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ОглавлениеChapter 1
Building Boom
In 1982, Chicago’s McCormick Place stood at the apex of the nation’s convention centers. With 825,000 square feet of exhibit space in the main facility and another 330,000 square feet in nearby Donnelly Hall, it easily surpassed the convention halls of other cities. It routinely hosted the largest collection of major conventions and tradeshows each year, with 24 of the nation’s 150 largest events in 1982 and 27 in 1983, “dominating over two-thirds of the 15 largest events.”1 The list included such blockbuster events as the International Machine Tool Show with 97,000 attendees in 1983, the National Restaurant Association Show (87,000), the National Hardware Show (84,000), and the summer Consumer Electronics Show (72,000).
But Chicago’s record of tradeshow success did little to dampen the competition from other cities, and the early 1980s saw a growing list of large, new convention facilities. Las Vegas was adding a major expansion to its convention center, bringing its exhibit hall space to 759,000 square feet—not much smaller than the lakefront building of McCormick Place. New York City was in the process of constructing what would be the Jacob Javits Convention Center, with 700,000 prime square feet of exhibit space, and some 200,000 additional square feet of flexible event space. Then there were new, albeit smaller centers under construction in such historically strong visitor destinations as San Francisco, New Orleans, and Washington, D.C.
The success of McCormick Place in hosting the largest national events also came at a price. The dominance of these large events on McCormick’s calendar led to a “feast or famine” impact on Chicago’s hotel and restaurant business, with a surge of demand from a major show followed by a downswing, as exhibits for one event were moved out and another show moved in. The public authority owner of McCormick, the Metropolitan Fair and Exposition Authority, sought both to accommodate growing major trade show events, and also to fill its schedule with the “mid-range exhibition market segment” that would reduce the feast or famine cycle. The authority’s consultants thus recommended a new, adjacent exhibit hall with more than 600,000 square feet of exhibit space.2
The promise was that the new North Building would boost the annual convention and tradeshow attendance at McCormick Place from one million in 1983 to 1.5 million, with a $275 million annual increase in new visitor spending. But even with the completion of “North” in 1986, the authority was far from finished. In 1989, the reconstituted Metropolitan Pier and Exposition Authority (renamed after adding Chicago’s Navy Pier to its responsibilities) proposed yet another expansion.
The “Long Range Marketing Study” consultant KPMG Peat Marwick (led by Charles H. Johnson) presented to the authority in 1990 was far bulkier than its 1982 predecessor, but it very much paralleled the assessment of the earlier analysis. Johnson and his KPMG colleagues described Chicago’s “pre-eminent status in the tradeshow market,” having attracted “the largest events held in the United States, resulting in extraordinary margins in attendance over its nearest competitors.” But if Chicago was to remain dominant, it needed to be “aggressive.” And the key element in an “aggressive” approach was “adding new exhibit space, adding meeting space, offering an enhanced environment…. and improving service and marketing support in order to compete more effectively.”3
The KPMG consultants portrayed a national convention and tradeshow industry with demand for exhibit space “growing at a rate of eight percent per year,” driven by “individual event growth was well as more new events.” Convention attendance was consistently growing as well, averaging 6.47 percent a year from 1971 to 1988. And, KPMG predicted, “Future growth is expected to continue,” supporting the need for more space at McCormick Place.4
The Long Range Marketing Study called for yet another major expansion, adding another one million square feet of exhibit space, more meeting rooms, and an adjacent domed stadium (then proposed for the Chicago Bears) as well. The new exhibit hall, exclusive of the stadium scheme, was forecast to solidify McCormick Place’s position in hosting major tradeshow events, while increasing its appeal for “large and mid-sized conventions” that would help alleviate the fluctuations in hotel demand generated by major shows. With more space and a better planned “campus,” the new McCormick Place was forecast to add some 18 annual conventions and tradeshows, boosting attendance by a total of 320,000.5
The Metropolitan Pier and Exposition Authority embarked on a $987 million expansion effort in 1992, completing the new South Building, with 840,000 square feet of exhibit space and a larger volume of meeting rooms than the other exhibit halls, and a companion effort to renovate the original McCormick East facility, all aimed at attracting “the medium and large convention segment of the meetings market…. [and] to meet the expanded need for meeting space by the trade show segment.” If all went as promised, the new building would yield a steady flow of new convention delegates, yielding a 30 percent increase in the center’s annual economic impact, or more than $1.1 billion.6
The new South Building opened in 1996. But as South added more space, the MPEA was planning on yet another major investment to boost McCormick’s appeal to mid-sized events. The authority had acquired and demolished the one hotel adjacent to the McCormick Place complex in 1993, and unsuccessfully sought a private developer for a new “headquarters hotel.” With its commitment to attracting medium-sized conventions, MPEA officials asserted there was a critical need for adjacent hotel rooms; in early 1996, the authority issued some $133 million in bonds for a hotel that it would finance and own. The new 800-room “Hyatt McCormick Place” opened in June 1998, with the promise from consultants Coopers & Lybrand that it would support luring three new major “Tradeshow 200” events each year (for a total of 26) and nine additional conventions and tradeshows, boosting attendance and hotel demand.7
The new Hyatt hotel was soon joined by another set of bond-funded projects designed to increase the competitive appeal of McCormick Place. At a cost of $100 million, the MPEA added a new six-level parking garage and a conference center to the complex, and constructed a dedicated busway from the downtown core to McCormick Place, all designed to make the center more competitive.
The Hyatt had barely opened when the MPEA leadership and Chicago city officials began another call for expansion and more exhibit hall space. A March 1999 Chicago Tribune article quoted MPEA CEO Scott Fawell as saying, “Some of the bigger shows that come to Chicago would like more space,” and “For the future, you’ve got to [ask], ‘Do you want to stay in the forefront of the industry?’” Mayor Richard M. Daley chimed in, “You have to look ahead.” The assessment that McCormick Place should be expanded again was buttressed by a report from the PriceWaterhouseCoopers consulting firm that concluded that the convention complex would lose market share and cost the state millions in economic impact if it failed to grow.8
With the political backing of Mayor Daley and Illinois governor George Ryan, the state legislature ultimately approved the construction of “McCormick West” in July 2001. The authority sold the $1.1 billion bond issue that financed the addition of 460,000 square feet of exhibit hall space in June 2002.
The development of the new West Building maintained Chicago’s preeminent position in convention center space. It also provided a set of lucrative contracts that Authority CEO Scott Fawell managed to manipulate. Fawell, Ryan’s former chief of staff, ultimately pleaded guilty to federal charges of bid rigging in connection with the McCormick expansion, in a wide-ranging corruption investigation that ultimately convicted former governor Ryan. Expanding McCormick Place could obviously generate construction contracts that were open to political manipulation. But what was not obvious was the real economic payoff from the investment of over $2.3 million in public revenues in the continuing expansions of McCormick Place and associated facilities like the publicly financed Hyatt.9
In 1983, McCormick Place had hosted 27 of the convention and tradeshow industry’s “150” largest events, with a total attendance of just under 645,500. The center dominated the largest events, with eight of the top fifteen. Its total convention and tradeshow attendance that year came to one million. And consultant estimates had pegged the impact of expansion—the construction of the new North Building—as yielding a 50 percent increase in business, a total annual attendance of 1.5 million. But in 1995, after the North expansion and before the opening of McCormick South, total attendance came to just 1,015,456—not much more than a decade earlier. The Chicago center’s apparent dominance of the largest conventions and tradeshows also appeared less secure, with just 24 of the top “Tradeshow 200” largest events in 1995.
The development of McCormick South was also supposed to yield increases in attendance and economic impact, with an added boost from the construction of the publicly financed Hyatt. But where Coopers & Lybrand had forecast 26 of the very large events by 2000, that year’s total came to just 21. It was much the same with total convention and tradeshow attendance. The expanded McCormick Place hit a peak attendance of 1.44 million in 2000. But in the wake of 9-11 and the tech bust of 2000, attendance dropped to 812,337 (with a possible additional 84,000 from meetings). And the 2007 opening of the new West Building did not have a very substantial immediate impact. Total convention and tradeshow attendance for 2008 came to 960,183. The next year, 2009, saw just 893,068 attendees. The attendance total then fell to 850,329 for 2010, and dropped farther in 2011 to just 768,685—less than half the convention and tradeshow attendance McCormick saw in 2003.
McCormick Place has also seen a continuing decline in the number and total attendance of the largest conventions and tradeshows each year, the “Tradeshow 200” events. For 2007, McCormick Place housed just 17 of the “200.” It managed 18 of these big events in 2008, with attendance of 672,591—just slightly more than the large-event attendance total of 645,485 twenty five years earlier in 1983. And where McCormick Place had once captured the majority of the 15 largest events, by 2008 it managed only two, ceding its leading position to Las Vegas.
The declining attendance at McCormick Place has come in part because of the growing competition from other cities. Both Orlando and Las Vegas are now not far behind McCormick in convention center exhibit space, and a host of other cities have competed by adding more space. But Chicago also faces a dramatically different convention and tradeshow industry. Following a split between the hardware manufacturers association and show management firm Reed Exhibitions, the National Hardware Show left Chicago for Las Vegas. Another McCormick mainstay, the summer Consumer Electronics Show that brought 72,000 attendees to Chicago in 1983, folded after 1994.
Other large McCormick Place-based tradeshows have also seen substantial changes in performance. Take the case of one Chicago perennial event, the National Restaurant Association Show. That event was the second largest in attendance for McCormick Place in 1983, with 87,000 attendees. It reached a peak attendance of just under 104,000 in 1997. Since then, the Restaurant Show’s attendee count has fallen to 73,664 in 2007, 71,367 in 2008, 53,319 in 2009, 57,892 in 2010, and 57,782 in 2011. Despite some recovery from the trough of the recession, attendance has remained well below the totals in 2007 and 2008.
