An exterior view of the Lorenzo Hotel Dallas as seen from Dallas City Hall, April 8, 2026.
Tom Fox/The Dallas Morning News
The Lorenzo Hotel was once celebrated by Dallas officials as the revival of a long-abandoned downtown building. Today, it’s at the center of a public fight over money.
The issue stems from an unusual deal with the city.
In 2015, Dallas borrowed $11 million through a federal housing and community development program, then loaned the money to the company behind the Lorenzo Hotel to help renovate the former Plaza Hotel overlooking Interstate 30.
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Dallas remained responsible for repaying the federal government whether the hotel succeeded or failed.
A decade later, the company has missed a $1.08 million loan payment, the hotel is up for sale and the city is trying to recover as much of the money as it can.
The Dallas City Council in June rejected a proposal that would have forgiven nearly $2 million of the hotel’s debt. Under the deal, the owners would’ve paid the city $5.7 million, plus interest and legal fees, from the sale of the property.
In return, Dallas would’ve released its legal claim on the hotel and agreed not to pursue the company or the family trust that guaranteed the loan for any remaining balance.
If the council had accepted the offer, Dallas would’ve given up its claim to about $1.98 million, including $1.2 million in unpaid principal and more than $750,000 in unpaid interest, city records show.
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Instead, council members agreed to the sale while keeping the city’s right to pursue the hotel company and the family trust for any debt the sale doesn’t cover.
Council member Cara Mendelsohn called the situation “incredibly shameful,” saying it was wrong for the city to use federal community development money to finance a private hotel.
“This should never happen again,” Mendelsohn said during a June 24 meeting.
Federal stakes
Dallas borrowed the money from the U.S. Department of Housing and Urban Development, the federal agency that oversees housing and community development programs. The loan is backed by federal grants the city uses for community development and programs serving low- and moderate-income residents.
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If Dallas fails to make its required payments to HUD, the federal government can take the money from those grants instead.
That risk is no longer hypothetical. In April, the council authorized the city to use up to $935,101 in unused federal community development grant money to keep making HUD payments if needed.
It’s unusual for a city to use the federal loan program for a hotel, even though it’s common to help finance major redevelopment projects, said Chuck Dannis, an adjunct professor of practice in real estate at SMU.
Hotels are among the riskiest types of real estate because business can change quickly with tourism and the economy.
“Hotels specifically are very cyclical,” he said. “They’re higher up on the risk spectrum.”
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The Lorenzo project did accomplish one goal, Dannis said: It brought a long-vacant building back into use.
Hamilton Properties converted the vacant Plaza Hotel into what it describes as a $38 million redevelopment that turned the property — vacant for more than five years — into an art-centric hotel with restaurant and meeting space, a pool area and streetscape improvements connecting the Cedars to downtown.
City officials said the project also met federal job creation requirements by creating an estimated 220 full-time jobs.
But Dallas was never first in line to be repaid. Its $11 million loan sat behind a private bank loan. Later in 2015, the council approved a refinancing plan that increased the debt ahead of the city from about $12.9 million to $18 million.
Lingering financial trouble
The Lorenzo Hotel’s finances have been under pressure for years.
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After COVID-19 devastated the tourism industry, the hotel company told Dallas in 2020 it could not make a scheduled payment. Between 2021 and 2022, the city used $1.73 million in federal pandemic relief funds to continue making its required payments to HUD.
By 2023, city officials assured council members that a restructured loan agreement would eventually make Dallas whole because it included additional protection from the Hamilton Family Trust.
“It requires $5 million of liquidity and $25 million of total value,” Robin Bentley, then-director of the city’s Office of Economic Development, told council members at the time. “So we feel that we’re adequately covered.”
But the company earlier this year said it wouldn’t be able to make a $1.08 million payment and said it planned to sell the hotel.
The hotel was publicly marketed this spring by CBRE Hotels as a chance to buy a fully renovated property “at a significant discount to replacement cost.” Offers were due in late April.
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Company officials cited two nearby construction projects as key causes: the closure of the Akard Street bridge for the Interstate 30 reconstruction and the shutdown of the neighboring Kay Bailey Hutchison Convention Center for its own overhaul.
In March, Ted Hamilton, president and CFO of Hamilton Properties, told council members the family had spent heavily to keep the hotel operating.
“We’ve loaned almost $7 million to the hotel since COVID, trying to keep it afloat,” Hamilton said. “And we just don’t have the resources to keep doing it.”
He described the highway construction work as “kind of the nail in the coffin.”
Ted Hamilton didn’t respond to a request for comment after the council’s June 24 vote.
In response to an email for comment in May from The Dallas Morning News, Hamilton said the company was trying to keep the potential sale quiet and declined an interview request.
“We have been good stewards of both the hotel and the Cedars neighborhood,” Hamilton wrote.
Craig Davis, president and CEO of Visit Dallas, said the convention center closure immediately cut off one of the biggest sources of business for nearby hotels.
Still, Davis believes the hotel is well positioned once the convention center reopens, which is now scheduled for 2030.
“I think that the future of the Lorenzo is very, very good, because it’s in the right place at the right time,” Davis said.
For now, though, Dallas is focused on recovering its money.