Saturday, June 14, 2014

Boston will be Nashville's favorite mistake

It's just a matter of time for before the snowjob to expand convention centers hits Nashville, too:

The [Massachusetts] House overwhelmingly passed a $1.1 billion expansion bond last week. The Senate is scheduled to take up the legislation Thursday, after trimming $110 million from it over concerns of a giveaway to hotel developers.

President Therese Murray is a strong supporter of the expansion. So strong, in fact, that in a speech last month before the Boston Chamber of Commerce, she quoted verbatim the talking points of Massachusetts Convention Center Authority Jim Rooney, who says the expansion will vault the state into the top five convention destinations in the country and create thousands of jobs and $184 million of additional economic impact every year ....

Heywood Sanders, a professor of public administration...said in a phone interview that convention space in the United States grew from 40 million square feet to 71 million square feet between 1990 and 2013, but tradeshow demand has been flat since 2000. Moreover, Boston’s expansion would occur alongside expansions planned or proposed in cities such as Anaheim, Los Angeles, San Francisco, and San Diego.

“There is nothing Rooney can do to make Boston a top-five convention destination,” Sanders said.

Joan Eisenstodt, a Washington-based national event planner, said competition sometimes prompts convention centers to virtually give away space to lure conventions, which pokes a hole in so-called economic impact. She also said a bigger Boston center may actually amplify Boston’s current weaknesses, such as our growing congestion.

Nashville faces a perfect storm of 1) post-sexy-beast debt that will plague the next administration and drag down the Metro budget, 2) image-conscious politicians who will be tantalized by pretty new capital projects to pad resumes, 3) outside competition from foolhardy cities like Boston who are trying to keep up in the race to the next big thing. That convergence assures that Nashville will be before long looking to expand its brand new Music City Center.

Also, consider for a moment some of the logic behind the Mayor's new plan for an east-west bus rapid transit connector to serve the convention center. Music City Center has created more Downtown traffic congestion. The Amp is designed to alleviate that, which in turn, provides another rationale when MCC expansion is proposed by a future mayor. The Amp will likely free up room for even more congestion caused once future MCC expansion is approved.

These capital projects look more and more like vicious circles within which Nashville is suspended and within which taxpayers are trapped. When does it stop? Where do we reach the tipping point where the costs destroy the few benefits that trickle down to us?

And how long before Music City Center starts giving away space because their competitors are doing it? Not long. Try August. A convention of convention planners is getting a free ride from Metro:

Cities trying to keep their massive convention centers busy bend over backwards to bring Graham’s group to town.

Nashville isn’t charging a dime for using the new Music City Center. And the Convention and Visitors Corporation is spending roughly $1.5 million to provide everything from private concerts with country music superstars to Nashville-branded air fresheners in taxicabs.

CVC president Butch Spyridon says it makes sense to waive the rental fee and go all out.

“You’ve got to build a mousetrap to capture the money,” he says. “And if you want to be in the game, you have to be competitive.”

Convention planning. Nice work if you can get it, thanks to the sweetheart treatment planners get from municipal governments who choose to remain willfully ignorant about independent studies on convention trends. Money buys other "studies" to the contrary.

In the meantime, the drag on Metro services caused by Music City Center, the expensive albatross that many of us have been concerned about, is already here:

In its first year of operation, the Music City Center convention hall failed to meet projections for hotel bookings, saw its surplus revenue fund drop by nearly $8 million and had its bond rating downgraded ....

At a cost of $623 million, Music City Center, which opened in May of last year, is the most expensive civic project in Metro's history. The center, overseen by the city's Convention Center Authority, also triggered $245 million in public spending for the headquarters Omni Hotel.

The project's supporters remain confident and paint a different picture of Music City Center. They point to a self-reported economic impact of $125 million through March in addition to a wave of expensive hotel renovations and potential new downtown projects ....

However, the real challenge for the Convention Center Authority appears to be lurking in the next three fiscal years, when incentive payments for the Omni and debt payments for the center will escalate, while hotel bookings in those years continue to lag behind expectations. Hotel bookings are important, because the Music City Center and Omni incentives are funded with a series of tourist taxes.

Cheerleaders for Music City Center can spin their own "economic impact" numbers any way they wish. When Nashville's Mayor annually proposes slashing the budgets of Metro departments, we are not fooled by the spin. The benefits are not trickling down. Any impact is negligible for those of us on the outside of tourism looking in. The cheerleaders make their money off the taxes we kick in to provide free conventions for tourists. Of course, they are not going to acknowledge reality. To do so would cut against their financial interests in keeping public money flowing to their coffers.

In the meantime, get ready for future build outs. The tourism industry has an addiction to feed. The rest of us are the saps backing these transactions, watching our money flow into a bottomless pit of big boxes in need of future expansion. The spin cycle won't stop any time soon.

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