The major tradeshow for the food machinery and packaging industry, Pack Expo, has long been among the top four or five events at McCormick in terms of exhibit space. The biennial Pack Expo (alternate years are held in Las Vegas) drew attendance of 78,321 and used 1.15 million square feet of space in 1998, its peak year during the 1990s. The show’s exhibit space use has been rather flat, just 1.12 million square feet in 2012. But its attendance fell to 67,964 in 2008, a significant drop from the peak a decade earlier, and to 67,641 in 2012.
Major conventions and tradeshows like the Restaurant Show and Pack Expo have commonly grown in size as McCormick Place has added more exhibit space. But more space has not translated into more attendees, and thus greater economic impact. Their history since the late 1990s suggests a gradual but dramatic change in the “draw” and perceived value of these events, a change that has directly affected the attendance at McCormick and its economic results.
Over and over, Chicago and Illinois public officials and a roster of consultants promised that a bigger McCormick Place would yield hundreds of thousands of new convention attendees and billions in new spending and public revenues. Those repeated promises have proved to be false, the consultant projections unmet. McCormick Place and Chicago officials have tried desperate measures to respond to the brutal competition in the convention market. In August 2009, the state announced creation of a $10 million incentive fund to provide rebates to conventions and tradeshows using McCormick. But by the end of the year a number of major shows, including the International Plastics Expo, announced plans to leave Chicago for other cities, including Las Vegas and Orlando.
Faced with the loss of these major events and pressure from other event organizers, the state legislature restructured the board of the Metropolitan Pier and Exposition Authority and began hearings into McCormick’s operations and finances. The result in early 2010 was a revamping of labor relations intended to reduce the cost of union labor in setting up and servicing exhibits and a massive $1.12 billion restructuring of the authority’s debt, together with plans to expand the publicly financed Hyatt hotel with an added 450 rooms.10
The performance of the nation’s largest convention center is by no means unique. The rhetoric of convention center boosters in city after city has not been matched by actual performance, and center managers and local tourism officials have ratcheted up incentive packages, free rent deals, and plans for even more space or adjacent hotel rooms.
For Atlanta and Phoenix, Boston and Philadelphia, just as for Chicago, the quest for a new or larger convention center follows a seemingly standard pattern. A local group, perhaps the city’s convention and visitors bureau or the local chamber of commerce, would proclaim that the community was falling behind its competitors, the size of its convention center slipping as other cities built and expanded. There would be news stories about “lost business” and descriptions of the groups and events that could no longer come because they had outgrown the center. And, predictably, there would be a study commissioned from an experienced, “independent” consultant.
The consultant study, filled with data and charts, would describe how other cities were building new centers, presumably demonstrating the need to compete with something bigger and more up-to-date. There would be summary figures of “lost business,” results from surveys of meeting planners demonstrating the attractiveness and appeal of the city, and a detailed presentation of national data indicating the consistent growth in convention and tradeshow demand and the reassuring forecast that growth would continue apace.
Armed with the consultant’s estimate of future convention business and the forecast that the “economic impact” of new spending by convention attendees would grow by 50 percent, 100 percent, or more, local officials would describe the public investment in a larger convention center as the catalyst for an economic boom. More convention delegates would lead to the development of new hotels, new restaurants and retail stores, likely revitalization of part or all of the downtown core, and a new image for the city itself.
In January 2011, New York governor Andrew Cuomo proposed a development to include “the largest convention center in the nation,” saying, “This will bring to New York the largest events, driving demand for hotel rooms and restaurant meals and creating tax revenues and jobs, jobs, jobs.” A few months earlier, Tim Leiweke of the AEG entertainment and development firm proposed a new privately built enclosed stadium as part of the Los Angeles Convention Center, contending that “L.A. would be the greatest destination for events in the world,” and that the city “could become the second or third” most sought-after convention city in the country.11
The promises and rhetoric have been remarkably consistent. At the same time New York, Los Angeles, San Diego, and Boston were contemplating major new centers or expansions, Cleveland and Cuyahoga County were building a $465 million Medical Mart and Convention Center, with the promise that it would attract 60 annual medical conventions bringing “300,000 visitors and $330 million in spending” after its 2013 opening. Nashville was building a $585 million convention center, slated to open in April 2013. The HVS consulting firm had forecast in early 2010 that the new Nashville venue would more than double the annual convention center hotel room nights produced in Nashville. And both Indianapolis and Philadelphia had opened major convention center expansions in 2011, each armed with consultant forecasts that they would see a sizable boost in convention attendance and resulting hotel demand.12
It would appear highly unlikely—indeed implausible—that each of these cities would see its convention attendance effectively double. With overall national convention and tradeshow attendance still depressed as a result of the “Great Recession” and economic restructuring, New York, Boston, Los Angeles, San Diego, Cleveland—and others like Miami Beach, Dallas, and San Francisco—would be able to increase attendance only by attracting events and people away from their competitors. And those competing cities would be unlikely to stand still and simply accept losing convention business. Communities such as Las Vegas and Orlando, Anaheim and Washington, supported by regular streams of public revenues fueled by visitors, would themselves respond by investing in more convention space and hotel rooms.
After the public promises of new spending, economic impact, job creation, and development often comes a reality that is rather different. City after city builds a big new center, only to realize little or no new convention activity and see no real job creation. The big new hotel that was supposed to be a direct product of the public investment in a convention center simply doesn’t appear. The promised economic impact is often missing or minimal. Yet that apparent failure—the center that sees half or a third of the attendance projected by a consultant, the convention venue that is obliged to give away its space, the tradeshow mecca that largely attracts local or drive-in attendees—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.
The “arms race” that has propelled this massive expansion in convention center space over the last two decades has been fueled by a dramatic change in convention center financing. During the 1950s, 1960s, and into the 1970s, new convention center proposals generally had to run the gauntlet of voter review and approval. But by the 1980s state and local governments were able to adopt new financing and development mechanisms that effectively insulated center plans from local voters. The shift to public authorities or state governments from general purpose local governments, and from general taxes to dedicated visitor-based revenues, also put the choice to invest in a massive convention facility in the hands of business interests usually focused on sustaining and boosting property values and development prospects in the downtown core. The result has been to privilege convention center spending over other, alternative public investments.
At the same period as convention center finance was being reshaped and eased, the arguments and rationale for convention facilities as major sources of economic development and job creation were gaining wider visibility. The same consultant who assured Chicago and Illinois officials of the benefits from a larger McCormick Place, Charles H. Johnson, had provided much the same advice earlier to St. Louis. He would go on to offer a justification and set of forecasts for new convention centers in Charlotte, and Richmond, a bigger one in Austin, and one in Boston. The same consulting firm that advised the Georgia World Congress Center Authority on expansion in the mid-1990s would provide remarkably parallel advice and economic impact forecasts to Cincinnati, Cleveland, Indianapolis, and New York City. The consistent finding was that more space would bring more business, and more jobs.
Much as consultant forecasts of demand and center performance have proven faulty, the basic assumptions about convention and tradeshow attendees, their visitation and spending patterns, have proved unrealistic. Consultants and convention center backers have routinely assumed that convention attendees stay in a city some 3.5 days, with attendees assumed to come from out of town. Yet convention and tradeshow events often draw a substantial volume of local attendees, or those who simply visit for the day. In 2009, more than half the convention and tradeshow attendance at New York’s Javits Center (excluding events like the New York Auto Show or similar public shows) was made up of “day-trippers” or other local attendees. Or take the case of one of the largest annual events at Orlando’s Orange County Convention Center, the PGA Merchandise Show for the golfing industry. For the 2008 edition, 31 percent of the attendees came from Florida—many of whom likely just attended for the day. And one measure of that phenomenon is the volume of hotel room nights used by PGA show attendees. The 43,000 estimated attendees actually booked only 29,178 room nights—rather less than three, or even two, room nights per attendee. With more day-trippers and fewer out-of-town attendees, the economic impact produced by centers like these, and others, is actually far more modest than backers claim.13
Even as convention center building has boomed in American cities, these centers have proved remarkably unproductive as public investments, failing to provide the benefits that justify their construction. Yet even in the face of failure—a new center in Boston generating less than half the hotel room nights promised by consultants, an expanded center in downtown Atlanta yielding fewer convention attendees in fiscal year 2010 than it saw in 1989—local officials and consultants continue to argue for more space and more building. Why are center consultants not held to account for their forecast errors? How is it that these failed public projects are followed not by expressions of outrage and apology, but by calls for even more? Why is it that governors and mayors, business and civic leaders, have promoted, built, and continue to call for more convention center spending, in the face of nonperformance and an evident glut?
Though the phenomenon of the boom in convention center development has been widely recognized, there is no agreement among scholars on its roots and causes, on the interests of the elected officials who sustain it, or the interests of the business and civic leaders behind it. For some academic observers, it represents an unalloyed positive in enhancing the local economy. For others, it is a necessary adaptation to central city decline or the product of political pressures from narrow interests such as hotel owners and developers. Still others point to the existence of business-dominated coalitions or regimes or “growth machines.” Yet all point to the role of local business interests and the organized business community as central to the initiation and promotion of these projects.14
If these academic analyses all point to some—perhaps the most central—role of local business in promoting and supporting convention centers and related public projects, the central paradox of center development remains. Why would business interests—narrowly focused ones such as hotels and restaurants, or broader ones such as department store chains, local utilities, and locally headquartered corporations—embrace public projects that appear to have such a modest and uncertain economic return? And why, when these convention centers produce far less activity than had been forecast and assumed, do supporters invariably call for more space, or a new publicly financed hotel or entertainment district next door? The answers to these questions, and to the fundamental interests and expectations that drive convention center investment, require a focus on local business and business interests, the apparently essential element in pressing and realizing the major public investment in convention centers.
