Oklahoma City Convention Center analysis: headquarters hotel a must, along with operating subsides from taxpayers
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Published: 23-Jan-2014

OKLAHOMA CITY – Five years after completion, an economic development analysis making the case for a new convention center is back in the news -- at least for the man who wants to unseat the incumbent mayor in the March 4 mayoral election.

The 2009 analysis prepared for the Greater Oklahoma City Chamber of Commerce assumed taxpayer subsidies would be required to operate convention facilities, more or less permanently, as is the widespread practice in the convention and visitor business across America.

The analysis documented around $10 million in operating subsidies for the tax-supported Cox Convention Center over the three years examined.

The mayoral contest pits incumbent Mayor Mick Cornett, who favored passage of the MAPS 3 local development plan, against Ward 2 City Council Member Ed Shadid, who has questioned both convention center financing and need for a “headquarters hotel.” MAPS 3 voters approved $250 million for a new center to make the city more competitive.

“The mayor is looking forward and not backward to a report with data that is a decade old. This is not really a campaign issue. This is an issue that’s not even in play. 

That is an issue of city governance, and we are not even there yet. Just because a consultant said something then does not mean it’s being considered,” Brenda Jones, spokesman for the “Mick for Mayor” campaign and president of Jones PR, told Oklahoma Watchdog.

Shadid contended Cornett’s “unwillingness to comment on the controversy regarding the development of the new convention center complex is actually a reflection on the indefensible nature of his comments over the past four years. If any literature or public statements by Cornett explaining the true costs and risk of this venture existed, we would have seen them by now.”

The 2009 analysis contended, “[A] new headquarters hotel will be needed to attract desirable levels of convention, tradeshow and meeting event potential unique to Oklahoma City.” Shadid asserts voters were misled because Cornett withheld information that estimates of improved performance in the convention business “were dependent on also building what almost certainly would be a publicly subsidized, if not publicly-owned hotel, coming up with additional funds for parking and finding land which would allow us to afford construction of a 285,000 sq. ft. center.”

The analysis (by the consulting firm Conventions Sports and Leisure International – CSL) projected “direct spending” by visitors to conventions held locally had reached more than $16 million annually – and could grow to $45 million if the city built expanded convention facilities. The analysis also projected increased tax revenues from expanded convention operations.

Shadid slammed Cornett, saying he “purposely misled the people with his claim during the MAPS3 campaign … that ‘the opportunities we have with the convention center will allow us to triple the business that we currently get from the convention business.’ There is no city that has been able to double, much less triple their existing convention business by building a new convention center.”

The report (“Feasibility Analysis for Potential Development of New Downtown Convention Facilities in Oklahoma City”) was financed by the City Chamber, and presented in February 2009. The Chamber has declined to release the document to the public, and the City Council did not press for its release.

This reporter asked for a copy of the full document, but was given an executive summary. Chamber staff allowed on-site access to the entire 89-page report, which was examined over three sessions at the group's downtown office.

Concerning a hotel linked to a new convention center, authors of the analysis said, “[C]osts to develop headquarter hotels are significant. There are no examples nationwide of a fully privately-developed convention center headquarter hotel in at least the last 10 years.” The authors outlined possible tax financing without, however, indicating a clear preference for either.

The suggested methods included, first, financial subsidies from the public (city government) to the developer, in form of Tax Increment Financing, public construction of parking or infrastructure at the hotel, land donations, and/or cash contributions; or, second, formation of a publicly-funded corporation or authority with the ability to issue debt. This corporation would own the facility “for a number of years and will then sell the hotel into the private market.”

Concerning convention facility operations, the analysis said, “Regardless of potential future convention facility development in Oklahoma City, public subsidies will continue to be necessary in order to operate the Cox Convention Center (CCC) into the foreseeable future.”

Operating losses at CCC were projected at $3,717,241 (Fiscal Year 2006), $3,363,848 (FY 2007) and $3,215,782 (FY 2008).

In the analysis, the Oklahoma City market was compared to 14 cities: Albuquerque, NM; Charlotte, NC; Hampton Roads, VA; Kansas City, MO; Louisville, KY; Memphis, TN; Mobile, AL; Pittsburgh, PA; Providence, RI; Salt Lake City, UT; Santa Clara, CA; Savannah, GA; Little Rock, AR; and Portland, OR.

In all, 12 cities had lower operating losses than the Cox Center in FY 2008. Two had higher operating losses that year.

Concluding his interview with Oklahoma Watchdog, Shadid said, “The size and risk associated with what could be the largest capital project in decades, demands that we maximize honesty, transparency, public deliberation and fiscal responsibility so as to protect the city’s renaissance.”

You may contact Pat at Patrick@capitolbeatok.com.

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