Meeting News - February 16, 2009 - (Page 12)

Convention Centers Convention center projects across the U.S. are encountering a wide range of challenges in the brutal economy, from developers trying to remain solvent, to political wrangling and corruption, to scrutiny of such projects’ consumption of precious public funds. Not just in Cleveland—where the Cuyahoga County commissioners’ decision to rebuild on the existing underground Mall B convention center site already has been criticized as a penny-pinching and fatal move (see cover story)—but scores of cities, like San Diego; Albany, NY; Wilmington, NC; Nashville; and Portland, are battling to push expansions, new builds, or convention hotels to fruition. Dallas is trying to develop a publicly funded and owned convention hotel while a political action group wants to force the project to a public vote (Jan. 5 MN, p. 17), not unlike the decadelong ordeal Fort Worth underwent before it finally opened its privately developed 614-room anchor hotel last month. The situation in Portland is similarly contentious, as the city attempts to float bonds amid the credit crisis to fund a By William Ng william.ng@nielsen.com Destinations Make Push on Projects Even in Deep Recession $200 million hotel for the Oregon Convention Center. The debate surrounding convention centers is not new, but it is put under the microscope in tough times. Those that oppose them note a national overcapacity of money-losing facilities and a need to divert tax money to more pressing needs. Defenders say they revicontinued on page 17 Cleveland continued from cover too many pillars. (For example, the San Antonio Convention Center, which is about to break ground on its fourth expansion, debuted in 1968—the same year as Cleveland’s last expansion.) All that could change. In late January, Chicago-based Merchandise Mart Properties Inc. (MMPI), the private-sector partner in a venture for a new Cleveland Convention Center, finished a five-month site study and recommended building on the existing downtown site under Mall B, on Lake Erie. The news represented the most significant progress yet since Cuyahoga County commissioners passed a quarter-cent county sales tax increase in July 2007 to finance the $425 million project. County officials are currently negotiating a development contract with MMPI that would have the company manage construction and operate the convention center, in addition to owning and operating a permanent showroom for the medical equipment and supply market. MMPI would break ground in 2011 and open the facilities in early 2013. 12 MeetingNews What took so long? In the 1990s, hundreds of millions of public dollars were poured into baseball, football, and basketball venues that didn’t yield a corresponding increase in tax revenues from private development. “Publicly led and privately led projects have to go hand in hand,” said Ed Morrison, founder of the Cleveland-based Institute for Open Economic Networks (I-Open). “Cleveland has never understood the private side of the equation. The ‘Comeback City’ name came about because of remarkable public investment downtown. But private investment never turned out to be all that strong.” Morrison, who has spearheaded downtown redevelopment in Indianapolis and Oklahoma City, raised the idea of retrofitting the current facility for a lower capital cost. In a city with a declining population but massive infrastructure, wrung-dry taxpayers have consistently voted down tax hikes to pay for a new convention center, so county commissioners raised the sales tax—the highest in Ohio—by a quarter-cent, without a public vote. Between 2003 and 2007, Cleveland’s convention center attendance dropped 58 percent, to 133,000, according to city figures. (Room nights booked in Cleveland in 2008 were up 60 percent from 2007, but it’s not clear whether the convention center received any similar bump.) Since 2005, there has been a new plan to build a 300,000-sf convention center with an attached 100,000-sf Medical Mart, a permanent, four-story showroom for medical equipment that would capitalize on Cleveland’s reputation as a world-class health care player and lure up to 50 midsize medical conventions and trade shows per year. County officials felt the added value of a Medical Mart would make the project both unique and profitable. According to Dennis Roche, president of Positively Cleveland, the city’s convention and visitors bureau, 50 events a year is “a stretch,” but he said convention center business would be a multiple of what it is today.“I believe the facility can earn a profit, possibly after a year to two years,” he said. Just six months ago, a site-selection committee composed of local business leaders recommended a different site for the new center, near Cleveland’s landmark Higbee Building on Public Square, citing its lower cost and connectivity to Hopkins Airport and downtown amenities. But MMPI’s study determined the waterproof foundation of the existing convention center could be reused for a new center and thus make the Mall site $108 million cheaper than the Higbee site—no small savings in a major recession. Cleveland can compete Even amid doubt and cynicism, outside observers suggest Cleveland has enough to offer that the convention market will be there should the project make it to the finish line. “The location is good, the attractions are in place,” said John Christison, president and CEO of the Washington State Convention & Trade Center in Seattle, and a past president of the International Association of Assembly Managers. “All the right pieces are there to make it an attractive convention destination.” H www.meetingnews.com February 16, 2009 http://www.meetingnews.com

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