Saturday, August 26, 2000

Tax plan would hike expense of dining out


Funds sought to help expand convention center

By Ken Alltucker
The Cincinnati Enquirer

        A group studying Cincinnati's convention center expansion wants restaurant patrons to help pick up the $334.9 million tab through the creation of a city tax charged to those who eat out.

        The 1 percent restaurant tax would raise an estimated $65.8 million total over 30 years, the largest of a dozen financing sources cobbled together by a task force appointed by Mayor Charlie Luken to create a detailed plan for expanding the convention center.

PAYING FOR IT
 Proposed funding sources for expansion of the Albert B. Sabin Convention Center:
 Business community, $20 million
 Equity Fund, $10 million
 City hotel tax, $17.9 million
 Delta Air Lines, $29.2 million
 Cincinnati, $50.8 million
 Kentucky/Indiana, $10 million
 State loan, $15 million
 Hamilton County, $50.8 million
 Countywide hotel tax, $34.7 million
 City restaurant tax, $65.8 million
 State capital funds, $30 million
 Total: $334.9 million
 Source: Mayor Charlie Luken's convention center expansion task force
        Financing is the biggest challenge to expanding Albert B. Sabin Convention Center west over Interstate 75, a project business leaders have identified as the top priority for its expected economic boost for downtown businesses and the region's economy.

        Critics say some funding sources are questionable, even doubtful. Creating a restaurant tax — a method used by cities like Indianapolis, Minnesota and St. Louis to pay for convention centers or other downtown attractions — would require approval of the Ohio Legislature, and restaurant owners vow a fight.

        The task force also is counting on $50.8 million from Hamilton County, but county officials say they won't have any money to spare following construction of two new sports stadiums on the riverfront.

        The task force — a group of business leaders, elected officials and union representatives — voted Friday to direct its consultant, HMS Success of Columbus, to create a detailed financial study spelling out the benefits of an expanded center for restaurants and Hamilton County.

        The consultant prepared a similar study for Delta Air Lines that helped convince the air carrier to pay $29.9

        million for naming rights of the expanded convention center.

        “Those who receive the benefits of the expansion should pay for it,” said David Milenthal of HMS Success. “I truly believe it's difficult, but it's our best approach.”

        Restaurant owners outside downtown said they wouldn't benefit from an expanded convention center because visitors usually don't buy meals in neighborhoods outside the central business district.

        “We would definitely not be in favor of that,” said Iain Connell of the Dubliner restaurant in Pleasant Ridge. “I think customers would notice, and the sales tax already is going up for the stadiums. “People are already tired of carrying the load.”

        He was referring to Hamilton County Commissioners' 1996 approval of a half-cent sales tax increase to fund new stadiums for the Bengals and Reds. That bumped up the countywide sales tax to 6 percent. A city restaurant tax would increase that tax to 7 percent for restaurants.

        Steven Petersen, who owns Petersen's Restaurant downtown, said conventions usually improve sales. He's noticed the difference over the last few years as Cincinnati's aging convention center has lost groups to larger, newer convention centers in other Midwest cities.

        “Restaurants are a tremendous beneficiary of a new convention center,” Mr. Petersen. “I see it bringing more money into this city than the stadiums.”

        A PriceWaterhouse Coopers study predicts $112.7 million in direct spending and $210.9 million from other benefits like more jobs, higher downtown property values and increased taxes.

        The task force members say those numbers should compel Hamilton County Commissioners to contribute.

        Robert Wehling, a Procter & Gamble Co. executive, suggested the task force wait until after the fall election to approach Hamilton County Commissioners and ask for funding.

        But Hamilton County Commissioner Tom Neyer Jr., a task force member absent from Friday's meeting, said funding is not a political issue and waiting until November won't make a difference. The county still won't contribute $50.8 million then, he said.

        “There are a number of difficult hurdles with all the funding options on the table,” Mr. Neyer said. “There's no support for spending those dollars on a convention center.”

        Cincinnati has committed $50.8 million in bonds to pay for the project. A city room-tax increase would raise $17.9 million, but it would take effect only after private businesses kick in $20 million. Other funding sources include $10 million in marketing funds from Kentucky and Indiana, $34.7 million from a proposed county hotel tax increase and $45 million in state loans and grants.

        Mr. Milenthal said other sources can be sought, including a rental car tax increase at the Cincinnati/Northern Kentucky Airport. It isn't the right time to ask taxpayers to pay the bill, he said.

        Even though private businesses haven't raised $20 million, Task Force Chairman Dan Meyer said he isn't worried. The chairman and chief executive officer of Milacron Inc. said other steps needed first are detailed engineering studies and cost estimates. Also, a more precise marketing study would show demand for the center.

        Expansion plans have stalled for a year and a half. The task force last month scrapped the original $400 million plan to expand the center by more than 600,000 square feet because it was unrealistic and too ambitious. The group agreed the center should expand by 350,000 square feet west over Interstate 75 instead of south or east. That expansion would be large enough to attract better-quality conventions with visitors that spend more money, rent more rooms and buy more meals at restaurants.

        A consultant warned that if the expansion fails, Cincinnati will attract second-tier conventions with visitors who tend to share rooms and spend less.

       



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