For business leaders like “Cubby” Baer and Leif Sverdrup in St. Louis, the public investment in a new convention center offered the opportunity to remedy “property decay” and provide an “effective barrier against further deterioration.” For Atlanta’s business leaders, a convention venue on an urban renewal site could yield “protection of the Uptown area.” And in these cities and others, a major public investment project would provide development “momentum,” evidence of the public commitment to the downtown core, and a means to be “a big-league city.”
In this context, the dual imperatives of land value reshaping and momentum creation have led many cities to replace one modern convention center with another as the frontier for development and investment opportunity shifted. Thus Washington, D.C., replaced one convention center opened at Mount Vernon Square in 1983 with a far larger one to the north in the Shaw neighborhood, completed in 2003. New Orleans replaced its 1968 Rivergate with the Morial Convention Center in 1985, then expanded the Morial in 1991 and again in 1999. Houston replaced the Albert Thomas Convention Center, opened in 1967, with the new George R. Brown Convention Center on the opposite side of downtown in 1987. Boston opened its second publicly owned center, the Boston Convention and Exhibition Center, in 2003, in an underdeveloped zone of south Boston. And New York City first replaced the 1950s-era Coliseum with the Javits Convention Center in 1986, only to see Governor Andrew Cuomo call for a new convention center at a casino in Queens in early 2012, proposing that the Javits Center be demolished and its site sold for new private development. Pressed by business leaders seeking to sustain downtown property values or boost the development fortunes of an old warehouse district or railroad yard, state and local officials have embraced one scheme after another for new or expanded convention centers.
Building Boom
The last two decades have seen a remarkable boom in convention center building across American cities. 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. In one sense, that building boom represents a triumph over the host of political, fiscal, and economic constraints and conflicts that routinely face state and local governments. Faced with public resistance to increased taxes, center promoters could, and did, invent alternative financing schemes. City governments often successfully shifted much of the cost of convention center development to state governments or independent authorities.
In another sense, the boom also provides ample evidence of the “me too” character of local public investment decisions. Chicago expanded to keep up with Las Vegas, Atlanta expanded to stay competitive with Chicago and New Orleans, and Boston, Philadelphia, Washington, and New York each competed to win a larger share of the convention business in the Northeast by building more space. Each and every city that successfully developed a new or expanded center appeared to believe that it was uniquely suited to win that competition and see a steady stream of new visitors. And those expectations were given a very specific and seemingly scientific justification and forecast produced by one or more of a very small group of industry consultants.
For Phoenix, convention center development efforts in the 1990s and 2000s were simply one part of a longer and continuing stream of public initiatives and investments designed to redevelop and restore the city’s downtown. That effort was built on an alliance of the city’s business and development interests with a succession of local officials.
Phoenix’s “modern” convention facility, Civic Plaza, opened in 1972, combined exhibit hall space with a symphony hall. The facility was neatly located on the eastern edge of the downtown core, where its construction served to demolish much of “The Deuce”—the city’s skid row. And despite one observation that “Civic Plaza failed miserably as a vehicle of public architecture and downtown redevelopment,” the city added a host of major public projects on adjacent blocks. The new America West arena was built three blocks south in 1992, and the county-financed Bank One Ballpark (now Chase Field) opened nearby in 1988.15
Even with an expansion and renovation in 1985, Civic Plaza never really performed as a competitive convention venue. Local business leaders attributed that failure to the lack of a third major downtown hotel, and in 1992 the Phoenix Community Alliance, the business organization “dedicated solely to the revitalization of Central Phoenix,” produced a report terming Civic Plaza “greatly underutilized” and pressing the “urgent need” for a third hotel downtown. Yet even with business backing and the promise of subsidies, no private developer appeared willing to construct a major hotel downtown. Finally, in July 1996, the city issued a formal request for developer proposals for a major downtown hotel. But even with the promise of a substantial city government subsidy, the preferred developer was unable to put together the deal, and by fall 1997 there was little prospect of the long-sought hotel.16
By 1998, city government leaders began shifting their focus to a major expansion of Civic Plaza, with a formal request by the city’s economic development staff for a consultant study of market demand and “how to optimize the use of Civic Plaza.” The justification for the study stressed the existing $112 million in annual economic impact from convention attendees. But it made particular note of the threat from competing cities expanding their own centers and building 1,000-room convention-oriented hotels. It argued that “Our competitors in Denver, Dallas, San Antonio, and San Diego all have larger facilities and are supported by a larger hotel room inventory.”17
PriceWaterhouseCoopers delivered its Civic Plaza market study in late 1999. The consultants praised the Phoenix venue for its central location and access to the airport. But they also identified a problem with the lack of nearby hotel rooms and the age of Civic Plaza. They recommended an ambitious expansion program, including the addition of 251,000 square feet of exhibit hall space, bringing the center to a total of 500,000 square feet, as well as at least 1,050 new hotel rooms. The PWC report included a very specific forecast of how a larger Civic Plaza would perform with the added hotel rooms. It put the existing convention and tradeshow attendance for Civic Plaza at 200,000. Without an expansion, the projected annual attendance would fall to 162,500. The expansion would instead boost attendance to 325,000. Annual attendee spending would almost double, from the “existing” $282 million to $526 million, boosting city and state tax revenues and creating over 7,000 new jobs.18
The PWC findings and forecasts were perhaps not surprising. The firm had produced similar conclusions and predictions for Boston a couple of years earlier, as well as for San Diego. It had recommended a major expansion for Cincinnati in a series of studies. And it had supported a substantial expansion of Atlanta’s Georgia World Congress Center in 1993 and 1996 analyses. It would endorse a new convention center in Cleveland in reports in 2001 and 2006.
Yet for Phoenix, the seemingly “expert” and assured conclusions seemed to provide substantial justification for a major public investment. For the director of Civic Plaza, the success of a major expansion was all but certain: “This is a serious growth industry. If you want to be in this game, you need to have the product.” The real hurdle was financing a project with an estimated price tag in excess of $500 million. Mayor Skip Rimsza and the senior city staff chose a two-pronged strategy. First, the city itself would finance some $250 million, using existing hotel and restaurant taxes. While that would, under the provisions of the city charter, require a public vote for approval, the electorate could be assured that there would be no tax increase of any sort needed to pay for the expansion.19
The second element of the city’s financing plan was a significant contribution from state government. During 2001, the city staff and consultants pitched the fiscal rewards of a Civic Plaza expansion to an ad hoc committee of the state legislature. Assistant city manager Sheryl Sculley and David Radcliffe of the Greater Phoenix Convention and Visitors Bureau stressed to the legislators how the city had fallen behind its competitors, and was regularly “losing business” because Civic Plaza was too small or other cities were offering new convention venues. At one committee meeting, a consultant from PriceWaterhouseCoopers stressed the competition with other cities: “if Arizona does nothing, there will be a loss, while other cities are still expanding their convention facilities.” When questioned about the impact of the recent 9-11 events on the potential performance and benefits to the state, the consultant observed that “it is not possible to accurately predict the future, and that business travel seems to be stronger than leisure travel at the present time.”20
The city’s part of the financing scheme was resolved first. With seemingly unanimous backing from the business community (including the Phoenix Community Alliance and Downtown Partnership, which had both effectively initiated the project), the promise of no tax impact, and the PWC forecasts of a substantial increase in visitor spending, tax revenues, and jobs, Phoenix voters overwhelmingly approved the expansion project in November 2001. For the expansion backers, it was time to formalize the project design, develop detailed cost figures, and begin to sell the project to the state legislature.
In 2002 the city began an effort to win legislative support. As the city staff and area business interests sought to sell the expansion project to the state, they had both a new proposal and an added sales pitch. With a revised construction plan, the expansion had grown—from an added 280,000 square feet to the addition of 490,000. Instead of doubling the size of the center, it would in fact triple it. And with a bigger proposed center came a new consultant study. Ernst & Young produced a report on the expanded expansion in March 2003. Putting convention attendance at the existing Civic Plaza at 133,000 in 2002, the E&Y consultants argued that, while “Phoenix is the sixth largest city in the U.S., [it] ranks 60th in terms of convention center space.” By tripling the size of the center, annual attendance would reach 376,861, E&Y argued, and Phoenix would be “on par with Dallas, San Diego, and San Antonio,” with Dallas and San Diego having recently expanded. With the forecast threefold increase in attendance, center backers could now argue that total direct spending and state tax revenues would triple as well.
The combination of the massive business lobbying effort, led by Phoenix Suns owner Jerry Colangelo, and the seeming certitude of the consultant forecasts proved effective. The $300 million in state funding for the expansion passed both houses of the legislature, and was signed into law by Governor Janet Napolitano in June 2003.
The expanded Civic Plaza, renamed the Phoenix Convention Center, was completed in phases. The entire complex was fully opened in December 2008. City officials again promised abundant economic impact from a tide of new convention delegates, and described a city and center now poised to compete. According to center director Jay Greene, “As one of the top 20 largest convention centers in North America, this project has made history for the city, state, and the convention industry.”21
The 1,050 new hotel rooms called for by PriceWaterhouseCoopers in 1999 proved more difficult to realize, despite the promise of the expansion and the consultant studies. The city repeatedly tried to find a private developer for a massive convention center hotel, but failed. The alternative was for the city itself to finance, build, and own the new hotel.
In July 2004, the city council approved plans to directly finance a 1,000-room, $350 million dollar hotel project, backing the hotel’s bonds with a combination of net hotel revenues and city sports facility taxes. The city employed the HVS International consulting firm to evaluate the likely performance of the city-owned hotel. HVS concluded that the city financing model was “solidly financially feasible,” and the city staff reported, “Conservative revenue projections show the proposed hotel would generate more than adequate revenue to cover operations and debt payments during the project stabilization period and through the life of the financing term.”22
Phoenix ultimately sold the hotel bonds in December 2005, and the new city-owned Sheraton hotel opened in October 2008, just before the full convention center expansion was completed. Things would not work out quite the way the consultants had forecast and the city staff had promised.
