Reporter
Fertittaville
The restaurant mogul has invested $150 million to help change the face of Galveston. Now critics warn that he wants to turn the Island into Atlantic City.
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Tilman Fertitta has no relation to the Island's three big families. Born in Galveston, he left the city in 1974 for Houston, where he opened his first Landry's while he was in his early twenties. In 1984, after amassing a small fortune, he began buying up land along the seawall of his old hometown. He saw the unrealized potential of tourism on the Island, and in addition to growing his restaurant empire, he wanted to build the city a new convention center. But he knew that any future center would have to compete with Moody Gardens, which had a huge advantage thanks to its tax-exempt status. So in 1996 Fertitta made a move long chronicled in Island lore. Asked to speak at an event at the Moody Convention Center, he stormed up to the microphone and directly attacked the Moody Foundation. He said its tax arrangement was scaring off viable competitors, including himself, and that it was the reason for Galveston's stagnant growth. The audience gave him a standing ovation.
Five years later, in 2001, Fertitta won over enough people around town, including Mayor Quiroga, to push for a special election on increasing the local hotel tax from 13 cents to 15 cents on the dollar. The plan would create funds for the city to build a Fertitta-run convention center to compete with the Moodys' and promised to create more jobs on the Island. Galveston voters overwhelmingly approved. "That election was not just on the convention center, okay?" Fertitta told me. "More people turned out for that election than for any mayor's race. That was a vote for change in Galveston."
Indeed, since then, change has been taking place at a rapid clip. The city has lured four lucrative cruise lines to dock in its port. UTMB has received a $110 million grant to create a Galveston National Biocontainment Laboratory. The developer Centex is looking to build a half-a-billion-dollar project, including new homes, townhouses, and condos. "There hasn't been this level of investment on Galveston Island since the rebuilding after the 1900 storm," said Jeff Sjostrom, the president of the Galveston Economic Development Partnership. As Quiroga saw his term limit coming to an end, Galveston boasted a $6 million surplus.
ON A SUNDAY MORNING IN APRIL, about seventy Galveston business leaders met for their weekly breakfast at Fish Tales, a Fertitta-owned restaurant on the seawall. UTMB president John Stobo was there, as was outgoing mayor Quiroga, among others. While casually dressed men and women sipped coffee out of white cups and pushed their eggs around small china plates, a microphone was passed from table to table. The floor was open, but conversation centered primarily on economic development. Every time someone brought up a viable property and its potential as an investment opportunity, the same joke was repeated. "Somebody call Tilman," an attendee would mutter. This would be followed by muffled laughter.
The suggestions weren't entirely in jest. Though Fertitta is not the only person investing in town these days, his aggressiveness can sometimes make it appear that way. Fertitta's convention center, completed in April, is surrounded by Fertitta-owned hotels and Fertitta-owned restaurants, creating a symbiotic environment in which all Fertitta-owned entities can feed off one another. He recently bought the nearby Flagship Hotel, and he says he wants to build an amusement park out on the Flagship's pier, complete with a Ferris wheel and a roller coaster. He's had his eye on a golf course, and he says he wants to turn piers nineteen and twenty into a yacht club. All of a sudden, Fertitta's grip on Galveston tourism rivals—some might say surpasses—the hold that Moody Gardens once enjoyed.
If the Moody family is upset by Fertitta's power grab, its members have been quiet about it publicly. (The foundation declined to comment for this story.) According to the Galveston County Daily News, however, at a city council workshop this spring, Irwin "Buddy" Herz Sr., the Moody family's attorney, aired grievances against Fertitta and the city, claiming that the city was trying to sell property to the restaurateur that had been promised to a church. "How many people are going to be stomped on in the name of economic development?" he asked. "I've seen deals cut in the past—" Steve Greenberg, the director of governmental affairs for Landry's Restaurants Inc., cut him off. "You've been part of them," he said.
Fertitta's growing obstacle these days is public opinion. In the past, any local opposition to his plans was outweighed by his ability to bring in new jobs. But his detractors started gaining footing when Fertitta backed video gambling at the special session. They say gambling will bring corruption, and some even point to Fertitta's family history as a warning sign: During the forties and fifties, his great-uncle Anthony Fertitta and his great-great-uncles Sam and Rosario Maceo worked together in the Balinese Room, the most notorious gambling tavern in the state. Asked about his own gambling aspirations, Fertitta said people were blowing them out of proportion. But he didn't deny that he supported some level of gambling on the Island. After all, he explained, how would it be fair for the horse-racing tracks—or the failing greyhound track in nearby LaMarque—to get slot machines and not Galveston? "I'll tell you," he said. "I used to think it wasn't coming. These days I think it's inevitable. Will it be two years, five years, ten years? You're going to be pulling a slot machine in Galveston, Texas, while we're all still breathing. I can promise you that."
BY ELECTION DAY, MAY 15, the divide among residents was visible downtown, where campaign signs littered the streets. That night, each candidate hosted a party for supporters. Thomas held hers at a VFW hall on Twenty-fourth Street, where the old guard converged to watch the results in the bingo parlor. They ate hot dogs and chips and drank keg beer out of plastic cups. "The direction the city is going in is just sad," one partygoer told me, summing up the mood inside. "We have been labeled anti-development. But we are for growth. I don't want a wall of hotels just like Miami Beach. We have to maintain ambience."
Meanwhile, down at Mario's Seawall, the Italian restaurant owned by Smecca's family, a predominantly middle-aged crowd had gathered. Men wearing baseball caps and women holding small children waited anxiously while they drank beer on tap and wine from the downstairs bar. "The biggest obstacle we're having to overcome is money. Lyda Ann Thomas has a lot of it, and she's using it," one woman explained, making the case that the election was about the haves and the have-nots. "Does Lyda Ann know how hard it is to scratch out a living and get from point A to point B?"
Neither candidate would be able to claim victory that night. Around nine-thirty an election official announced that there'd been a machine jam and that ballot counting would have to be postponed until a repairman could be called. (Word even got out that a mysterious "lost box" had appeared, causing concern on both sides that the fix was in.) Shortly after, Smecca began thanking his supporters and saying good-bye. Before he left, I asked him if he thought it would be a long night. "No, no," he said. "I don't know that there's too much to worry about." By ten-thirty the next morning, however, the results were finally in: Thomas had crushed Smecca by thirty percentage points.
A WEEK LATER, TILMAN FERTITTA was plotting his next move. "I have to be careful here," he explained. "Let me think." Then, after a long pause, he made his pitch to the new regime. "Galveston didn't elect a pro-economic-development mayor and council. But I think they're all very smart people, and they see the right direction that Galveston needs to go in by being progressive. I think Galveston will be all right—if they make the right decisions." The election capped an unusually bad week for Fertitta. A few days earlier, slot machines had been rejected in the special session and Quiroga pulled the proposed street-name change due to lack of support in the neighborhood. Any plans for Fertittaville—real or imagined—would have to be put on hold.
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