Callaghan: Story of convention centers always has the same ending

Staff WriterApril 24, 2014 

That the book finally arrived just a week after Tacoma’s regional convention center was in the news again was coincidental but fortuitous.

“Convention Center Follies — Politics, Power and Investment in American Cities,” by Heywood Sanders, puts in one volume all of the reasons why convention centers might be the worst investment we make. Yes, even more so than stadiums.

A professor of public administration at the University of Texas at San Antonio, Sanders has been pointing out for years that the feasibility studies that tell local and state government leaders to build are always overstated.

Then, when the attendance and hotel room nights fall short, the same consultants recommend building more space and adding more hotel rooms.

Tacoma isn’t to that point. Yet. It is in the midst, however, of seeking developers to build a mixed-use project on lots next to the Greater Tacoma Convention & Trade Center. A key requirement was to include hotel rooms to “enable the growth of Convention Center revenues.”

Four of the respondents — hoteliers and developers — asked for financial help from the city ranging from use of existing city parking to a $35 million-to- $60 million direct subsidy.

The “winner” didn’t ask for direct subsidy but instead is depending on a investment method that attracts foreign investors who put up money in exchange for U.S. visas. This so-called EB-5 program has been used in other cities and explains why the plan has 150 to 220 condo units — investors often buy a condo for their own use as their investment in the United States.

Tacoma’s convention center has performed like most others. It has not produced the business the consultants suggested and has not filled hotel rooms as projected. Also, as with most other centers, the space is too often filled with local events that require no hotel rooms at all.

One excuse for a lack of conventions and trade shows — here and elsewhere — is that the center isn’t big enough to accommodate two events at once. But when other cities — Seattle particularly — have fallen for advice to get bigger, they often attract even fewer events after expansion.

How can that be? Simple math — there is way too much convention center space competing for too little convention and trade show business.

“From 36.4 million square feet of exhibit hall space in 1989, the total center exhibit space reached 70.5 million square feet in 2011 — an increase of 94 percent,” Sanders wrote. If the number of convention and trade shows increased accordingly, this might make economic sense. But it hasn’t. It has flat-lined.

“City after city builds a new center, only to realize little or no new convention activity and see no real job creation,” Sanders wrote. “Yet that apparent failure … invariably yields a call for more space, an adjacent hotel, or a new ‘entertainment district’ that will propel the city into the front rank of convention destinations.”

Politicians generally want to build because that decision pleases so many constituencies — downtown landowners, chambers of commerce, organized labor, the local newspaper. It also sounds like found money, there for the plucking. So they commission feasibility studies from consultants who always recommend going forward with the project. And since funding schemes created by legislatures do not require voter approval, most in fact go forward.

Besides, the money doesn’t come from us, politicians rationalize, it comes from out-of-towners who pay hotel taxes and rental car taxes. Of course, we pay those same taxes when we travel to fuel everybody else’s struggling convention centers.

The consultants are never held accountable for their numbers or they are permitted to say the predictions weren’t realized because the center isn’t big enough or there aren’t enough hotel rooms. They then leave town and the folks hired to operate local convention centers get scrutinized when they fail to meet those ridiculously unrealistic expectations.

If the EB-5 funding scheme works and no public money is involved in the Tacoma hotel-condo project, taxpayers will have dodged one bullet. But sometime later will come the calls for a larger convention center to supply guests for all those new hotel rooms.

Peter Callaghan: 253-597-8657 peter.callaghan@ @CallaghanPeter

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