Convention Center Follies. Heywood T. Sanders
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area of the state. The final cost of the center, estimated at $114 million by PKF in 1983, came to $523.4 million when it opened in June 1993.76
State Deals, Local Goodies
The deal that sealed millions in state funding for Philadelphia’s new convention center proved both a model and a harbinger. When Pittsburgh and Allegheny County officials began the search for financing an expanded center to replace what one consultant termed “worn and dated,” they turned—as had Philadelphia—to the state. Governor Tom Ridge came through with a commitment of $150 million in April 1998 for what would be a final cost of more than $370 million. When Philadelphia leaders concluded that the existing Pennsylvania Convention Center needed to be expanded, to keep up with the competition from other cities and accommodate “lost business,” they won a state commitment to finance the expansion debt service over 30 years, using the proceeds from newly authorized slot gambling at racetracks and casinos. The same new slots revenue source also provided funding for Pittsburgh as part of the deal, with funds to pay off the debt of the city’s convention center and build a new arena for the Pittsburgh Penguins. And Pennsylvania governors have been equally accommodating and distributive with smaller communities, providing state funds for new convention centers in both Lancaster and Erie in recent years.
State governments have come to be central players in convention center development and expansion in recent decades. The state of Maryland provided the bulk of financing for the Baltimore Convention Center, opened in 1979. When the center was expanded in the late 1990s, the state provided $101 million of the $151 million total cost. And the state also helped finance both a new convention center in Ocean City and a conference center in Montgomery County. Hartford’s new Connecticut Convention Center, opened in mid-2005 at a cost of $271 million, was entirely financed by the state government. The Arizona state government picked up $300 million of the roughly $600 million cost of a major expansion of the Phoenix Convention Center. Nebraska supports the Qwest Center convention center and arena complex in Omaha through an arrangement in which state sales tax revenues generated from the facility are “turned back” to the city of Omaha. Washington state enacted legislation in 1999 providing for the creation of “public facility districts” which can capture a portion of the sales tax revenue that would otherwise flow to the state, all without a vote at the local level. The public facility district scheme has supported new convention centers in Tacoma, Kennewick, Vancouver, Lynwood, Spokane, and Yakima. And in 2009, the state of Michigan passed legislation providing for the transfer of Detroit’s Cobo Convention Center to a new regional authority (with a board made up of representatives of the state and Wayne, Oakland, and Macomb counties as well as Detroit) and a $279 million expansion financed by a state liquor tax and hotel tax.
The “deals” that create and sustain these state initiatives vary. In some cases, like Pennsylvania’s, the state legislature’s “price” for funding a major project in one city or region is a companion project—or multiple projects—in other places. In other cases, like Detroit’s Cobo or again Philadelphia’s Pennsylvania Convention Center, the price of broad political and legislative support is a shift in control from the central city to a broader regional or state authority. And what appears to be a single instance of state involvement can easily become a “model” for a far larger set of facilities and investments. Washington state’s multiplying convention centers, built through public facility districts, employ the same financing vehicle the state provided a few years earlier to build Seattle’s Safeco Field baseball stadium.
The state-level politics of creating logrolling legislative coalitions and providing governors with “goodies” to distribute around their states thus tends to shape convention center building rather more than the realistic prospects of economic return or market feasibility. It leads to the proliferation of new convention centers in untested visitor destinations like Erie, Pennsylvania, or Vancouver, Washington. But it does offer local business leaders seeking a way to revitalize a downtown core, or local elected officials promoting a major new public project, a means of getting those things done—and claiming the credit—without relying entirely on local revenues or selling the community electorate on a bond issue. Perhaps most important, “taking it to the state” neatly avoids any serious debate over local, city priorities, ensuring that those interests that want a new or larger convention center succeed.
Riding a Visitor Wave
For most cities, financing and building a new or expanded convention center requires a substantial—albeit manageable—stock of political initiative and fiscal ingenuity. Local governments often need to overcome a combination of legal and fiscal constraints, as well as the possible opposition of the local electorate. For some communities, however, convention center financing and building is a far easier task. Those places are able to capitalize on effectively dedicated streams of public revenue that are legally linked to center finance and tend to grow over time.
Las Vegas
The Las Vegas Convention Center today boasts 1.94 million square feet of exhibit space, a far cry from the 40,000 square foot hall at its opening in 1959. Much like those in Orange County, Florida, the expansions of the Las Vegas Convention Center have been powered by the stream of revenues generated by a tax on Clark County hotel rooms. As the city and county have prospered as a gambling center and visitor mecca, the river of annual visitors has provided an enormous fiscal boon to the Las Vegas Convention and Visitors Authority.
The contemporary Las Vegas Convention Center began with an effort by a small group of local businessmen to build up the volume of visitors in off-peak periods. Led by electrical contracting firm owner and county commissioner George “Bud” Albright, the city and county jointly named a convention hall subcommittee in January 1955. The subcommittee of Horseshoe Club executive Joe Brown, Last Frontier owner William Moore, and Edmund Converse recommended building a new convention facility on an undeveloped site (the former Las Vegas Racetrack), owned by Brown, adjacent to the “Strip” of Las Vegas Boulevard.77
The choice of the Strip, rather than downtown, as the center site was an enormously important one. It provided an abundant stock of relatively inexpensive land on which to expand, and it reinforced (and in turn was supported by) the explosion in development of casino hotels on the Strip, outside the limits of the city of Las Vegas.
Albright and the county commissioners faced another central question in choosing how to finance the planned $4.5 million convention center. Fearing opposition from local voters to a tax hike, Albright came up with the idea of financing with a dedicated five percent room tax on resort hotels and a more modest three percent tax on motels. That differential tax rate neatly accommodated the small motel owners, while providing a steady revenue stream. Albright’s son recalled seeing his father at an adding machine, trying to calculate the yield from varying tax rates, and “The numbers he produced were enormous.” Indeed, Kenny Albright remembered, “He thought he had put the decimal in the wrong place.”78
Albright and the county commissioners had secured approval from the state legislature to develop the convention center through a new entity, the Clark County Fair and Recreation Board. The county commission approved the project in November 1955, and it was enthusiastically endorsed by both the Las Vegas Sun and the Review-Journal. The one final piece in securing the funds for the proposed center was approval by the voters of a county general obligation bond issue. With the argument that hotel taxes rather than their property taxes would pay, the county’s voters approved the bonds at a special election in March 1956. The grand opening of the new Las Vegas Convention Center came in 1959.79
The argument that hotel taxes, not property taxes, would repay the bonds for convention center construction was a powerful one. As both Las Vegas and the casino hotels along the “Strip” grew, the hotel tax would provide an expanding stream of public revenues to finance the convention center and its expansions. But both the county commission and county voters had to approve the Fair Board’s expansion plans and the needed county general obligation bonds. They were not necessarily always supportive, and there were other political interests involved as well.
By 1964, the Fair and Recreation Board was planning for a major expansion of the center. The first step was to secure enough adjacent land to accommodate future growth, a