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Questioning $900 million plan for “limping” Convention Center

Baltimore comes in right behind Boston in a City Journal article taking cities to task for pouring millions of public dollars into convention centers despite “a nationwide surplus of empty meeting facilities, struggling convention centers, and vacant hotel rooms.”

The author, Steven Malanga, holds Charm City up as a prime example:

“Hoping to help its limping convention center, Baltimore paid $300 million to build a city-owned convention hotel, which opened in 2008. The hotel lost $11 million last year and has barely been able to pay its employees or its debt service,” writes Malanga, author of the 2010 book “Shakedown.”

“Yet Baltimore is now considering a massive $900 million public-private expansion that would add a downtown arena, another convention hotel, and 400,000 feet of new convention space,” Malanga writes, noting that the projected cost in public money is $400 million.

(The mismatch between those two numbers comes because developer Willard Hackerman has said he would lead a private investor group to foot the $500 million bill for the arena part of the plan.)

The Brew raised some of these same questions in a 5/27/11 analysis piece – “Super-sized convention center: a meal Baltimore could skip?”

While $900 million may sound impressive (and could help many ailing neighborhood facilities in Baltimore, such as public pools, recreation centers and dilapidated city school), the amount pales in comparison to what Malanga says Boston tourism officials want to spend to double the size of their struggling convention center:

$2 billion.

 

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  • Devil’s Advocate

    Why a new arena when there are no professional sports teams to justify it?

  • Devil’s Advocate

    Why a new arena when there are no professional sports teams to justify it?

    • a reader

      because a new arena COULD attract new professional sports teams (as both the Baltimore Blast and Baltimore Mariners are already playing there) and nationally touring bandsconcerts to the city that don’t want to play at a small, outdated arena like 1st Mainer.

      • Edfitz

        Hate to break the news to you “reader”, but concerts across the country are down. Only the stadium show are making any money to speak of and only so many bands can draw those crowds.  The Arena management is doing just fine filling that space. The NBA and NHL will never come to this city. Both leagues are hurting and DC based teams make it even harder to place a team here. 

        Everyone needs to think in these terms. You have a huge convention to book …Let’s see…maybe Vegas…no New York…Chicago maybe…San Francisco…Orlando…Toronto…the Nations Capitol sounds good too….”
        Of course that list can go on and on. Do you really think you would have Baltimore is in your top 20 or 30 ? I’m aware that money talks when booking these events, but when you need to start charging rates like the “big boys” what make this city so attractive ?

        Just keep filling the BCC up with Coin Shows and and Cheerleaders Tournaments and create annual events (besides The Grand Prix) to promote tourism while we use our funds to reopen rec centers and fix our streets.

        I’m surprised that no one has commented on the tax loss the city will take thanks to the 20 year abatement that’s already in the picture.

  • Ktrueheart

    Citizens of BMore must begin to speak up about how our money is spent … Send our Mayor a message … loud and clear … She has her priorities twisted!

  • Bmorepanic

    I question whether we have the audience levels for another large capacity venue as well as enough convention business to warrant building either project.  Ask the Hippodrome how they currently feel about if-you-build-it-they-will-come.  It doesn’t seem possible that we will will not get stuck with a pair of projects resembling the hotel.  

    I do not want more professional sports teams that are subsidized by the city.  I have other priorities – clean water, sewers that don’t leak, crime reduction, education and child care.     Building more facilities for entertaining rich people or for county people isn’t one of them.  Let Baltimore County house them, fund them, and  handle the traffic!

  • http://profiles.google.com/jamiehunt344 James Hunt

    The Brew wrote:

    “… While $900 million may sound impressive (and could help many ailing neighborhood facilities in Baltimore, such as public pools, recreation centers and dilapidated city school) …”

    ++++++++++++++++++++++++++++++

    No. It couldn’t. $500 million would come from Hackerman and his investors, who would expect the revenue from the hotel and arena to return them their money, plus interest.

    $400 million would come from the state’s sale of bonds to investors, who would … well, you get the picture. There’s isn’t $900 billion lying in a city or state bank account to pay for the stuff mentioned above.

    It’s possible, however, that taxpayer money that would otherwise be spent on those things would be needed to cover the bond payments if revenue falls short.

    ++++++++++++++++++++++++++++++

    At any rate, NYC, which already has the gi-mormous Javits Center in Manhattan, is looking to go bigger in another borough:

    http://www.newsday.com/opinion/oped/mcmahon-cuomo-s-big-idea-looks-like-1970s-1.3428887

    ” … [Gov. Andrew] Cuomo envisions a “state-of-the-art” facility at Aqueduct Racetrack nearly 20 percent bigger than the 3.1 million square foot McCormick Place convention center in Chicago — which, as it happens, is reported to be running at only 55 percent capacity after a costly expansion of its own. …”

    +++++++++++++++++++++++++++++

    The story here might be that cities recognize there isn’t enough business for everyone, and are fighting to be kings of their niche and compel competing cities to get out of the game. The herd could be thinning.

  • Gerald Neily

    Until this billion dollar convention center plan came along, the question of when, where and how big to go with a replacement arena was being debated at its own pace. But in terms of a mega-convention center, trying to attract the NBA or NHL is small-potatoes compared to attracting major-league conventions.

    Willard Hackerman has raised the stakes. He’s not just interested in attracting sports. But he also isn’t willing to put up the money for the convention center half of the project. What’s his motivation? Is he just looking for a reason to knock down and rebuild his adjacent Sheraton Hotel on Conway Street? Does he just want to put his name on something – The HackerDome?

