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Commentary
 

Unfortunately, it’s all too conventional


Dr. Ed Shadid June 26th, 2013

Among the highest priority for a city government should be preparing that city for the 21st century. There is little room for error; certainly not on the order of hundreds of millions of dollars. While Oklahoma City is poised to grow in many ways, a preoccupation with 20th-century economic development strategies — particularly massive public investment in convention center expansion with large-scale subsidies for an accompanying hotel — are akin to the gambler risking more than one’s family can afford when the odds are heavily stacked against success.

In preparing the MAPS 3 campaign, those who advocated for intensive convention center expansion had two significant problems. First, polling showed overwhelming opposition of 75 to 80 percent. Second, the preposterous conclusion of a 2008 Convention, Sports and Leisure (CS&L) study (never released to the public) was that to triple our existing convention busi ness, we would need to build a 650- room convention center headquarter hotel and that no city in years had been able to develop one without massive taxpayer subsidies.

Public discussion of what could be hotel subsidies of more than $100 million likely would have derailed MAPS 3. The mayor publicly and repeatedly contended that building a convention center would see an increase of 700 jobs and a tripling of our convention business without mentioning the supplemental need for a hotel.

What little, poorly circulated literature there was mentioning the hotel included statements such as“in all likelihood, the hotel would be privately built and owned” even though CS&L indicated that such a scenario had not occurred in a city in recent memory.

While the country’s convention center exhibit space is exploding (75-percent increase from 1990 to 2010) attendance at conventions and trade shows is plummeting (from 126 million in 2000 to 86 million in 2010). No U.S. city has seen a doubling or even significant increase from such space expansions, much less the tripling promised by the mayor.

Convention center hotels carry substantial risk for cities and will divert precious resources away from other services. Because convention center hotels have performed so poorly, Wall Street and bond-rating agencies seem to be offering cities two options. First, cities can finance 50-100 percent of the construction costs or revenue bonds can be utilized in which a nonprofit created by the city issues the bonds and has ownership in the hotel.

All such recent deals require that the cities (Columbus, Ohio; San Antonio; Baltimore; Phoenix; Dallas) pledge a revenue source with a proven track record to supplement the net income from the hotel to pay off the debt. What revenue source of potentially millions of dollars are we prepared to commit to debt service for a hotel? Should taxpayers subsidize a hotel that will compete with private downtown hotels?

Trying to reach the upper tier of convention center operations at this stage is unwise and a greater return on investment — even for convention business — would be to spend those dollars on quality-of-life improvements and the creation of walkable destinations in our neighborhoods and downtown core. The 21st century awaits.


Shadid, a mayoral candidate, represents Ward 2 on Oklahoma City Council.


Opinions expressed on the commentary page, in letters to the editor and elsewhere in this newspaper are those of the author and do not necessarily reflect the opinions of ownership or management.

 
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