Saturday, February 20, 1999
$325M Sabin expansion urged
Report: City can't compete otherwise
BY LUCY MAY
The Cincinnati Enquirer
Cincinnati's downtown convention center is losing ground to competitors, and a $325 million to $350 million expansion is the only way to keep up, according to a new report released to city council Friday.
The report, by consultant Price Waterhouse cooper,recommends expanding the 245,000-square-foot Albert B. Sabin Cincinnati Convention Center to 640,000 square feet.
Consultants estimate such an expansion would generate an extra $312 million annually in direct spending for Cincinnati, Hamilton County, Ohio, Northern Kentucky and Kentucky state government.
Cincinnati has been studying such an expansion for nearly a decade, and the longer it takes to start the project, the more expensive it will get, said Greater Cincinnati Convention and Visitors Bureau President Michael Wilson.
“We need to decide if we want to be a big-league city,” Mr. Wilson said, echoing the slogan used in the 1996 stadium sales-tax campaign. “Status quo is just not acceptable.”
Big-spending conventions — like the Ohio Florists, the Fire Service Instructors and Dealernews Powersports — are just a few of the shows Cincinnati has lost over the years because the center wasn't big enough to accommodate them.
That's why Greater Cincinnati Convention and Visitors Bureau officials will unveil a new expansion plan Tuesday at the bureau's annual luncheon.
What they won't talk about is how to pay to expand the center to 640,000 square feet of exhibit and meeting space at a cost of between $325 million and $350 million.
Advocates are looking for private funding sources — such as selling naming rights to Delta Air Lines — as well as money in the form of increased hotel taxes and a new restaurant tax.
Still, planners don't have funding in place to finance the complete cost of the expansion.
“Obviously, there's a shortfall,” said City Councilman Todd Portune, who has made convention center expansion one of his priorities. “The question is whether the city can do it on its own or whether the city or county do it together.”
Mr. Portune thinks the city should fund the expan sion on its own, if possible, so city officials can “marry the center expansion with our own political considerations concerning the letting of contracts, workforce development and the like.”
Hamilton County Commission President Tom Neyer Jr., who has taken the lead for the county on the expansion project, said that while the county's involvement in the project is unresolved, he believes the expansion needs to happen.
“We're spending a lot of money — appropriately — on things like stadiums, parks, transportation, entertainment and retail. But that is primarily a reallocation of already existing local dollars,” he said. “Convention income represents primarily new dollars to this region.”
Some academics who have studied convention centers across the country, however, question whether the centers really generate as much money as predictions promise. Every consultant's report that recommends expansion paints a rosy picture of the dollars that will be pumped into a local economy, said Heywood Sanders, a professor of urban studies at Trinity University in San Antonio.
The results rarely are as good as the promises, he said, and businesses leaders typically end up pushing for another expansion or public subsidy of a new hotel to improve the bottom line.
Plus, convention centers them selves lose money, said William Raabe, a business professor at Samford University in Birmingham, Ala.
“With good management — and that's a big if — maybe some years you break even,” he said.
Indeed, the new report shows Cincinnati's convention center, without the expansion, can expect an annual operating deficit of $663,000. With the expansion, the report predicts the operating deficit will grow to $1.12 million a year.
Cincinnati's downtown convention center was built in 1967 at a cost of $10 million. In 1987, the center's first, $62-million expansion and renovation was completed. By 1992, community leaders already were calling for another expansion.
Local business and community leaders insist another expansion will draw enough business to pay off because of all the other amenities Cincinnati has going for it: professional sports, a safe downtown, the arts and a world-class zoo, to name a few.
In fact, the new report ranks Cincinnati and its competitors based on hotel taxes, hotel rooms available and other amenities and found that Cincinnati is near the top on every measure except those that rate the size of the convention center.
Among the major findings in the new report:
• The expanded center is estimated to host about 702,500 visitorsa year for professional associations, trade associations, social, military, educational, religious and fraternal groups, wholesale shows and consumer shows. That compares to 429,000 visitors if the center doesn't expand.
• Estimated tax revenues for the city, county, state and region generated by an expanded center will total up to $18.5 million annually (in 1998 dollars). That's $11.7 million more annually than the estimate if the center doesn't expand.
• The state of Ohio is expected to receive 55 percent of the total tax revenues and will be the primary beneficiary of a center expansion. Northern Kentucky and the state of Kentucky will receive about 14 percent of the total tax revenues. Hamilton County will get about 20 percent, and the city of Cincinnati will get about 11 percent.
• Among its 14 major competitors, Cincinnati currently ranks near the bottom in terms of exhibit space square footage. If the facility doesn't expand, it will rank even lower after competitors complete their expansion plans. With the expansion, Cincinnati would increase its rank to 6th for total exhibit space and 2nd for meeting room space.
The report cautions, however, if Cincinnati's hotels deteriorate or the expanded center isn't managed aggressively, the estimated attendance and economic impacts could vary by as much as 25 percent.
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