The Phoenix case neatly exemplifies the dynamics and results of contemporary convention center development. A proposal for a new center or a major expansion appears to bubble up from a longstanding policy stream, often focused on downtown development and revitalization efforts. The idea comes buttressed with a seemingly compelling logic: the convention center is now old, competing cities have expanded and added more space, and expansion will bring enormous benefits in terms of spending, tax revenues, and job creation. A consultant study (or series of studies) documents the “need” for a larger convention facility, describes the expansions and additions of competing cities, and presents a highly precise forecast of expected performance and economic benefits. Local business leaders endorse the plan, and it receives an enthusiastic reception on the editorial page of the local newspaper. And, with little or no opposition, the plan receives the formal approval of the local mayor and city council.
Two central dimensions of convention center development provided the foundation for Phoenix’s expansion quest. The first was the manner in which the expansion was proposed and structured. The expansion proposal came before the public and the city council by itself, not as part of any larger consideration or plans. It did not result from a broad analysis of downtown revitalization or even tourism development. Indeed, it seemed to result from the failure of the efforts to develop a new privately built, albeit subsidized hotel.
During the entire period that the Civic Plaza expansion was being considered, from 1998 through the November 2001 city vote to the funding decision by the state legislature in mid-2003, there was no consideration of alternative visitor-related projects or different uses for the city’s $300 million investment. The city staff never offered the council or mayor an array of policy choices, or even a range of sizes and costs for the expansion itself. The proposal was literally a major investment in doubling (ultimately tripling) the size of Civic Plaza, or nothing.
The financing of the expansion was also structured in a narrow fashion, clearly designed to deal with the realities of voter sentiment while observing the formal, legal constraints on city spending. Both city staff and elected officials would no doubt have preferred to avoid any direct public vote on the project. But a 1989 amendment to the city charter required a vote on any sports or convention-related facility project costing more than $3 million. The city faced no alternative, and so structured the expansion proposal to make it salable to a tax-concerned electorate.
The vote authorization stressed that “The ballot proposition does not ask voters to authorize any new tax or funding sources,” and “under no circumstances will the project result in an increase in any city tax rate.” The proposition also stressed that the city government would only be responsible for half the cost—with “an additional $300 million from state or other funding sources.” And the city’s case for the expansion repeatedly stressed the imperative to compete with other places: “While Phoenix is the 6th largest city in the nation, we have only the 60th largest convention center. Other cities have been more aggressive at expanding and modernizing their convention centers, and have realized the economic and community benefits.”23
The second central element of the expansion effort in Phoenix was the reliance on outside, presumably expert consultants. The initial expansion proposal was accompanied by a study from PriceWaterhouseCoopers that appeared to endorse an expansion, with the promise that more space would allow the city to “Attract additional new and/or larger events to Phoenix,” “Increase capabilities of hosting simultaneous events by multiple users,” and “Increase patronage to downtown business including hotels, restaurants, retail shops, [and] entertainment and cultural venues.”24
The 1999 PWC report concluded that an expansion paired with 1,050 new hotel rooms would double convention attendance and thus increase attendee spending by a total of 86.5 percent. And when the city enlarged the scale of the expansion, it obtained another consultant study, from Ernst & Young, that was even more certain and expansive: convention and tradeshow attendance would grow from the 133,000 of 2002 to over 375,000 after expansion.
These consultant analyses and forecasts were effectively the only substantive market or demand information provided to the city council, local media, and public. They were presented as authoritative, with no sense of a range of alternative outcomes, “best” or “worst” cases, or even detailed discussions of the assumptions upon which they were based. Nor did the city staff, or any local group or organization, commission any competing or alternative analysis. Indeed, the assumption that Phoenix had to see a substantial boost in its convention business was accepted and regularly reported as an article of faith. That faith was neatly summarized in an Arizona Republic editorial before the November 2001 vote:
What’s more, a doubling of the size would allow Civic Plaza to handle multiple events, an advantage that not only helps expand business, but helps even out the ebb and flow of conventioneers into downtown Phoenix. It would help keep downtown businesses stable. It would help downtown thrive. A “yes” on Proposition 100 will allow the Valley of the Sun to continue competing for conventions and the wealth of tourism dollars that flow from them—nearly a third of convention travelers to the city venture around the state either before or after their event. And it will allow that to happen without an increase in city taxes.25
Much the same thing occurred with the proposal for a 1,000-room convention center hotel. The argument for a major hotel voiced by the Phoenix Community Alliance in 1992 and the “need” established by PriceWaterhouseCoopers in 1999 were never questioned. The repeated reluctance or inability of any private developer to finance such a project was taken not as a measure of risk but as simply a short-term impediment to be overcome. As they had before, the mayor and council relied on the assessment and professionalism of the city’s managerial staff. And the staff reported, “Having confirmed that a privately financed downtown hotel is not feasible through developer input, staff research, and outside consultant advice, staff’s findings support the publicly financed hotel model as the most reasonable and expeditious course to achieve the City’s downtown hospitality objectives.”26
The new city-financed Sheraton hotel was thus reviewed and approved by the City Council in much the same fashion as the Civic Plaza expansion. The city relied on expert consultant advice from Warnick and Company and HVS International in establishing both the future financial performance of the hotel and its place in downtown Phoenix. HVS simply relied on the Ernst & Young estimate of 375,000 total convention attendees post-expansion, and argued that these would produce 289,282 annual added room nights to support the planned hotel, yielding a 63 percent occupancy rate by 2010 with an average rate of $164.90. Warnick, in providing a “vision statement” for the hotel, contended, “All great cities have a great urban hotel, which becomes the focal point for that city‥…The downtown Sheraton Hotel is to be that great urban hotel for the city of Phoenix.”27
The Phoenix Convention Center expansion and the adjacent 1,000-room Sheraton proved to be rather more a house of cards than an economic engine and “focal point for the city.” In its first full year of operation, 2009, the expanded convention center drew 309,729 convention attendees who produced 358,632 room nights of hotel demand. Those were short of the Ernst & Young and HVS estimates, but a respectable showing. But attendance faltered for fiscal 2010, hitting just 229,097, and for fiscal year 2011 (through June 30, 2011) came to just 156,126.
As the center’s attendance slipped back to what the smaller Civic Plaza had been producing in 1995 and 1996, the city-owned Sheraton also stumbled. Occupancy for 2009 was just 49.4 percent, at an average daily rate of $163.90. The 2010 occupancy grew to 52.5 percent, but the rate slipped to $158.34. At the end of 2010, Moody’s Investors Service downgraded the hotel’s bonds. In September 2011, Moody’s placed a “negative outlook” on the bonds of the city-owned Sheraton, noting the rating firm’s “expectation that, over the next 12 to 18 months, the hotel will likely struggle with improving its occupancy levels and average daily rates.”28
In 2012 and into 2013, the hotel reported it could not meet its required debt payment from its operating revenues, and had to draw on a guarantee of other city funds, an action “reflecting financial difficulties.”29
Phoenix had bet big on a massive convention center expansion and city-owned hotel. The initial results did not bear out consultant forecasts or city expectations. Yet Phoenix’s investment in tripling the size of its center proved remarkably effective ammunition for the small group of industry consultants, including PriceWaterhouseCoopers and HVS. They were now in a position to tell any number of other cities that the Phoenix expansion posed a direct competitive threat to them.
Impressive and expensive as the Phoenix Convention Center expansion was, it was by no means unique or unusual. Vancouver, British Columbia, opened a major center expansion just a couple of months after Phoenix, and Daytona Beach, Florida, had opened its own expanded Ocean Center shortly before. Raleigh, North Carolina, opened an entirely new center in September 2008, followed in June 2009 by the new Lancaster County Convention Center in Lancaster, Pennsylvania. The first few months of 2011 saw convention center expansions open in Indianapolis and Philadelphia, with construction under way on new centers in Cleveland and Nashville. During 2011 and 2012 plans were under way for center expansions in Boston, Miami Beach, Detroit, Anaheim, San Antonio, Oklahoma City, San Diego, Los Angeles, San Francisco, and Seattle.
PriceWaterhouseCoopers, having recommended that Phoenix expand in part to keep up with the competition, could report to San Diego officials in December 2007 that “Upon completion of its expansion, exhibit space at the Phoenix Convention Center will exceed that of the SDCC, thereby lowering San Diego’s rank to seventh among the Western centers.”30
For convention center consulting firm Conventions, Sports & Leisure, founded in 1988 by the former heads of Coopers & Lybrand’s convention center practice, the bigger new Phoenix Convention Center also neatly functioned as an argument and foil. The CSL firm could argue, in a November 2010 presentation to Boston convention center managers and supporters, that Phoenix had “nearly tripled the size” of its center, complementing it with a “downtown entertainment complex that consists of the U.S. Airways Center, Chase Field, Symphony Hall, Science Center, etc.”
The firm also pointed to the Phoenix expansion as a competitor for San Antonio’s Henry B. Gonzalez Convention Center in a study in July 2008. CSL reported that the expansion was due to open in late 2008, and that “340,000 estimated room nights have already been booked for 2009.” In an updated study for San Antonio in December 2010, CSL again pointed to the opening of the expanded Phoenix center, and an expansion of Philadelphia’s Pennsylvania Convention Center—also a CSL client—due to open in 2011, noting that the San Antonio center’s “exhibit space continues to rank very low relative to the centers reviewed.” The CSL firm had completed a “market demand analysis” for the New Orleans Morial Convention Center in February 2009 that noted the increased competition from the expanded Phoenix Center. It also described the more than 1.1 million square feet of new center exhibit space being planned in cities such as Boston, Miami Beach, Detroit, San Antonio, Las Vegas, and Anaheim—all also CSL clients, all advised of the growing competition from new and expanded convention centers in other cities, and all advised to add more space or improved facilities.31
The CSL consultants managed to tell a wide array of city clients that they were facing a growing stock of competitive convention center space. The firm also managed to tell some cities an additional tale—that beyond the need for more exhibit space, a new ballroom, or more meeting rooms, they needed a very large new “headquarters hotel.” A series of CSL studies in 2007-2011 presented the need for a thousand-room headquarters hotel adjacent to Kansas City’s convention center. A CSL analysis had argued the case for a 1,200-room hotel to serve the Washington, D.C., Convention Center in 2004. And in studies for Boston and San Diego in 2009 and 2010, CSL could point to both the Phoenix Convention Center expansion and the adjacent Sheraton and recommend that each of those cities expand and add a headquarters hotel.
