Convention Center Follies. Heywood T. Sanders
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full cost of a major expansion, estimated at over $100 million. For that, Kansas City needed more local money. City leaders had imposed a set of hotel and restaurant taxes to pay for the bonds used to build Bartle in the 1970s. By raising those tax rates, it could provide a steady stream of revenue to retire new bonds for the expansion. At the same time, the tax increases would require voter approval, but only a simple majority.
By shifting to financing with a tax increase rather than a bond issue, Kansas City political leaders neatly reduced the size and scale of the electoral coalition needed to approve the expansion project. There was no need to propose a broad, all-inclusive package of public improvements for the entire city. But there was still a need to ensure the support of critical groups of voters. The result was a series of “side deals” to win council and community backing for the Bartle expansion. For the African American community, there was a commitment to neighborhood tourism projects that could include funding for a jazz hall of fame. Union leaders won a new contract for city employees.38
The hotel and restaurant tax increase was backed by the “Kansas City Jobs Committee” with a $337,000 campaign effort and the strong editorial backing of the city’s two daily newspapers. The result was a 61 percent “yes” vote, securing some $6 million in annual revenues that could both pay for the expansion, now pegged at $120 million, and support a “tourism development fund” for projects like the Jazz Museum. The city neatly avoided the state requirement for voter approval of bond issues by crafting a lease arrangement, with the debt actually issued by the “Kansas City Municipal Assistance Corporation,” a nonprofit entity created in 1984 to get around state debt restrictions, and overseen by a board that included the city manager, the city attorney, and the city’s director of finance.39
The expanded Bartle Convention Center formally opened in late September 1994, adding some 200,000 square feet of exhibit hall space to the earlier facility, at a cost of $144 million. Kansas City mayor Emanuel Cleaver termed the larger edifice a “majestic convention center that will set the standard for convention centers around the world.” The mayor added, “It makes a statement nationally that Kansas City is a big-league player when it comes to conventions.” The city’s convention and visitors’ bureau promised that 40 new conventions had already been booked for the expanded center through 2002. And there were promises of a boom in private hotel and restaurant development in the surrounding area.40
Yet, much as with its original completion in 1976, the expanded Bartle almost immediately faced growing competition from other cities. And in 2000, the consultant hired by the city council and the convention and visitors bureau, John Kaatz of CSL, delivered a withering assessment of what the city had bought for its $144 million. He concluded, “Bartle Hall’s meeting rooms are substandard in decor and technologically outdated, and its undersized ballroom is costing Kansas City lost convention business and tax dollars.” “You have to spend some money,” he added, telling a council committee, “Kansas City ranked near the bottom of several comparison lists of the nation’s top 25 convention cities and risked falling even further without a Bartle Hall upgrade.”41
Kaatz’s analysis provided the justification for yet another call for investment in improving and expanding Bartle. And just as with the first expansion effort, the $74 million price tag of the new ballroom and additional upgrades would be on the ballot as an increase in city hotel and restaurant taxes, requiring only a majority vote for approval. And rather than a broad program of public improvements, the tax increases were paired on the ballot with a proposal for a $35 million revenue bond issue, much of it earmarked for downtown improvements. According to the city’s economic development director, “When we can, we want to invest our dollars to create a catalytic effect, to leverage private investments and create market opportunities.”42
The November 2002 ballot gave the Bartle upgrade tax increase a 52.8 percent “yes” vote, the lowest margin since the two-thirds majority garnered by the original bond proposal in 1973. But by changing the fiscal and political structure of convention center finance, Kansas City’s business and political leaders had literally “reformed” the capacity for convention center investment. By 2002, the business community could reassuringly assert that “business travelers” would pay the higher hotel taxes, and that the burden of the increased restaurant tax, “adding a nickel to every $20 restaurant tab,” was comparatively mild. The result, just as promised in every previous vote, was that Kansas City would remain a competitive convention destination, fully capable of competing with every other major city and luring tens of thousands of new convention attendees to the city each year.
The shift to revenue bonds and a vote solely on increases in the hotel and restaurant taxes did not remove the need to work out deals and compromises, both with the city’s hospitality interests and with important voter blocs. But it eased the political problem of securing electoral support, while being manageable in an environment of local fiscal limits. Convention center and downtown backers could regularly assert that these taxes could only properly be used for boosting tourism. And they could reassuringly portray the convention center investment as one that would both boost visitor spending and secure the fortunes of downtown.
San Antonio
The fiscal and political reformation managed by Kansas City business leaders and elected officials was not unique. Faced with growing voter resistance to both increased taxes and downtown development projects, a broad array of other cities succeeded in creating new fiscal schemes that assured public dollars for expanded centers without a vote on long-term debt.
San Antonio’s first post-World War II convention center efforts began with the plan for clearing and rebuilding much of the fringe of downtown as the site for a world’s fair, Hemisfair ’68. The fair plans included a new “Community and Convention Center,” to be financed with city general obligation bonds. That in turn required a referendum vote, and the center proposal with a $10.9 million price tag was packaged as part of a broader seven-item, $30 million bond program, including funds for parks, libraries, and street improvements, in January 1964.
Less than a decade after the new center opened in 1968, city officials called for an expansion. This time there was no attempt to put it on the ballot for voter approval. And there would be no further votes on center expansion or financing in future years. The expanded and renamed Henry B. Gonzalez Convention Center opened in 1977, financed by the revenues from the city-owned City Public Service gas and electric utility.
By early 1983, Mayor Henry Cisneros was promoting the idea of yet another expansion, arguing that it would allow for larger conventions and draw more visitors to the city. Even before it commissioned a feasibility study of the expansion, the city council committed to an increase in the hotel-motel tax. That hotel tax increase would pay for the “certificates of obligation” issued to pay for the expansion, neatly avoiding the need for a public vote on a bond issue proposal.43
The expansion of the HBG Convention Center was completed in late 1986, bringing it to 240,000 square feet of exhibit space. Yet once again, only a few years passed before downtown business interests and local hoteliers were pressing for another major expansion. Arguing that the center “is at absolute full capacity during months of high traffic,” consulting firm Gladstone Associates recommended in November 1990 adding up to 230,000 square feet of exhibit space, effectively doubling the center’s size. The consultants recommended that the expansion be paid for with an increase in the citywide hotel tax, then at 7 percent.44
City leaders secured approval for the 2 percent “Expansion Hotel Occupancy Tax” from the state legislature in 1993, and three years later sold the bonds to finance the $215 million expansion effort. By using the dedicated hotel tax, San Antonio could tap the revenues generated by some 23,000 city hotel rooms, regardless of whether they were occupied by convention attendees or by families visiting the Alamo and Riverwalk. And as the city and its stock of hotel rooms grew, the 2 percent tax provided a stream of funds committed to the expansion—and future expansions—almost exclusively.45
The HBG Center expansion was completed in early 2001. But even before the larger center had demonstrated its success (or failure) in luring convention business, the city government was planning yet another expansion. City finance officials told bond rating agencies in 2006