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If the city of Galveston puts up $10 million, the charitable Moody Foundation will chip in an additional $46 million to expand this island resort town's convention center at Moody Gardens and turn it into one of the state's premiere meeting sites.

It may look like an attractive deal, but in this city, even a $46 million windfall is looked upon by some with suspicion - if it's coming from the powerful, local Moody Foundation.

On Tuesday, voters will decide whether to accept the offer, which calls for raising the local hotel tax rate from 13 cents to 15 cents per dollar.

Approval would allow the city to issue more than $10 million in bonds to finance its share of the proposed $56 million convention center expansion. The extra tax revenue would pay off the bonds over 25 years and cover operating costs.

Moody Gardens already receives the proceeds from 1 cent of the hotel tax each year - now about $578,000 - to operate the city's official convention center at the sprawling tourist attraction.

The Moody Foundation agreed when it took over operation of the convention center to cover any operating losses. In the fiscal year ended Sept. 30, the foundation says, it covered $205,000 in convention center losses.

Moody Gardens also includes a rain forest, space museum and aquarium - all under large pyramids - as well as a 300-room hotel, IMAX movie theater and restaurants.

The foundation uses revenues from Moody Gardens to operate Hope Therapy, an equestrian rehabilitation program for brain-injured people. The money also pays for research into medicinal uses of rain forest plants and developing public education programs.

So, why would voters consider rejecting the foundation's $46 million offer?

If they do, it probably will be because of sentiments such as those of George Osborn.

"If the Moodys want to build a convention center out there at Moody Gardens, they can do it with their own money and not with public funds," said Osborn, a Galveston resident who works as a Texas City firefighter. "Any time the Moodys come around asking for public funds, or their attorney, Buddy Herz, cries about how the Moodys are mistreated, a red flag goes up."

He was referring to a recent appearance by Moody Foundation attorney Irwin "Buddy" Herz at a meeting where the Galveston Chamber of Commerce's executive committee voted to support the hotel tax increase.

Herz took offense at questions in recent weeks from residents and the local newspaper about the foundation's integrity and its motives for seeking the tax rate increase. Complaints say that businesses the Moody family owns or controls profit from Moody Gardens, and a rumor is circulating that a Moody-owned construction firm will get the convention center expansion contract.

Herz turned to sarcasm as he addressed public concerns about the wisdom of committing perhaps $50 million to $90 million in future hotel tax revenues solely to paying for and maintaining a convention center at Moody Gardens.

"By the way, I'd like to apologize to you for the embarrassment we've caused the city with the construction of Moody Gardens," he told chamber members. "It must be an embarrassment to everyone here to have Moody Gardens here as part of the tourist attraction for the city."

He was indignant that people might resent the foundation after it spent $300 million to create Moody Gardens and offered $46 million to expand the convention center.

Galveston uses only 11 percent of its annual hotel tax revenues for debt service, operations and maintenance on the present convention center, Herz said. The figure would rise to 27 percent if voters approve the proposed tax rate increase, he said.

Houston uses 38 percent of its annual hotel tax revenues for debt service, operations and maintenance of the George R. Brown Convention Center, and other Texas cities use as much as 62 percent for such purposes each year, Herz said.

"If other cities require 62 percent, and Houston requires 38 percent, but Galveston only uses 11 percent now and possibly 27 percent, where does the rest come from?" he asked. "From the bad guys. You know us - the Moody Foundation."

While they may not consider the foundation literally "the bad guys," a considerable number of Galvestonians are uncomfortable with the local influence that the foundation, chairman Robert L. "Bobby" Moody Sr. and his family have and the ways in which they wield their power. Moody also developed South Shore Harbour in League City and is chairman of both Moody National Bank and Galveston's American National Insurance Co.

Osborn said Moody and the foundation wield so much influence in local affairs that Galveston should change its name to Moodyville.

"It reminds me of the old movie, It's a Wonderful Life," Osborn said. "The mean old man in it was Mr. Potter, and he had to control everything in town. It's a question of power and control on this little, bitty island."

While many Galvestonians want a first-class convention center to compete with Corpus Christi, South Padre Island and other cities, disputes over the proposed expansion have revived long-simmering ill will toward the Moodys and the foundation.

In 1983, the foundation leased hundreds of acres of municipal airport property from the city for a token annual sum so it could create Moody Gardens. A convention center opened there in 1986, a white-sand artificial beach in 1988 and the rain forest pyramid and IMAX theater complex in 1993.

In 1994, an Internal Revenue Service ruling forced the foundation to deed all Moody Gardens buildings to the Galveston Park Board of Trustees to maintain the facility's nonprofit status. Instead of a lease, the foundation and park board now have a management agreement.

