Convention Center Follies. Heywood T. Sanders
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investments designed to redevelop and restore the city’s downtown. That effort was built on an alliance of the city’s business and development interests with a succession of local officials.
Phoenix’s “modern” convention facility, Civic Plaza, opened in 1972, combined exhibit hall space with a symphony hall. The facility was neatly located on the eastern edge of the downtown core, where its construction served to demolish much of “The Deuce”—the city’s skid row. And despite one observation that “Civic Plaza failed miserably as a vehicle of public architecture and downtown redevelopment,” the city added a host of major public projects on adjacent blocks. The new America West arena was built three blocks south in 1992, and the county-financed Bank One Ballpark (now Chase Field) opened nearby in 1988.15
Even with an expansion and renovation in 1985, Civic Plaza never really performed as a competitive convention venue. Local business leaders attributed that failure to the lack of a third major downtown hotel, and in 1992 the Phoenix Community Alliance, the business organization “dedicated solely to the revitalization of Central Phoenix,” produced a report terming Civic Plaza “greatly underutilized” and pressing the “urgent need” for a third hotel downtown. Yet even with business backing and the promise of subsidies, no private developer appeared willing to construct a major hotel downtown. Finally, in July 1996, the city issued a formal request for developer proposals for a major downtown hotel. But even with the promise of a substantial city government subsidy, the preferred developer was unable to put together the deal, and by fall 1997 there was little prospect of the long-sought hotel.16
By 1998, city government leaders began shifting their focus to a major expansion of Civic Plaza, with a formal request by the city’s economic development staff for a consultant study of market demand and “how to optimize the use of Civic Plaza.” The justification for the study stressed the existing $112 million in annual economic impact from convention attendees. But it made particular note of the threat from competing cities expanding their own centers and building 1,000-room convention-oriented hotels. It argued that “Our competitors in Denver, Dallas, San Antonio, and San Diego all have larger facilities and are supported by a larger hotel room inventory.”17
PriceWaterhouseCoopers delivered its Civic Plaza market study in late 1999. The consultants praised the Phoenix venue for its central location and access to the airport. But they also identified a problem with the lack of nearby hotel rooms and the age of Civic Plaza. They recommended an ambitious expansion program, including the addition of 251,000 square feet of exhibit hall space, bringing the center to a total of 500,000 square feet, as well as at least 1,050 new hotel rooms. The PWC report included a very specific forecast of how a larger Civic Plaza would perform with the added hotel rooms. It put the existing convention and tradeshow attendance for Civic Plaza at 200,000. Without an expansion, the projected annual attendance would fall to 162,500. The expansion would instead boost attendance to 325,000. Annual attendee spending would almost double, from the “existing” $282 million to $526 million, boosting city and state tax revenues and creating over 7,000 new jobs.18
The PWC findings and forecasts were perhaps not surprising. The firm had produced similar conclusions and predictions for Boston a couple of years earlier, as well as for San Diego. It had recommended a major expansion for Cincinnati in a series of studies. And it had supported a substantial expansion of Atlanta’s Georgia World Congress Center in 1993 and 1996 analyses. It would endorse a new convention center in Cleveland in reports in 2001 and 2006.
Yet for Phoenix, the seemingly “expert” and assured conclusions seemed to provide substantial justification for a major public investment. For the director of Civic Plaza, the success of a major expansion was all but certain: “This is a serious growth industry. If you want to be in this game, you need to have the product.” The real hurdle was financing a project with an estimated price tag in excess of $500 million. Mayor Skip Rimsza and the senior city staff chose a two-pronged strategy. First, the city itself would finance some $250 million, using existing hotel and restaurant taxes. While that would, under the provisions of the city charter, require a public vote for approval, the electorate could be assured that there would be no tax increase of any sort needed to pay for the expansion.19
The second element of the city’s financing plan was a significant contribution from state government. During 2001, the city staff and consultants pitched the fiscal rewards of a Civic Plaza expansion to an ad hoc committee of the state legislature. Assistant city manager Sheryl Sculley and David Radcliffe of the Greater Phoenix Convention and Visitors Bureau stressed to the legislators how the city had fallen behind its competitors, and was regularly “losing business” because Civic Plaza was too small or other cities were offering new convention venues. At one committee meeting, a consultant from PriceWaterhouseCoopers stressed the competition with other cities: “if Arizona does nothing, there will be a loss, while other cities are still expanding their convention facilities.” When questioned about the impact of the recent 9-11 events on the potential performance and benefits to the state, the consultant observed that “it is not possible to accurately predict the future, and that business travel seems to be stronger than leisure travel at the present time.”20
The city’s part of the financing scheme was resolved first. With seemingly unanimous backing from the business community (including the Phoenix Community Alliance and Downtown Partnership, which had both effectively initiated the project), the promise of no tax impact, and the PWC forecasts of a substantial increase in visitor spending, tax revenues, and jobs, Phoenix voters overwhelmingly approved the expansion project in November 2001. For the expansion backers, it was time to formalize the project design, develop detailed cost figures, and begin to sell the project to the state legislature.
In 2002 the city began an effort to win legislative support. As the city staff and area business interests sought to sell the expansion project to the state, they had both a new proposal and an added sales pitch. With a revised construction plan, the expansion had grown—from an added 280,000 square feet to the addition of 490,000. Instead of doubling the size of the center, it would in fact triple it. And with a bigger proposed center came a new consultant study. Ernst & Young produced a report on the expanded expansion in March 2003. Putting convention attendance at the existing Civic Plaza at 133,000 in 2002, the E&Y consultants argued that, while “Phoenix is the sixth largest city in the U.S., [it] ranks 60th in terms of convention center space.” By tripling the size of the center, annual attendance would reach 376,861, E&Y argued, and Phoenix would be “on par with Dallas, San Diego, and San Antonio,” with Dallas and San Diego having recently expanded. With the forecast threefold increase in attendance, center backers could now argue that total direct spending and state tax revenues would triple as well.
The combination of the massive business lobbying effort, led by Phoenix Suns owner Jerry Colangelo, and the seeming certitude of the consultant forecasts proved effective. The $300 million in state funding for the expansion passed both houses of the legislature, and was signed into law by Governor Janet Napolitano in June 2003.
The expanded Civic Plaza, renamed the Phoenix Convention Center, was completed in phases. The entire complex was fully opened in December 2008. City officials again promised abundant economic impact from a tide of new convention delegates, and described a city and center now poised to compete. According to center director Jay Greene, “As one of the top 20 largest convention centers in North America, this project has made history for the city, state, and the convention industry.”21
The 1,050 new hotel rooms called for by PriceWaterhouseCoopers in 1999 proved more difficult to realize, despite the promise of the expansion and the consultant studies. The city repeatedly tried to find a private developer for a massive convention center hotel, but failed. The alternative was for the city itself to finance, build, and own the new hotel.
In July 2004, the city council approved plans to directly finance a 1,000-room, $350 million dollar hotel project, backing the hotel’s bonds with a combination of net hotel revenues and city sports facility taxes. The city employed the HVS International consulting firm to evaluate the likely performance of the city-owned hotel. HVS concluded that the city financing model was “solidly financially feasible,” and the city staff reported, “Conservative revenue projections show the proposed hotel