The argument that growing competition requires more public spending on more convention center space—bigger, newer, enhanced with the latest technology—has helped sustain a massive boom in convention facilities. From just 193 centers with at least 25,000 square feet of exhibit space in 1986, the U.S. convention center count reached 254 by 1996 and 325 in 2010.
As the number of convention centers grew, so did the stock of exhibit hall space. That total, 32.5 million square feet in 1986, hit 49.1 million in 1996 66.8 million square feet in 2006, and 70.5 million in 2011. Thus over two and a half decades, available space in U.S. convention facilities more than doubled. And with new centers under construction in places as diverse as Cleveland, Nashville, and Cedar Rapids, Iowa, the total will inevitably continue to grow.32
The convention center building boom has been remarkable not just for its scale. New and expanded centers cover a wide array of urban and suburban communities, across all geographic regions and city-size categories. Major visitor destination cities have committed substantial public revenues to center development. Chicago’s McCormick Place, with a total of 1.8 million square feet of space in 1986, developed a major addition in the mid-1990s that brought the complex to 2.2 million square feet; another expansion, adding 470,000 square feet, opened in July 2007. Las Vegas doubled the size of its center over these two decades, to 1.94 million square feet in early 2002. And Orlando’s Orange County Convention Center, which covered just 180,000 square feet in 1986, reached 2.05 million square feet in late 2003, fueled by the growing river of revenues from a tax on the county’s more than 100,000 hotel rooms.
Many growing Sunbelt cities have also chosen to invest in ever larger and more expansive convention centers, much as Phoenix did. Dallas expanded its center steadily through the 1990s, reaching over one million square feet of exhibit space in 2002. Houston added 420,000 square feet of space, almost doubling the size of the George R. Brown Convention Center, in November 2003. Two years earlier, San Antonio had opened an expansion of its Henry B. Gonzalez Convention Center that doubled its size.
While the total center space has been boosted by the growth of very large centers in places like Chicago, Las Vegas, and Orlando, a broad array of cities now also boast up-to-date convention facilities intended to lure the proverbially lucrative meeting and tradeshow business. In California, the Ontario Convention Center opened in late 1997, San Jose’s new McEnery Convention Center in 1989, and Sacramento’s expanded center in 1996. Denver’s Colorado Convention Center opened for business in 1990 and was doubled in size in 2004. Hartford’s new Connecticut Convention Center began operation in 2005, the Rhode Island Convention Center in Providence in 1993, and the new Boston Convention and Exhibition Center in 2004.
The Baltimore Convention Center was expanded to more than double its original size in 1997, and entirely new centers have opened in Ocean City, Maryland; Richmond, Hampton, and Virginia Beach, Virginia. In the Midwest, the new Greater Columbus Convention Center opened its doors in 1993, Cincinnati completed a major expansion of its Duke Energy Center in 2006, and Fort Wayne, Indiana, and Grand Rapids, Michigan, are home to newly expanded centers as of 2005. Branson, Missouri, opened its new center in 2007 and Peoria, Illinois, completed an expansion the same year. The Indiana Convention Center in Indianapolis has also seen a series of expansions—in 1993, 2001, and most recently early 2011.
The convention center building boom has not been limited to central cities. Suburban communities have also sought their share of the visitor activity and economic impact promised by convention center backers. Overland Park, Kansas, a Kansas City suburb, opened its new convention center and publicly financed hotel in 2002, and Chicago suburb Schaumburg, Illinois, opened a new convention center and an adjacent publicly owned hotel in 2006. Also in suburban Chicago, Rosemont’s Donald Stephens Convention Center more than doubled in size from 1986 to 2001, to 845,000 square feet of exhibit space. The suburban Atlanta area includes the Cobb Galleria Center, the North Atlanta Trade Center, the Georgia International Convention Center (near Hartsfield-Jackson Airport), and the Gwinnett Center in Duluth.
The contemporary convention center building boom is in many ways a dual triumph of politics and finance. Convention centers and expansions are major public investments, commonly in hundreds of millions of dollars. They most often are financed with some form of long-term public borrowing. And historically, they have not necessarily been widely embraced or approved by local taxpayers and voters.
The civic auditoriums and convention centers built in the first half of the twentieth century were commonly developed by city governments, financed using general obligation bonds. In the vast majority of states, that debt required majority—in some states, two-thirds majority—approval by the local electorate. When city governments began the wave of “modern” convention facilities after World War II, often as part of new civic centers or downtown renewal schemes, those too had to be voted on and approved by the local electorate.
Los Angeles civic leaders first sought a major convention venue early in the twentieth century, but local voters failed to provide the needed two-thirds majority for a memorial auditorium bond issue in 1920. Mayor Fletcher Bowron backed another auditorium bond issue in 1939 with the argument that Cleveland’s auditorium was a “great success.” But his enthusiasm was not shared by the city council, which voted against putting the auditorium bond proposal to the voters. A plan for a “huge civic auditorium costing $25,000,000” was on the ballot in 1951, paired with a proposed music center and slum clearance funding. All three propositions were defeated. Auditorium backers returned with a $27 million auditorium and convention hall bond plan in May 1953. Despite the editorial plea by the Los Angeles Times that “national gatherings …. pass us by,” the voters again failed to produce a two-thirds majority. Convention hall backers tried again in June 1954, with the argument that the city had lost $38 million the previous year in convention business. And once again the voters said no. Los Angeles did not open a convention center until July 1971, a feat it only managed after an extended debate over the site, and by using a special authority to issue the bonds and bypass the city’s voters.33
The efforts to build a new civic auditorium or convention hall in San Diego were no less problematic. A plan for a new civic center and auditorium in 1947 was defeated at the polls. A bond proposal for a convention hall and theater was voted on in June 1956, and failed to get the required two-thirds majority, winning approval from just over 60 percent of the voters. City officials and civic leaders chose to place the convention center scheme on the ballot again in November; again it failed, winning just a 49.9 percent “yes” vote. San Diego only succeeded in building a new convention center in 1964 by finding a way around the voters, using a combination of a lease arrangement and the proceeds from the sale of other city property. Business leaders and the Centre City Development Corporation developed a plan for a new downtown convention center in the late 1970s. Seeking to avoid a public vote, the city council adopted a scheme financed with lease revenue bonds in October 1980. But citizen antipathy and the reaction of outlying hotel owners opposed to a downtown center that would provide them little business led to a successful petition drive that forced a public vote. In a May 1981 ballot, the proposed center received just 43 percent of the vote and was defeated.34
Other cities demonstrated a parallel fragility of convention center bond proposals. Cleveland voters turned down two successive funding plans in the 1950s, finally approving one on the third try. Atlanta’s electorate defeated a proposed Civic Center in 1962, approving a less expensive version the following year. Raleigh voters in 1992 defeated a proposed $95 million convention center bond issue by 58 to 42 percent.
In more recent years Pittsburgh area voters turned down a proposal for a new convention center (together with new sports stadium) in 1997; Columbus voters twice defeated tax issues to fund a new convention center; San Jose voters failed to provide a sufficient majority for a center expansion in 2002; and Portland, Oregon voters nixed a convention center expansion in 1998. Yet despite the verdict of local voters, each of these cities, much like Los Angeles and San Diego, succeeded in building a new convention center or expansion. That success in the face of electoral defeat has been managed with a series of financial and political innovations. Pittsburgh turned to a sports and exhibition authority; Columbus created a countywide convention facilities authority; Portland turned to a combination of city, county, and metro area government. What these cities, and a host of others, have managed is nothing less than a reconstruction of the means of financing convention facilities and similar projects, employing a variety of fiscal vehicles that avoid the “problems” of popular democracy and voter review. This fiscal reconstruction is the focus of Chapter 2.
The convention center boom has also been built on a parallel reconstruction of urban politics. It is not just reluctant voters who have stood in the way of convention center development. For decades, center building was stymied by local conflict and opposition over issues beyond the immediate fiscal ones. Much of that conflict involved disputes over location and site. Chicago’s efforts to build a major convention hall from the 1920s into the 1950s were marked by continuing disputes over where a new facility would go, and thus who would benefit or suffer. During the 1960s, St. Louis saw two competing convention center proposals, one from the mayor and one from local business leaders, at very different downtown sites. And in San Diego, Mayor Pete Wilson’s plans for a new downtown center in 1980 were opposed by a coalition of outlying hotel owners and defeated at the polls. Yet in all these cases, and dozens of others, the apparent conflict was eventually successfully managed, the opposition eventually overcome, and a new center completed.
