are not letting them off the hook,” said councilwoman Jennifer Staubach Gates. “They will eventually have to make these payments to us.”