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Phoenix Sheraton—Taxpayers ARE on the hook

May 2, 2012

In an article from the Arizona Republic “Execs meet pair ousted from hotel,” which deals with an incident at the taxpayer owned Phoenix Sheraton, your writer makes the statement: “the city paid for its construction with $350 million in revenue bonds. Bondholders are paid back with hotel revenue, so no tax dollars are spent (emphasis added) on the deal.”

Your writer should have pointed out that this statement can only be true if the hotel is profitable. But this is clearly questionable since investors were obviously not willing to put up enough money to build the hotel. What this means is that knowledgeable investors, not city bureaucrats, realized that the hotel was a gamble and, therefore, let Phoenix taxpayers take the ultimate risk.

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