Hotel Whitewash

What do the FBI and developer Wayne Duddlesten have in common?

But that was then, and this is now, Duddlesten regretfully informed the court. "Today, there is no minority equity." Duddlesten testified that his new partners in the hotel, Crescent Real Estate Equities of Fort Worth, have 80 percent control of the deal and are calling the shots.

When he was seeking the contract, Duddlesten paid extensive lip service to three minority investment groups that he introduced to Council as his future co-owners. But, as the developer testified, all that touted minority presence amounted to a few letters of intent, with no hard cash on the table.

"Sir, I would not characterize [minority investment] as being relied upon," Duddlesten told Maldonado defense attorney Dick DeGuerin. "I would characterize it more as making [ownership] available to [minorities]." Since no minority money materialized, Duddlesten seemed to be saying, his commitment to include minority owners was no longer operative.

Under questioning, Duddlesten also minimized the impact of his minority ownership pledges on his winning the hotel project, and suggested that Allyn and Maldonado had played minor roles in the campaign to win Council support. Those assertions don't correspond to the recollections of Marc Campos, a member of the rival JMB team.

"Ben, Betti and Ross were essential in influencing councilmembers and winning that deal," claims Campos, who recalls that every time JMB would visit a councilmember, Allyn was waiting outside the door to counter the effort. In Campos's view, Duddlesten's pitch for minority ownership turned the Council in his direction.

Allyn's attorney Paul Nugent took several sarcastic swipes at Duddlesten's seemingly faulty memory about who had helped him win the hotel contract and what he had promised in return. Under Nugent's cross-examination, Duddlesten initially couldn't even remember paying Allyn for his services until the lawyer produced a canceled $5,100 check signed by Duddlesten.

Just as the developer couldn't recall whose services helped him win the hotel contract, he is now disavowing responsibility for the minority ownership pledges that he so emotionally made to councilmembers. "I don't make those decisions now," he testified.

City Director of Convention and Entertainment Facilities Jordy Tollett isn't quite so willing to let Duddlesten off the hook. "I didn't hear his testimony," says Tollett, who is responsible for monitoring minority participation in the hotel project. "But I'm shocked that he would say that if he made some arrangement with Crescent, that he's saying he's not involved. I don't know that we made that deal."

According to Tollett, Duddlesten made the original minority ownership commitments in excess of what the city required under its Minority, Women, and Disadvantaged Business Enterprise program, and should be held to those commitments no matter what changes have occurred to the financing of the hotel.

"He's the one that took it further and said he wanted to go further," says Tollett of Duddlesten. "I would hope he passed that on in his arrangement.

"I'm not going to say 'well, that's too bad now,' They're the ones who made the statements, and I hope they live up to them no matter who he sold it off to."

Duddlesten is hoping to break ground on the hotel this summer, but it isn't up to him to set a date. Unable to make his financial commitments after the Hilton Hotel chain pulled out of the deal, Duddlesten peddled 80 percent of the hotel package to Crescent, which is controlled by Richard Rainwater, who got his start with the billionaire Bass brothers in Fort Worth. Mayor Bob Lanier announced the new arrangement late last year in a City Hall news conference.

Crescent has bought more than a billion dollars' worth of property in the Houston area, including the so-called Texas Eastern parcel originally owned by the rival hotel-proposal owner, JMB Development. The hotel will be built on that site rather than a nearby parcel of land originally earmarked by Duddlesten.

Crescent is now represented by Bill Miller, the same Austin-based political-relations consultant who helped Duddlesten win the contract battle. Miller insists that the hotel battle was decided when Hilton joined the Duddlesten team, and not because of the developer's promises to include minority owners. Asked whether Duddlesten's commitment to 30 percent minority ownership should be honored by Crescent, Miller indicated the issue isn't on his radar screen.

"These guys are traded on the New York stock exchange," comments Miller. "They just do business deals. They do their charity work, or whatever, but does that mean getting minority investors for the hotel deal in Houston?"

Miller paused. "I don't think that factors in. They think a little more globally than that."

The next time the hotel deal comes up before City Council, perhaps the minority members should try to think globally as well, and hold Crescent to the commitments made to Council by the man who won the contract.

E-mail Tim Fleck at tim_fleck@houstonpress.com.

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