The parking lots owned by the city may not pay taxes, but create revenue through parking meters/parking tickets. They also provide a much-needed service. Many businesses in the square would go out of business without those lots. This discussion seems to be focused on where to put a hotel, and has by-passed the more important discussion of why, and at what cost. As they said in Jurassic Park, "Just because you CAN do something doesn't mean you SHOULD". This idea is akin to dropping that T-Rex right in the middle of Davis Square, and I think has more to do with city officials lining their pockets than with an actual need or desire.