The City Sentinel

Convention Center fiscal analysis: headquarters hotel a must, along with operating subsides from taxpayers

Patrick B. McGuigan Story by on January 19, 2014 . Click on author name to view all articles by this author. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

 

Ed Shadid and Russell Claus

Ed Shadid and Russell Claus




by Patrick B. McGuigan

Associate Publisher


 

A 2009 analysis prepared for the Greater Oklahoma City Chamber of Commerce assumes taxpayer subsidies will be required to operate convention facilities, more or less permanently. The conclusion is based both on widespread policies for the convention and visitor business across America. The analysis documented around $10 million in operating facilities for the existing Cox Convention Center over the three years examined in the analysis.


Authors of the analysis contended (page 75): “[A] new headquarters hotel will be needed to attract desirable levels of convention, tradeshow and meeting event potential unique to Oklahoma City.”


The analysis was critical of the Cox Convention Center’s model of divided management. Consequently, the authors strongly recommend “that a hotel operator not be given rights to book or operate space in the convention center.”


The analysis (by Conventions Sports and Leisure International – CSL) estimated “direct spending” (by visitors to local conventions held locally) reached more than $16 million annually – and would grow to some $45 million if the city built expanded convention facilities as anticipated in MAPS 3 process. The analysis also projected increased local tax revenues from expanded convention operations.


The report (“Feasibility Analysis for Potential Development of New Downtown Convention Facilities in Oklahoma City”) was financed by the City Chamber, and presented at meetings held in February 2009. The City Chamber has declined to release the document to the public, and the City Council declined to press for its release.


This reporter asked for a copy of the full document, but was given only an executive summary. Chamber staff allowed on-site access to the 89-page report (which included several charts and graphs), which was examined over three sessions at the group’s downtown office.


Concerning a hotel linked to a new convention center, authors of the analysis said, “The costs to develop headquarter hotels are significant. There are no examples nationwide of a fully privately-developed convention center headquarter hotel in at least the last 10 years.”


Authors outlined possible methods for tax financing of such a hotel. First, financial subsidies from the public (city government) to the developer, in form of Tax Increment Financing, public construction of parking or infrastructure at the hotel, land donations, and/or cash contributions; or, Second, formation of a publicly-funded corporation or authority with the ability to issue debt. This corporation would own the facility “for a number of years and will then sell the hotel into the private market.”


Concerning convention facility operations, the analysis said (page 85), “Regardless of potenial future convention facility development in Oklahoma City, public subsidies will continue to be necessary in order to operate the Cox Convention Center into the foreseeable future.”


Operating losses at the Cox Center were, over the three years summarized in the report projected at $3,717,241 (Fiscal Year 2006), $3,363,848 (FY 2007) and $3,215,782 (FY 2008).


The 14 cities to which the Oklahoma City market was compared were Albuquerque, NM; Charlotte, NC; Hampton Roads, VA; Kansas City, MO; Louisville, KY; Memphis, TN; Mobile, AL; Pittsburgh, PA; Providence, RI; Salt Lake City, UT; Santa Clara, CA; Savannah, GA; Little Rock, AR; and Portland, OR.


In all, 12 cities had lower operating losses than the Cox Center in FY 2008. Two had higher operation losses that year.


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