Many people have criticized the park board for letting Moody Gardens hire Gal-Tex Hotel Corp., partly owned by the foundation and controlled by Bobby Moody, to manage Moody Gardens.

For years, Galveston hotelier and The Woodlands developer George Mitchell fought the foundation's plans to build a tax-exempt luxury hotel at Moody Gardens, but the IRS ruling cleared the way for construction.

After Mitchell sold the beachfront San Luis Resort and Conference Center to Landry's Seafood Restaurants president Tilman Fertitta, Fertitta joined Mitchell in claims that a Moody Gardens hotel would unfairly compete with taxpaying private hotels, restaurants and other businesses.

Nonetheless, the hotel, also now owned by the city's park board, opened in late 1998.

Before the opening, Bobby Moody's efforts to persuade the park board to let the Moody Gardens hotel sell memberships to its fitness center provoked bitter opposition from the owner of the neighboring Galveston Health and Racquet Club.

Park board trustees, City Council members and many residents complained that this would result in unfair competition with the private sector, so the foundation dropped the plan. It also agreed to share parking fees with the city and provide conventioneers transportation from Moody Gardens to the city's beachfront and downtown Strand Historical District.

In return, however, the park board reluctantly made concessions, including bowing to Moody's demand that a "give-back" clause in the Moody Gardens operating agreement be eliminated. The clause allowed the board to return ownership of the Moody Gardens buildings to the foundation without cause on 20 days' notice and was considered the board's most potent tool in dealing with the powerful foundation.

As Tuesday's election looms, many locals are outraged that Moody, less than a year after he agreed not to, has pressed the park board to let the hotel sell health club memberships.

To sidestep the competition issue, Moody suggested putting the hotel spa on the tax rolls by making it part of the South Shore Harbour Fitness Center, a Moody-controlled, for-profit business. Racquet Club owner Tom Cook says, however, that the foundation can't lease the fitness center to anyone because, among other reasons, it doesn't own the property.

The issue is one of many that critics say should have been settled before voters were asked to approve a hotel tax rate increase.

Officials have privately expressed fears that resentment over Moody's fitness-center bid could kill the tax increase. Publicly, they asked voters to rely on a committee to strike a post-election deal for convention center expansion and operation that will protect private businesses and the public interest and keep the Moodys from profiting from public money.

Despite reservations, Fertitta, Mitchell, the Chamber of Commerce, the Galveston Hotel-Motel Association, the Galveston Restaurant Association - even Racquet Club owner Cook - have expressed support for Tuesday's proposed rate increase.

In a move that may reassure some voters, the committee chosen to negotiate with Moody announced last week that it will ask him to drop efforts to sell fitness-center memberships and agree not to add rooms to the Moody Gardens Hotel until citywide hotel occupancy has averaged 75 percent for two years running. The average hovers near 50 percent now.

The committee said it will ask Moody not to add restaurants or retail businesses at Moody Gardens.

In addition, the committee said it will try to get Moody to agree to submit a proposed operating budget for the convention center before City Council sells the expansion bonds, and agree to give the city revenues from the proposed 1,000-car parking garage and other Moody Gardens parking areas for use in the city transportation budget.

Addressing widespread criticism that the foundation plans no competitive bidding from contractors for the expansion, the committee also said it will ask Moody for assurance from an independent source that the building contract is a good deal.

If he and the foundation do not sign an agreement with the park board by Nov. 17, the board can negotiate with other parties for construction of a convention center at another location, the committee said.

Moody attorney Herz declined comment on that long list of bargaining points until after the election. But he said the rumor that the Moodys own or could profit from Gilbane Construction Co., the huge firm already pegged for the expansion, is "an outright lie."

Park board chairwoman and negotiating committee member Sheila Lidstone expects the committee to stand firm on the spa-membership issue if the hotel tax increase is approved. Other items may be more negotiable, but the committee doesn't want to stray far from its unanimous decisions, she said.

"It's possible for there to be minor alterations, minor negotiating points, but I don't think anything is going to be really significant," Lidstone said. "It's going to take a lot of skill and a lot of patience, but I think we can get this done."

Mayor Roger Quiroga, also a committee member, calls the bargaining points "just a framework for negotiations."

"They're not demands," he said.

Like Lidstone, however, he said the committee wants no commercial health club at the Moody Gardens Hotel.

Plans for the convention center expansion call for nearly doubling exhibit space to 75,000 square feet. Backers say it will bring 85,000 more visitors to the island each year, boost hotel occupancy by 50,000 room nights and pump about $27.6 million through the local economy. They also say it should have a direct impact of about $10.4 million per year on the local economy.