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.