The fundamental conflict over center location was not about technical planning questions or issues of accessibility or land cost. Rather, it was over gaining (or potentially losing) the benefits a major public investment could have for urban space. The promise of a new or bigger convention facility was that it would draw thousands of new visitors and millions of their dollars to the city—what Cleveland Plain Dealer editorial writers termed “the convention pot o’ gold” in 1956. That flood of visitors would spur the development of new hotels, restaurants, and shops. But while local hotel owners and newspaper publishers might all agree on the great benefits for the community at large or even for downtown, much of that boost would be narrower, limited to the immediate environs of the new convention hall. That meant that property interests or developers focused on one area of the city or the downtown would not necessarily embrace a new convention facility somewhere else.35
A number of geographically distinct business groups in Chicago—the West Central Association, the North Central Association, the South Side Planning Board—each sought the convention center in its own area to bolster land values and encourage new development. Boston’s War Memorial (later Hynes) Auditorium, opened in early 1965, was part of the new Prudential Center development on the site of the former Boston & Albany rail yards in Back Bay, intended to support new hotel and retail construction. The goals of convention center building also went beyond encouraging and supporting new development to altering the character and potential of land in or near downtown.36
When the Los Angeles Times editorialized about the civic benefits of a new convention hall in 1953, it noted that the proposed downtown location was “in a somewhat dilapidated state,” and the buildings’ “removal would improve the area and cause a sprucing up of neighboring structures.” And when in 1954 the leaders of the Chicago Planning Commission and Land Clearance Commission joined a group of leading business leaders to consider the Fort Dearborn development proposal for the area north of the downtown Loop, mayoral adviser James Downs noted the possibility of building a new convention hall at the south end of the Loop, arguing that “a large scale redevelopment at this site would tend to balance Fort Dearborn and anchor the Loop securely.”37
Writing in his pioneering volume Principles of City Land Values in 1924, Richard M. Hurd had concluded,
To summarize, the effect of public buildings, if located at or near the old business centre they tend to maintain central strength in their first location, as in Boston, New York, Philadelphia and Chicago. This is the normal case. The first exception would be where public buildings are located at a moderate distance from the centre, where the tendency is to draw business in their direction.38
For planners and real estate experts such as James Downs, Hurd’s assessment tapped the potential role of a new convention center in shaping land use and development. A new facility might serve as an “anchor” for the existing central business district. Located on the edge of the downtown core, it could serve as a bulwark against adjacent areas in decline.
For Atlanta’s Metropolitan Planning Commission in 1952, the potential of a new civic center with a “large convention auditorium” was that it could eliminate “one of Atlanta’s worst slums…. a definite menace to the future health of the downtown area.” The Planning Commission two years later would suggest a “new convention auditorium” at a different site, as part of the “development of space above and immediately adjacent to the railroad gulch,” where it would aid the development of new office buildings, a new department store, and an 800 to 1,000-room hotel.39
The two conflicting Atlanta plans pointed up the political problem of siting and building a new “convention auditorium.” Built as part of a slum clearance and urban renewal project east of the downtown core, it might remove a “menace.” As part of the “air rights” over the gulch on the opposite side of the core, it promised to act as “magnet” for new investment and private development. But Atlanta could not necessarily afford one convention center, let alone two.
The solution for Atlanta, as it would be for any number of other cities, was a combination of multiple public projects in a single deal that could serve the distinct parts of the downtown core. Many of the east side “slums” described in the 1952 plan were in fact wiped out through the federal urban renewal program, providing a site for that “convention auditorium,” the Atlanta Civic Center. The railroad gulch would receive its own public project a few years later, in the form of a new coliseum/arena, promoted by one of the city’s major developers as the kind of magnet that could support his planned private development.
Atlanta’s voters first turned down the Civic Center bond proposal in 1962. A smaller scheme was approved the following year. But when local business leaders sought to construct an Intercontinental Congress Center in the late 1960s, they avoided city government and its voters. They turned instead to the Georgia state legislature. When the new Atlanta Coliseum was planned and developed in the late 1960s, it too was financed in a fashion that avoided any public vote.
With the fundamental deals for convention center building structured first within the local business community, only emerging into public view when set, and financing arrangements arranged to avoid or limit any direct public vote, the politics of center development has been effectively reshaped since the 1960s and 1970s. The final element in sustaining the convention center boom has been the set of promises—of visitor activity, spending, job creation, and economic impact—that have singularly privileged center development as a public investment.
Economic Impact
The fiscal reconstruction of convention center finance and politics has been accompanied by a parallel shift in the rhetoric of purpose and promise. The convention halls and civic centers of the first half of the twentieth century were commonly justified as amenities for the broad urban community, capable of hosting large community events as well as conventions, and accommodating large local gatherings as well as the occasional national political convention or major event. In 1923, St. Louis voters approved a $5 million bond issue for a “Municipal Auditorium and Community Center.” Cleveland voters overwhelmingly approved the bonds for a “Public Auditorium” in 1916. Los Angeles civic and business leaders promoted a new “War Memorial Auditorium” in 1920 as a “living monument” to the city’s servicemen and “large enough for any indoor spectacle.”40
Beginning in the years after World War II, cities began to promote the idea of luring major national convention and tradeshow events, often accompanied by the imperative to lure national political conventions. By the 1980s and 1990s, the rhetoric had come to center on the notion of “economic impact.” The flow of new out-of-town visitors to the conventions, accommodated by a new or larger venue, would yield a growing stream of spending, visitor dollars that would be multiplied throughout the local economy. Spending by hotel guests would be re-spent by hotel employees; wages of restaurant workers and retail employees supported by new visitors would be spent on other local goods and services, magnifying the economic impact.
The increased volume of visitor spending, over a three- or four-day average stay, would in turn boost local tax revenues. Hotel and restaurant spending would produce new hotel occupancy and sales tax revenue, and increased visitor business would ultimately support new development around the convention center, development that would produce new property tax revenues. By the early 1980s, arguments that a new or expanded center would produce economic benefits were a staple of consultant studies, with forecast amounts stated with striking specificity.
Convention centers have thus come to be justified as “loss leaders.” Local convention and visitors bureaus (CVBs) and center promoters acknowledge that almost every convention center in the U.S. operates at a loss, not even counting the annual cost in debt service. Centers simply do not take in revenues equal to the cost of operation. In fiscal 2011, the operating loss of Philadelphia’s Pennsylvania Convention Center was $18.1 million. Washington’s Walter Washington Convention Center lost $20.7 million from operations, in addition to $34.9 million annual debt service and $14.2 million for marketing. Orlando’s Orange County Convention Center saw an operating loss of $14 million.
But the regular argument of convention center backers is that these persistent operating losses, in addition to the cost of building a center, are more than counterbalanced by the “essential economic activity that [drives] new tax revenues, economic benefit and employment from other services and establishments like hotels, restaurants and retail stores.”41
The argument for convention centers as economic drivers has come to be structured around the analyses and predictions of consultants. Where once a local government research bureau or chamber of commerce might provide an estimate of future convention center business, by the 1980s and 1990s the public rhetoric of center investment revolved around formal forecasts of visitor volume, convention delegate spending, and multiplied economic impact.
These consultant forecasts, whether by hotel consulting firms such as PKF or major national accounting firms like PriceWaterhouse (and its predecessor Laventhol & Horwath), Coopers & Lybrand, and KPMG, were presented as both more expert and far more precise than their predecessors. Laventhol’s promotional materials circa 1989 boasted of its computer-based “predictive attendance model” and told local officials that its “estimates of economic impact…. can be used to gain community support and interest.” The language of public officials and newspaper headlines changed as well, describing the benefits of convention center development in terms of an exact number of annual new spending dollars and a seemingly guaranteed flow of new local tax revenues. Thus the discourse surrounding convention center investment was altered, from choosing one public investment against another in a broad package of bond proposals to a focus on the evident and certain rewards a new or bigger center would bring.42
For Philadelphians, the front page of the Philadelphia Inquirer in January 1983 brought the headline that “Big Civic Center Is a Must, Study Says.” The article reported on the conclusion of the PKF study that a new downtown convention center would bring some $700 million a year in convention delegate spending, yielding the city $1 billion in new tax revenues over thirty years. A second major Inquirer story two weeks later added the forecast that a new center would create as many as 5,000 new jobs. And with the boom in visitor spending and jobs would come a larger if less measurable benefit. A large new convention facility would reshape the city’s image from a “drab” location to a “progressive” and “forward thinking” community.43
The PKF analysis did include some alternatives, including a smaller center or renovation of the existing Civic Center. But the firm emphasized a large new convention center in the Center City area as its “first recommendation.”
Armed with the conclusions from the PKF consultant report described by its reporters, the Inquirer’s editorial writers chimed in, repeating the consultant claims of delegate spending, economic impact, job creation, and tax revenues and calling on the city to “move ahead with design and construction of a new and modern convention complex in Center City…. It should do so with enthusiasm and resolve.” Deeming the project of the “highest priority,” the stirring editorial concluded, “The need now is to get on with it—with vigor and dispatch.”44
For the Inquirer’s editorialists, there was little need for additional analysis or independent review. Nor was there questioning of the logic of convention center investment at a time when competing cities like New York and Washington were also building new centers. The bulky PKF study was sufficient evidence and justification for an investment that would ultimately cost $523 million, the promise of new visitor dollars and job creation far too entrancing.
As communications scholar Phyllis Kaniss recounted in her case study of local media response to the convention center proposal, coverage of the scheme was dominated by official pronouncements and the image of pressing civic need. When some independent observers, including one professor at the University of Pennsylvania, did begin to question the PKF numbers, their views were given short shrift compared to “official” accounts and forecasts.45
The promises of abundant visitor spending and new city jobs did not eliminate conflict over issues such as location, cost, and political control. There was an extended public debate over the proper downtown site and then over city versus state control of construction and operation. The proposed center did manage to avoid any real local conflict over financing. The city would ultimately contribute some $300 million from hotel room tax revenues, while the state government agreed to provide a $185 million grant. But the state fiscal role opened the project to questioning from state legislators. Facing what the Philadelphia Daily News termed “gales of criticism from some politicians and community leaders who saw the center as a huge waste of money,” the newly formed Pennsylvania Convention Center Authority commissioned another PKF study.46
The PKF firm delivered its updated analysis in May 1988. The new estimate of annual convention delegate spending was slightly lower, if remarkably precise, at $618,927,900 for 2001, with 346,000 annual convention attendees producing new hotel demand of 664,800 room nights. With that presumably assured new demand, PKF promised a total of 4,848 new hotel rooms to be built in the city over the next decade, including a thousand-room convention headquarters hotel, and sufficient “over demand for the airport and City Line hotels.”47
The series of consultant studies in Philadelphia did not necessarily eliminate conflict or debate over the massive public investment in a new convention center. But it did shape both media coverage and public perception of the proposal—the experts had assessed the performance of a new center and offered the assurance that it would succeed in delivering a host of economic and employment benefits to a city that had seen serious job loss and decline.
