Convention center expansion: Build it and they won't come

Originally Published in the Baltimore Sun

Expecting a convention center to lead to job growth is like expecting a diet of double bacon cheeseburgers to lead to weight loss.

Pretty much every person who lives in a city with a convention center and every economist knows it — except for people in organizations like the Greater Baltimore Committee (GBC) and Visit Baltimore. They are the ones pushing the nearly $1 billion public-private expansion of the Baltimore Convention Center, arena and Sheraton hotel.

Take Baltimore, where 53,000 jobs exited the city over the past decade, along with 30,000 residents. Those figures are difficult to spin. So are the huge declines in attendance at many convention centers around the country and concomitant drop in hotel room nights.

Consider Las Vegas, a top destination, where convention center attendance was 1.31 million in 1999 and 1.16 million in 2010 after a massive expansion earlier in the decade. Lest people think it was all due to the economy, peak attendance was 1.7 million in 2006 — or a 30 percent increase in attendees after a doubling in size of the center. The GBC proposal would more than double the current convention space in Baltimore.

In nearby Philadelphia, the number of convention center-related room nights in 2010 was 179,000, or the lowest since 1994. In D.C., the number of convention center-related room nights dropped 27 percent from 2008 to 2010.

The most recent numbers on the $305 million, publicly financed Hilton Baltimore are from 2009 and show a $31 million cumulative loss since opening. If new figures told a different story, we would have known about it by now. Standard & Poor's affirmed a negative outlook on some of the hotel bonds in January based on poor convention bookings. Convention Center attendance is down 25 percent since 2008.

But that does not stop the handful of unelected people with an inordinate amount of power from proposing upgrade after upgrade, decade after decade.

In 1991, before a previous Convention Center expansion, the then-head of the GBC, Robert Keller, told The Baltimore Sun, "The current facility doesn't meet the needs of this market. There's no such thing as treading water, you're either swimming or sinking. We need to swim in this."

Flash forward 20 years and Donald Fry, the current head of the GBC, said this to the Baltimore Business Journal, "This could put us in a position to be competitive for the next 20 to 25 years. It's a tremendous opportunity and adds tremendous value [to the city]."

Is it déjà vu, or do convention pushers suffer from a collective medical problem? As the saying goes, the definition of insanity is doing the same thing over and over again and expecting different results.

Either way, expanding the city's convention center is "just wacky," said Heywood Sanders, an expert on convention economics and a professor at the University of Texas at San Antonio.

He said that economic developers in Baltimore originally argued for a convention center with Camden Yards. After a center was built, it became a reason to lobby for more hotel space and entertainment venues to attract tourists in a never-ending treadmill of "If we build it, they will come."

Maybe that's what Tom Noonan, the head of Visit Baltimore, meant when he said the convention business is a "cyclical industry."

He and others in his business say that doing nothing is not an option. They are right, but as the Reason Foundation's head of urban and land use policy, Samuel Staley, says, "Baltimore should cut its losses. … The most rational policy position is to let private hotels handle the convention market. Cities should back out of publicly funded convention centers."

Instead of publicly financing a $400 million money pit, why don't the city and state instead think big about growing the city and jobs through a property tax cut? City residents pay at least twice as much as those in other parts of the state, and high taxes have been repeatedly cited as the main problem hampering growth. Property tax cuts in San Francisco and Boston brought a flood of new people and money to those cities. In San Francisco, property tax revenue was 66 percent higher the fourth year after the cut than in the year prior to it, and real estate transfer taxes started to increase immediately.

City leaders have a choice. They can create the conditions for new people and new jobs, or they can force taxpayers to finance their hubris — if any are left after we reach "the next level."