Monday, October 17, 2011

Convention Centers - The Power of This Investment?

The Minneapolis Star Tribune had an interesting article about the Minneapolis Convention Center dismal financial prospects and the slashing of supervisory staff in half and placing all other staff on an on-call basis.

"The city has been spending as much to subsidize the center as it takes in because operating costs far exceed rents and other charges the facility reaps from conventions, trade shows and other events. The city spent more than $13 million in 2009 from special hospitality taxes it collects to subsidize the center."

Read this article and think about the event center proposal before the citizens of Sioux Falls on November 8th. The mayor, in a web interview with Argus Leader Sports Writer Stu Whitney stated that  the primary tenants of the event center are not sports teams. He stated that the primary tenant will be the conventions, the conferences, the big events, trade shows. "That's the power of this investment," he stated.

I guess the power of that investment is not working so well for the City of Minneapolis, Minnesota. The fact that the Minneapolis Convention Center can't make a go of it certainly brings pause to the mayor's event center plan for Sioux Falls.

The Star Tribune article states: "Convention centers have been battered financially across the country, first by a post-9/11 drop in convention travel and then by the recession. Those factors affected Minneapolis just as it was opening a major expansion of the center. Centers nationally have been cutting costs and discounting rents."

As stated in a previous blog, these reasons why this event center plan is not right for today makes even more sense after reading what is happening to the Minneapolis Convention Center:
  • Ill conceived concepts of fiscal prosperity and promises of private funding that will save the taxpayer from having to subsidizing ongoing operating costs for decades and decades.

  • The promise that the financing plan to build it or operate it won't use property tax revenues and the 1st penny sales tax revenues but doesn't say never.

  • That the projection of $1.1 million to $2.5 million per year in positive revenue from event center activities and events will be generated for operating expenses.

  • That using the Entertainment Tax revenues as a contingency to cover operating expenses won't impact negatively on the needs of the Washington Pavilion, Orpheum and the Great Plains Zoo and Delbridge Museum

  • A projection of $36 million in new economic impact per year when there is talk of a recession next year and the economic climate is a slowdown that could last for another decade.

  • A promise of bigger events, more events and more simultaneous events when consumer confidence and spending is at an all time low.

I wish the power of this investment worked with the plan currently before the voters on November 8th. I really do. Reality is fact. We can't afford the power of investment that Minneapolis is facing today before the first first shovel of dirt is thrown. The economic climate does not project a rosy future.

The only sensible fiscal action is to vote no on November 8th.


  1. They aren't alone, here's a new place that's very similar in size and scope to the Mayor's plan and it's sucking pond water;

    "The arena had expenses of $2.43 million and revenue of $2.03 million in 2010, according to the ShoWare Center income statement. The projections for 2011 are expenses of $2.42 million and revenue of $2.13 million.

    City officials expected the arena to be in the red last year because SMG last January forecasted a loss of $141,000 in 2010. But the deficits are a constant concern as the city continues to set aside money in its annual capital budget fund to cover the losses. That money could be used to help pay for improvements to city streets, facilities and other capital projects."

  2. If this thing passes it is going to suck this city dry and this mayor and council will be long gone. I want a new events center but not in this financial climate. How many stories about financial shortfalls for these type of facilities in other cities do we need to read about? The only vote right now can be no.

  3. Mayor Huether should, in the spirit of fairness, add this information to his currently one sided EC presentation and Mr Beck should do an editorial with this information. But..... we know that will never happen.

  4. I would very much like to see an events center but cannot vote for it because (1)in this financial climate it is not feasible--Minneapolis problem explains it well, (2) somewhere in the future, probably sooner than later, Lewis and Clark will need more funding, (3)and the millions spent on this events center WILL result in lack of funds for normal maintenance needs let alone unexpected maintenance. The only way to build the events center is to get the state allow the city to designate a 1% sales tax ear-marked for this project only.

  5. The news on the Minneapolis EC maybe a spear in the chest on this deal. Too much reality? Both sides expect a close vote. The Pros did not need the MPS news just now. I'd say Cons have the advantage now.


    Wow...staggering number. The voters of Sioux Falls should read this article before voting. Another example of the "business acument" that our Mayor speaks so fondly of? THIS IS NEITHER THE TIME NOR THE PLACE TO MAKE THIS INVESTMENT.

    The Argus Leader could learn a few things from reading other papers around the area instead of writing ridiculous open letters to the public.

  7. I just saw a "Build it Now" TV ad today. The lady states the EC will bring in hundreds of jobs and millions of dollars to Sioux Falls. The mayor is out and out LYING to the people in his EDUCATIONAL meetings and on these ads! When these kind of lies are sold to the public as facts, can a suit be filed against the mayor and the city for falsifying the facts? Instead of a neutral presentation of info, it's a propaganda program skewed to talk voters into unknowingly taking on this financial white elephant!

  8. Build It Now is not the Mayor, it is a private group.

  9. In the Seattle article

    The article says
    "The $84.5 million events center needs more people in the building in order to sell more concessions."
    So Seattle doesn't have enough people to support a $84.5 event center and Sioux Falls can support a center that will cost $200 million in payments over 23 years?

  10. A private group that is working very closely with the Mayor and his "team"!!!!

  11. Yes, and good or bad not subject to the issue of being openly For. They are very Openly For.

  12. Seattle has a population of 608,660 (2010 Census), a city four times the size of Sioux Falls!!

    Vote "NO" to a $173,000,000 million dollar (capital cost only) mistake!!

  13. "and placing all other staff on an on-call basis." -- actually, it was not the entire staff, just 22 employees going from full-time to intermittent status (part time). Also, note the more fleshed-out story here: that explains more about the economic impact overall for the city; the subsidy is only part of the story.

  14. Someone needs to be at the city's "Propaganda Meetings" to present REALITY to the voters along side the "pie in the sky" picture currently being presented. That would get on the news for sure and the truth would be widely spread.

  15. For whatever your thoughts are on the Wash. Pav., I remember the 'pro' crowd selling us the line that it would be self-sufficient, that it would not rely on taxpayer subsidies to pay its bills, etc. Then, after the project was built, the line became "We never said it would be self-sustaining. Projects like this never are." The city cuts a check every year for $1 mil. Well, gee, thanks, arts and croissants crowd!
    Civic gadfly Al Brown went to his grave warning of that funding nightmare.