Even before the center’s grand opening in June 1993, arguments were being made that the new Pennsylvania Convention Center was too small. In February, the Daily News quoted the findings of a City Planning Commission report that the 440,000 square foot center was not large enough to compete for major conventions and tradeshows against Chicago, Las Vegas, Atlanta, and New York. The city lacked both the financial resources for a bigger facility and the new hotel rooms to support it. Calls for a larger center began quite soon after 1993. In November 1997, Mayor Ed Rendell called for a major expansion, arguing, “In order to get the very, very largest groups to come back, we need more space.”48
Before Mayor Rendell could realize his goal of a bigger center for the largest groups, he and the Pennsylvania Convention Center Authority had to grapple with two problems. The first was finding a source of funds, presumably from outside a city government increasingly strapped for cash. The second was dealing with the impact of the center’s union labor rates and work rules on event organizers and exhibitors. Newspaper accounts of the possible expansion invariably included a discussion of labor issues, exemplified by a January 2000 Inquirer article that ended by noting that only New York and San Francisco had higher labor costs, and quoting the head of the convention center authority as saying, “Workers here have also been criticized by tradeshow and convention producers as uncouth and insensitive to their needs.”49
It was not until fall 2002, with union agreement on new jurisdictional and work rules, that the center authority was prepared to make the case for expansion. That came from a consultant study on the case—and forecast results—for a major expansion, commissioned and paid for by the Pennsylvania Convention Center Authority. The Conventions, Sports & Leisure International (CSL) findings were released by the authority in October 2002 and headlined by the Daily News as “Center Survey: If You Build It, They Will Come,” emphasizing that 58 percent of convention planners would “look favorably” at an expanded center. The study also promised that more space would boost the center’s annual economic impact from $215 million to $308 million, or 43 percent, and create 2,850 new permanent jobs.50
An Inquirer article the same day was somewhat more questioning, with the headline “Smaller Return Seen from Center Expansion.” The story went on to report the same figures from CSL—43 percent more hotel rooms filled after an expansion, with a $93 million boost in attendee spending. But it also noted that those figures were less than had been offered by studies in 1998 and 1999. The article quoted city finance director Janice Davis as saying, “We needed validation…. I am extremely happy that it is in support of the expansion.”51
The findings of the CSL study effectively made the case for more convention center space, with seeming certitude that the expansion would bring real rewards in terms of increased convention business. When the study was finally finished in late January 2003, it included some specifics that had not appeared in the newspaper coverage the previous October. Indeed, those specifics never appeared in the local media, as the CSL study was not released to the public. The 58 percent “positive response rate” garnered by Philadelphia from convention planners was noted. But so was the information that Philadelphia’s figure was equal to Boston’s and lower than other competing cities such as Denver (65 percent), Las Vegas (70 percent), and New Orleans (77 percent). No comparable response figures were cited for New York, Baltimore, or Washington, cities CSL described as Philadelphia’s “primary competition.”52
The CSL study did offer the prediction that an expansion would increase attendance by more than 50 percent and boost annual hotel room night demand from an average of 503,000 per year to 786,000. But the analysis contained some other potentially troubling details. The center had averaged 246,839 convention and tradeshow attendees yearly from 1999 to 2002. But those totals were well below PKF’s 1998 forecast of 349,500 for those years. And the CSL consultants did not bother to note that the center’s room-night production of 503,000 included two years, 2000 and 2002, that were unusually successful. The 2000 total was boosted by the city’s hosting of the Republican National Convention, while 2002 had seen 27 major conventions, the highest in the center’s history. A more plausible baseline would have been the 470,000 room nights in 1998 or 420,000 in 1999.
CSL’s promise of more than 280,000 new room nights would be a fixture of arguments for the expansion, as the state legislature passed a 2004 slots gambling bill that allocated some $400 million for the expansion. It would be a constant in the press releases and publications of the Philadelphia Convention and Visitors Bureau. It would appear—unquestioned—with some regularity in press reports of the progress of the project as it moved to an early 2011 opening.53
Even as the expansion project was moving ahead in late 2006, it was evident to the Pennsylvania Convention Center Authority that it would be far less productive than CSL had predicted. The authority’s November 2006 “Convention Center Operating Plan” included the information that the existing center’s hotel room-night generation had fallen to 363,954 for fiscal year 2004 and 297,180 for 2005. The authority’s own forecast of future room-night generation was set to grow to 650,000 by fiscal 2014, a far more modest increase than the 786,000 predicted by CSL in 2003, and one not mentioned in public.54
When the Pennsylvania Convention Center expansion opened for business in March 2011, it faced a market environment reshaped by expansions at competing centers and the 2008 recession. The center’s room-night total dropped to 336,000 in 2007 and 303,000 in 2009. The actual performance for 2010 was 179,000. A new consultant study of the expanded center’s future performance and operations put the forecast at 321,300 for fiscal 2013 and 381,523 for 2014. It was clear that the expanded Pennsylvania Convention Center would be pressed to merely equal the average 503,000 annual room nights noted by CSL in 2003. Indeed, it managed 431,000 room nights in calendar 2012, well below the CSL forecast of 786,000.55
From the first public discussion of a new convention facility in downtown Philadelphia in the early 1980s through the opening of a new $786 million expansion in 2011, the series of consultant studies and their forecasts, regularly cited by the press and public officials, effectively defined the content and focus of the public discourse on convention center building. Those “expert” studies admitted no uncertainty about larger market realities or future performance. It was simply taken as a given that the new center would produce the anticipated benefits. And when the expansion proposal was developed, that discussion too was suffused with consultant predictions of an economic boom, with no real effort on the part of local officials, city and state bureaucrats, or news media to determine whether earlier forecasts had really been met.
The Philadelphia story neatly exemplifies the larger political and fiscal realities (or perhaps fantasies) behind the building boom. The new Pennsylvania Convention Center was financed with a combination of state dollars and local hotel tax revenues, neatly removing the question of center development from both the public and the city government. The expansion was financed with state revenues from slots gambling, in a deal—assembled and pressed by governor and former Philadelphia mayor Ed Rendell—that also aided Pittsburgh and its convention center. In both cases, the public investment decision was focused on paying for convention center space, not on any larger goal or purpose, and with no consideration of alternative needs or public investments.
Without any direct public vote, the “deals” to finance the center were shaped by state-level politics. There, the deal-making was effectively distributive and geographic, with enough benefits for enough parts of the Commonwealth and their local legislators to succeed. The fundamental “deal” for Philadelphia’s center and its subsequent expansion were thus constructed in a remarkably narrow and constrained field, with serious public discourse and debate effectively limited and avoided, built on the unquestioned assumptions and presumptions of consultants who presented no record of their earlier forecasts’ accuracy and no evidence of expert knowledge beyond the contention that they had done many such studies before.56
The dynamic of “expert” consultant studies, promises of a boom in visitor spending, specific forecasts of “economic impact,” editorial endorsements, and seemingly “invisible” financing was much the same in New York City in the 1990s. Just a decade after the 1986 opening of the Jacob K. Javits Convention Center, center officials commissioned a feasibility analysis of an expansion from Coopers & Lybrand. The New York Times reported the findings of the Coopers & Lybrand study on the Javits Center in April 1997, that “To maintain its competitive edge” the Javits needed to double its exhibition space or risk being hurt by new centers or expansions under way in Chicago, Las Vegas, Orlando, Atlanta, and Philadelphia. From such an expansion, “the economic benefits could be huge…. creation of 13,000 new jobs and $87 million in annual tax revenues for the state and the city.”57 And the expansion call was renewed the following month in the New York Times, pegged to the opening of a new center in Atlantic City, complete with the same argument that “an expanded center would generate 13,000 new jobs and contribute $568 million in added spending at hotels, restaurants, theaters, stores and other New York City businesses.”58
The Times editorial page joined the chorus in June 1998, by noting that the city’s “attraction as a site for trade shows and conventions has been one of the key elements in its economic growth” and telling Mayor Rudolph Giuliani, “Building a world-class convention center would create jobs and assure the city’s ability to attract trade shows and exhibitions into the next century…. The Mayor must cooperate with the state in reaching that goal.”59
For all the seeming specificity and certainty of the Coopers & Lybrand study, the Times reportage succeeded in misreading its findings and substance. The report did estimate the jobs to be produced by an expansion at “12,700 full and part-time jobs.” And it did put “Estimated Annual Direct Spending in a Stabilized Year of Operations” at $568,254,000. But those figures would be the total product of the expanded center, not the added or incremental impact.60
The Coopers & Lybrand study did not include figures on the spending or job creation of the existing, pre-expansion Javits. Nor did it include numbers of anticipated new events or attendees, making it impossible to calculate the added impact of expansion. Indeed, the Coopers study contained only relatively limited information on the center’s actual performance, with event and attendance data for just three years, two of them shown as “estimated.” Had the Coopers consultants provided a longer historical view, the study might have yielded a more accurate, if more disturbing, portrait.