    Glad you raised New York’s Javits Center, James. It’s instructive that the modest High Line has been more instrumental in attracting interest in Manhattan’s previously forlorn Hell’s Kitchen and Chelsea neighborhoods than the convention center ever has. People are more interested in a quality urban environment than “gi-normous” convention facilities.

  • Jreyesko

    More pork. Thanks SRB for lining the pockets of developers. I’m really sick of these pie in the sky schemes. How about investing in Baltimore City’s infrastructure. Wait…how about investing in Baltimore City’s RESIDENTS. Have we not learned anything from the Grand Prix debacle? If you have a problem, don’t throw more money at it.

  • It’s about time!

    Everywhere I go, people tell me that the biggest problem with Baltimore is our medium-sized convention center.  If memory serves, it was the focus of season 3 of The Wire.  If the city is having a hard time finding the money to pay for this project, we can always raise taxes or cut school budgets.  I think stifled economic growth is a small price to pay for the possibility of getting an occasional NCAA basketball tournament game.

  • It’s about time!

    Everywhere I go, people tell me that the biggest problem with Baltimore is our medium-sized convention center.  If memory serves, it was the focus of season 3 of The Wire.  If the city is having a hard time finding the money to pay for this project, we can always raise taxes or cut school budgets.  I think stifled economic growth is a small price to pay for the possibility of getting an occasional NCAA basketball tournament game.

  • Rametag

    It is interesting the way people talk about this money as if it could be easily used for whatever the cause might be. Spend it on schools. Spend it on rec centers. Whatever. This is not a pot of money. Revenue bonds get paid by revenue. Federal road dollars are spent on roads. Etc. If you don’t want to give tax breaks for development. Fine, don’t do it. Give the development opportunities to the projects that aren’t asking for tax breaks. Oh wait. There aren’t any. Businesses are not breaking down the doors of the city to set up shop, hire workers, and pay taxes. If you don’t want to do anything, that’s okay. You can choose to be like Cleveland and Detroit where they continue to contract and decline. Read the online and newspaper letters from citizens in those cities, and you will frequently see citizen requests for their cities to invest the way Baltimore has done with the inner harbor and downtown stadiums. Are our problems solved? No. But they would have been a lot worse off without the steps we have taken to spur interest, growth and jobs in the city. The success of Canton, Inner Harbor East, Federal Hill and similar areas were spurred by city development efforts downtown. Could we get similar or even better results investing in neighborhoods and schools. Good question. We might. But it will take many decades. The city doesn’t have that long. The state and city have been investing huge sums in education for over a decade. How much better are we off?

    • Edfitz

      Please tell me what on-line outlets you’re reading because both Cleveland and Detroit have Downtown Stadiums. Plus, they don’t have a DC as a neighbor to help support residential growth like we do. I think the point your missing is that the priorities of our leadership have gone south.  If we had put more energy in education 10 years ago we may have cut out population loss by a forth over the past 10 years.  Honestly, do you really want to give up another 4.1 million dollars a year in property tax payments to this project like we do for the Legg Mason Complex in Harbor East?  Enough all ready, start thinking about the tax payer, stop the abatement’s and find ways to keep the people we have in this city to stay in this city.

  • Parent

    How about this: Don’t spend the money at all. Just lower taxes, not for a few friendly developers, but for everyone. Turn the entire city into a development project. The problem with Baltimore is not that we are lacking incentives for politically connected developers to engage in big projects. It’s that we’re lacking in incentives for little projects for everyone else.

  • Rametag

    I don’t believe I’m missing the point. Over the years I’ve listened to people say things like “if only we have bike lanes this would be a more livable city and people would want to live here and life would be good.” Or, more and more money for schools. Or rec centers. Or after school programs. Or trees. or whatever. Any these things important to the livability of the city? ABSOLUTELY. Are they the number one priority? No. IMHO, it starts with jobs. Jobs lead people out of poverty. Jobs offer people a path out of drug addiction and crime. Jobs support the integrity of families. Jobs improve the ability of people to seek education and improved health care. In the short term, we need to do what it takes to get people employed. People will help themselves if they can afford to do so. Development is a tool to spur job growth. I’m not trying to get developers rich. I’m trying to get people jobs. Add more people to the workforce, collect more taxes, spend revenues on improving the quality of life in the city. Once again, can doing all these other things accomplish the same thing. Maybe. But not in a timely fashion. Our children’s children will be debating the need to spend more money on education is we don’t address the desperate need for employment opportunities in the city.

  • Parent

    Jobs will come when investors start investing in the city. They will restore old buildings, build new ones, start new businesses, etc. The main thing that’s keeping them from doing so is the incredibly high tax burden in the city — why invest in the city when you can invest anywhere else around here and be charged 1/2 the taxes?

    Sometimes the problem with the economy is a drop in private demand (some argue that nationally, we are currently in this situation). In such cases large government projects might make sense as a way to fill the demand gap. However that is not Baltimore’s problem. There is plenty of demand in the region. Witness the growth of all of the areas outside the city lines. The problem in Baltimore is a lack of capital supply — people with money think the city of Baltimore is a bad investment b/c you get a much greater return as soon as you set foot across the city line.

    There are a lot of jobs in the region, and by some measures the region is one of the best in the country for jobs right now. If the city wants to benefit from this, all it needs to do is bring its tax code in line with the rest of the region.  If you charge twice the price as the guy next door, he’s going to do a lot more business than you. 

  • westside resident

    This seems like an “if you build it they will come” project. Where are the surveys that show the demand? Where is the sports team that will use the arena? If, and only if, the city or the private developers could show the demand is there it may be a reason to make such an investment. 

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