Friday Interview: Prof Probes Convention Center Follies | Eastern North Carolina Now

    Publisher's note: This post was created by the CJ Staff of Carolina Journal, John Hood Publisher.

UT-San Antonio's Heywood Sanders documents wasteful schemes


Heywood Sanders
    RALEIGH     If you live in a city with a government-owned convention center, chances are pretty good that it's a money loser. It's also a good bet that government leaders think they can fix the problem by spending more money on the convention center and its surrounding amenities. Heywood Sanders, professor of public administration at the University of Texas at San Antonio, examines this often-repeated scenario in the book Convention Center Follies: Politics, Power, and Public Investment in American Cities. During a recent visit to Raleigh, Sanders discussed his research with the John Locke Foundation's Shaftesbury Society and with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

    Kokai: Why do these cities all keep looking at convention centers and thinking they're a good deal for their cities?

    Sanders: Well, and one could say local business, civic, and political leaders believe their city is a special place, believe their city has great merit as a visitor destination, that earnestly they can perceive a desire to create jobs, a desire to boost the local economy and produce economic impact. The dilemma that you have is that when every single city of any size in the U.S. makes that decision a local booster believes that they're going to see a flood of new visitors. What you get is an oversupply of convention center space.

    And the fascinating question for me — it's part of the reason why that book ends up weighing in at over 500 pages — a fascinating question for me is, what are the local politics that drive this? And over and over, the short answer is we see the local business leadership being the prime movers behind this, and it's a business leadership that is largely focused on revitalizing, boosting, enhancing the downtown core.

    Kokai: And despite all evidence, politicians from all political parties seem to buy into this, don't they?

    Sanders: Oh, absolutely. In part it reflects the appeal of the commitment of the business leadership to downtown. We've got cities that have done massive levels of public investment in their downtown cores over the last 40 or 50 years. We've seen a host of downtown sports stadiums and arenas. We've seen convention venues and hotels, performing arts centers, cultural centers. These days, streetcars seem to be up there as one of the latest innovations in the planning panoply of panaceas.

    So the dynamic is one in which, over and over, there's the assumption that one more major project, one more large-scale public investment will be the thing that will turn downtown around.

    Kokai: Each of these cities seems to find fairly early on that their convention center is a money loser, but instead of saying, "Hey, let's do something different," they try to put more money into it or get a bigger convention center or another amenity, just as you said. Why does the good money tend to follow the bad in these cases?

    Sanders: There are two answers to it. One is the public image of this, and the industry — the convention and trade show industry generally, the local convention and visitor bureau, the folks in the business of selling and promoting the city — will typically talk about convention centers as loss leaders. That is, well, we know they lose money, but on the other hand, look at the flood of new visitor dollars that they're bringing to the community. Look at all the economic impact that they yield.

    And so there is really a kind of public vision that however much money they lose, however much they cost, they're still doing great things for the local economy. But beneath that, what we see, and at least what I've tried to grapple with in major cities around the country, is the fact that there's a very different kind of policy agenda at work, and that's typically a policy agenda focused on shaping downtown land values and development potential.

    So at one juncture — going through the monthly minutes of the big business organization in St. Louis, a group called Civic Progress Inc., and it's a group that would typically include the CEOs of all the major area corporations: McDonnell Douglas Aviation, the local banks, the local utilities, Gussie Busch of Anheuser-Busch, a Danforth of Ralston Purina, the kinds of corporate leaders who are the titans of American business — and at one juncture in the late 1960s, one of the their members, the chief executive of a local department store chain, says to his colleagues, "What we need on the north end of downtown is the same kind of protection from erosion that Busch Stadium provides on the south side."

    And in that little, modest statement was, for me, the kernel of this. It was: This is not about what the public image or economic reality of a convention center is. This is about protecting land values from erosion. This is about shaping large-scale development. And in a world in which there's lots of money to be made by shaping and defining and altering land value, if you can get the public sector to do it for you, it's a great deal.

    Kokai: Your book deals with convention centers really across the country, but you have some personal knowledge of the convention center that's located just a few blocks from where we're sitting right now, the one in Raleigh. What can you tell us about Raleigh's experience with convention centers?

    Sanders: Raleigh followed very much the same trajectory and pattern of most every American city. There was a proposal to develop a convention center here in the 1990s that was on the ballot. The voters turned it down. The local business community continued to press for it, and a convention center surfaced as part of the city's 2003 Livable Streets effort, one of the so-called "Five in Five" big projects focused on downtown Raleigh. The mechanism for financing it was now pretty standard — a countywide tax on hotel and motel rooms and on restaurant meals, with the argument that it's visitors who are paying for this, not local taxpayers. So in a sense it's kind of free; it's not coming out of your property tax payments, for example. And, this time around, the voters weren't asked directly.

    And so with the financing mechanism in place, Raleigh also had a set of consultant studies done by one of the small number of national convention center consultants. They said, "Your existing convention venue is too small. You need a big, new one in order to compete with other cities. Raleigh has great potential in the convention business. A convention center here will do just great, bring in a flood of new visitors every year, fill up local hotel rooms. You do, however, need to have a new hotel next door, and so you'll probably need to provide some public subsidies," as the city did for what became the Raleigh Marriott downtown. "And once you have that, you've got great potential as a convention destination."

    Kokai: So we know that what was talked about has come to pass. What's going to be the next step probably from Raleigh?

    Sanders: We already see it. The next argument is, "Well, we need to do even better. And to do even better we need more, and that means Raleigh needs a convention center expansion, and it needs more adjacent downtown hotel rooms, that the Marriott right there is not nearly big enough or new enough, and so Raleigh needs a 500-room hotel next door to the convention center to make everything work out just fine."
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