While the Javits was shown as hosting 60 conventions and tradeshows with total attendance of 1.1 million in fiscal year 1995, that total was substantially less than the (not reported) 1.42 million attendees of 1991 or the 1.92 million in 1990. And perhaps most problematically, where Coopers & Lybrand calculated average convention attendee spending on the basis of estimates by the International Association of Convention and Visitors Bureaus, that each spent three days or more in the convention city, Javits attendees didn’t come close to that estimate. The Coopers study of the Javits expansion noted that the 1.1 million convention and tradeshow attendees in fiscal 1995 generated just 201,600 hotel room nights. The reality was that the tradeshows at the Javits were primarily attended by New York metropolitan area residents, who visited the Javits for the day, rather than by out-of-town visitors. In order to realize the jobs or economic impact promised by the Coopers consultants, the Javits would have to successfully compete for an entirely new market of rotating conventions.
The Javits expansion proposal stalled despite the economic boom promised by Coopers & Lybrand, as the result of a fight between Mayor Giuliani and New York Governor George Pataki over Giuliani’s plan for a new stadium adjacent to the center. With no real progress, the Javits Center Operating Corporation commissioned another study to move the project forward, this time from Robert Canton of PriceWaterhouseCoopers.
The March 2000 PriceWaterhouseCoopers analysis concluded (in print both italicized and bold) the “JKJCC will lose existing business if it does not expand,” “JKJCC will attract new events if it is expanded,” and “An expanded JKJCC will generate economic and fiscal benefits to New York City and the State of New York.” The PWC report offered an even more precise picture of the results of an expansion, noting that the center’s exhibit halls “are currently at practical maximum occupancy,” and predicting that an expansion of some 500,000 square feet would bring the Javits 504,000 more convention and tradeshow attendees each year, for a total of 1.62 million.61
Canton’s 2000 report concluded that those half million more convention attendees would produce precisely 417,000 new hotel room nights a year and generate an added $355 million in spending and 7,000 additional jobs to the city. But at the end of the year an entirely new dimension was added, with the initially quiet floating of a proposal for a new football stadium for the New York Jets adjacent to the Javits. The Jets stadium was linked to the city’s efforts to win the 2012 Olympic Games. But a stadium with a retractable roof could also be sold as offering added exhibit hall space—“the stadium could be converted within 24 hours to exhibition space and connected to the Javits Center by a footbridge”—and a solution to the presumed deficiencies of the Javits. The convention center itself was termed by the Times article as “widely derided as an out-of-date, second-class building unworthy of the city.”62
Neither the Jets stadium nor the Javits Center expansion proved easily realized in the cauldron of New York City politics. So in late 2003 the Javits Center Corporation sought yet another consultant study of the market for an expanded center, turning once again to Robert Canton of PriceWaterhouseCoopers. In the years since the 2000 analysis, convention business and travel generally had been hard hit by a recession and the aftermath of 9-11. Convention and tradeshow attendance at the Javits had fallen from 1.3 million in 1998 to just 955,000 in 2003. Canton attributed the drop to “an industry wide trend of decreased event attendance.” Yet the forecast of new convention and tradeshow attendee spending in his 2004 report proved even greater than in 2000.63
The New York Times article reporting on the PriceWaterhouseCooper findings noted that “doubling the center’s size… would attract half a million more visitors, 18 to 20 new trade shows and conventions, and nearly $700 million in additional business a year.” The article also noted the reassurance provided by PriceWaterhouseCoopers that “The center does well despite its size, high labor costs and the city’s high hotel rates…. because New York is a highly attractive international city in a region with a shortage of exhibition space.”64
The 2004 PWC report provided the formal, seemingly expert, economic justification for New York’s political leaders to endorse and press for the Javits expansion. In a joint press release on March 25, 2004, Mayor Michael Bloomberg and Governor George Pataki announced “a historic plan to transform and modernize New York City’s convention industry,” including a major expansion of the Javits, a new adjacent 1,500-room hotel, and a 75,000-seat stadium. Their vision and rhetoric were grandiose: “This is a smart City-State investment in New York’s future and one that leverages private investment to grow our convention industry and help realize New York’s Olympic dreams.” Their claims that “the expansion will have a profound impact on New York’s economy, increasing the existing $97 million annual tax revenue generated by Javits by an additional $53 million and 415,000 hotel nights a year…. [and] will create 10,830 additional jobs” were drawn directly and exactly from the 2004 PriceWaterhouseCoopers report. The seemingly expert consultant study provided ample political cover and economic rationale.
While the analysis by PriceWaterhouseCoopers provided a public justification for the expansion, the report itself had some serious deficiencies. Rob Canton of PWC argued for the success of the expanded center, despite being “mindful of the fact that overall national demand for exhibit and meeting space and overall attendance at trade shows and conventions had declined since 2001,” because “the Center did not suffer substantial declines in business or attendance during this period and that it continues to turn away business because of lack of available dates.”65
The issue of the convention and tradeshow attendance at the Javits—historic, current, and likely future—was crucial to PWC’s forecasts of spending, public revenue, and job creation. It was also the vital link in understanding the reasonableness of the consultant’s forecasts. But in 182 pages of the January 2004 PWC report, analysis of attendance occupied less than a single page, largely devoted to a bar chart of attendance from 1993 to 2002. The report noted that “convention/trade show attendance is estimated to have ranged from 1.0 million to 1.4 million from 1993 to 2002 and to have averaged 1.2 million annually.”66
In the accompanying chart (Table 8), the attendance figures for 1999, 2000, 2001, and 2002 are all shown as “estimated.” The PWC consultants offered no explanation for their use of “estimated” values for three or four years earlier. The actual figures, distributed by NYC & Company, the city’s visitor bureau, in its monthly “Barometer,” would suggest significant change in the Javits’s performance. The Javits saw 1,277,800 convention and tradeshow attendees in 1999, and 1,253,400 in 2000. Yet attendance fell to 977,600 in 2001, followed by 931,850 in 2002, and 955,150 in 2003.67
Canton would surely have had the exact attendance numbers for 2001 and 2002 available for his analysis in late 2003. Indeed, he should have had at least partial year-to-date numbers through September or October. Those numbers would have shown a substantial and persistent drop in convention attendance. Yet that drop does not really appear in the report. Instead, it estimates a “No Expansion” scenario of 1,113,000 annual convention and tradeshow attendees, and a projected “Expansion” total of 1,532,000.
The proposed Javits expansion would first grow in size, as new Governor Eliot Spitzer and Senator Charles Schumer embraced a plan for a more ambitious expansion with a total cost on the order of $3 to $4 billion. Then, by 2008, it would shrink back to a renovation accompanied by a quite modest expansion—all that could be financed with the $700 million in hotel fee revenue bonds sold in November 2005. And as the expansion shrank, so did the Javits’s actual convention and tradeshow attendance, to 817,200 in 2007, 708,200 in 2008, and then 533,700 in 2012.68
From the first announcement of the Javits expansion plan in March 2004 to the adoption of the final “General Project Plan” in March 2009, the PWC forecasts were repeated over and over by public officials and in public documents. They were treated as “real” in the project’s environmental impact statement. Indeed, the final 2009 project plan neatly repeated the PWC “No Expansion” figure of 1,113,000 annual convention and tradeshow attendees at 73 events, despite the fact that the center hosted just 67 conventions and tradeshows in 2008, with an attendance of 708,200.69
There were no independent studies or reports in the New York City media of the remarkably parallel studies with similar estimates of economic impact completed by PriceWaterhouseCoopers for other cities at about the same time. Cleveland garnered a PWC report on a new center in 2001 with the promise of $181.7 million in annual direct spending, followed by another PWC analysis in April 2005 that forecast a larger center would boost annual convention attendance from 25,000 to 175,000, generating direct spending of $213,584,000 annually in Cleveland and Cuyahoga County.
Canton and the PriceWaterhouseCoopers consultants produced a market demand and economic analysis of a planned expansion of the Indiana Convention Center in early 2004, offering the assessment that the center’s “past success is largely explained by the strong destination package it offers (numerous proximate and connected hotels, dining, and attractions)” and promising that a bigger center would bring 18 to 23 additional conventions and tradeshows, attracting at least 108,000 new attendees and producing $108,810,000 in new visitor spending each year.70
PriceWaterhouseCoopers, like many of the other convention center consultants, appeared fully capable of finding that more space would generate more convention business for a wide array of cities. The absence of any real questioning or re-analysis of its forecasts was, in the case of New York’s Javits Center, a product of the local political environment. With a “deal” set by both Mayor Bloomberg and Governor Pataki, there was no organized or formal opposition. Local hotel owners had long pressed for a bigger Javits. With their commitment to a new hotel tax to pay a part of the cost (albeit less than the mayor had hoped), and a reliance on a broad array of seemingly “free” state and city funds, including $350 million from the Battery Park City Authority, the expansion (at least in its initial form and cost) did not appear to come at a particularly high price, or at the cost of another public investment project. And with the location of the Javits already fixed, there was no extended debate or conflict—as there had been at the Javits’s birth—over site and locational benefit.71
From Civic Improvement to Economic Boon
The arguments for public convention center investment and the case for development have changed dramatically over the past few decades. Where cities once promoted civic memorials or public amenities, convention facilities have come to be portrayed as economic boons, sources of new dollars from visitors and spurs to private investment and development. Those arguments—and the media coverage built around them—have come to be defined by the studies and analyses of ostensibly independent, “expert” consultants.
Armed with forecasts that a new or larger convention center will surely yield a predictable stream of new attendees and visitors, the public is told this investment will produce millions of dollars in “economic impact” and a substantial boost in new local jobs. Repeated by public officials and the local media, the promise of dollars and jobs appears to be absolutely assured. Only rarely are the foundations of those consultant conclusions fully investigated, the assumptions subjected to serious review and questioning. Nor are the consultants pressed to demonstrate the success or accuracy of their predictions, or held to account for their work.
The authority and expertise behind consultant conclusions has made convention center projects more appealing to local officials, and far easier to “sell” to the general public. But the political path to convention center development has also been reshaped from the years when Los Angeles or Cleveland voters would regularly say “no” to center investment. By the 1990s, it had simply become unnecessary to ask them.