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By Andrea Stape A year at Rhode Island Convention Center slideshow It's a place where a man in a red plaid shirt and khaki pants can play Vanna White for an afternoon at the National Scrabble Association's All-Star Championship. It's a place where a typical day can bring a parade of college graduates, the Pawtucket Credit Union's annual dinner, or a conference of dentists. It's a place where a cup of coffee goes for $2 and boats sell for $3 million. This is the Rhode Island Convention Center at age 10. It was conceived a decade ago to be an economic magnet that would attract visitors from across the nation to Rhode Island and encourage them to spend freely at the state's hotels, restaurants and malls. Ten years later, the Convention Center complex does attract about 578,000 people a year and generates an estimated $3.9 million in new state taxes and fees, according to an economic-impact study commissioned in 2000 by the Rhode Island Convention Center Authority. Around it have sprouted a $300-million mall and a Marriott Courtyard hotel. It's difficult, though, to call the Convention Center an unmitigated success. The state still pays about $23 million a year on the debt incurred to build the Convention Center complex which includes the exhibition facilities, two garages and the Westin Providence hotel. Taxpayers will be paying for the Convention Center until 2023. One thing is clear, though: the Convention Center has become a hub for local and regional events. The center was used about 318 days during the 2003 fiscal year, which ended in June, for events as small as the Tollgate High School Reunion to conventions as large as the New England International Auto Show. "The Convention Center project was a quality-of-life issue for the residents of Rhode Island," said David D. Barricelli, the third chairman of the Rhode Island Convention Center Authority and a member of the authority's first board of directors. "Where would these events be if we didn't have a Convention Center?" IT'S A GOOD question. Where would the Mighty Molar go to wave his toothbrush and grin goofily, if there weren't a Rhode Island Convention Center? The tooth was a costumed representative of Blue Cross Dental, and he danced his way through the 2003 Business Exposition held at the center in April. Billed as New England's largest business-to-business expo, the Business Exposition has been held at the Convention Center for the past eight years. The majority of the exhibitors and attendees at the two-day exposition have been from Rhode Island and Southeastern New England. They are drive-in, drive-out visitors not the type of people who fly in from afar and rent a hotel room for four days. This is typical fare for the Rhode Island Convention Center. But in the early 1990s, when the Convention Center was being built, proponents of the project were basing their estimates about the center's economic impact on its ability to attract out-of-town guests. The cost of the center, $354 million, was controversial - the state would need to issue bonds to build it and use taxpayer dollars to pay back the debt over 30 years. Proponents of the project were quick to justify the cost to taxpayers. Richard M. Oster, head of the Convention Center Authority during its inception and construction, projected that the additional traffic from convention attendees would create a "multiplier" effect in tax revenue. As convention attendees spread their money throughout the state, it was expected to generate additional sales taxes and hotel taxes plus, there was the new income-tax revenue from the employees whom businesses hired to handle the influx. Combined, the new tax revenues were estimated to exceed the annual debt the state would have to pay on the costs of building the Convention Center. At the time, Oster one of the main proponents of the complex told The Providence Journal that the center would have "a positive cash flow from Day One." In addition to an increase in tax revenues from conventions and visitors, backers of the Convention Center were looking to the Convention Center to spark an economic revival in Providence. "At the time we started this program, no one would even walk downtown at night," Oster said in a recent phone interview. "We realized that this facility would serve as a beacon whose light would attract industry and further growth for our capital city." At the end of the 1980s and early 1990s, the promise of increased economic activity downtown, millions of dollars in additional tax revenue from meal sales and hotels, as well as new employment, was enticing. A study, done by the consulting firm Coopers & Lybrand, estimated that by 1998, about 87,988 people would attend 27 four-day events at the center and spend $142.30 a day on hotel rooms, restaurants, taxes and souvenirs, according to a Journal article. It turned out, after the center was built, that the Coopers & Lybrand study was overly optimistic about the amount of tax dollars and revenue the center would generate. BUT JAMES McCARVILL, executive director of the Convention Center Authority, says the taxpayers' investment is paying off. It took some time to get started. It took another year after the Convention Center opened to get the Westin up and running. And then there was the question of which state or local agency was responsible for selling the complex to conventions, which took a couple of years to straighten out. But now, McCarvill points to the number of days the center is in use, the thousands of guests it attracts annually, and the millions of dollars the state makes off the hotel as clear examples of success. "I think it's certainly done what it was supposed to do helping to instigate other development, raising the profile of the area," said McCarvill. "If you were here 12 years ago and you see what's here today it's created a more vibrant city and raised the profile of the state." It's tough to truly measure the economic impact the Convention Center has had on the state. The last study of the complex's economic impact was done based on figures from 2000, and was put together by a consulting firm hired by the Convention Center Authority. Based on that study, the center appears to performing well. According to the three-year-old survey: the complex held 870 events in fiscal 2000, including smaller meetings at the Westin and conventions at the center; more than 578,000 people came to the state thanks to events at the Convention Center and meetings, weddings and other tourist activities at the Westin; and an estimated $3.9 million was generated in state tax revenue. The average event at the complex lasted 1.72 days, the event attendees reported spending an average of $52 a day, and the average event at the Convention Center generated the use of 320 hotel rooms, according to the study. The number of visitors in 2000 exceeded the expectations discussed in the early 1990s. The tax estimate, though, is open for interpretation since spending by industries that support the Convention Center and other multiplier effects aren't easy to track. "Are Rhode Island and the City of Providence better today with it, than it was without it? I think the answer is clear," said David Duffy, the recently appointed chairman of the Rhode Island Convention Center Authority. "It's fulfilling its promise for generating some economic development for the city, the airport, and [the state's] entertainment venues." So far this year, 100,129 hotel rooms in the state were used by people attending or setting up events at the Convention Center, a 157-percent increase since 1994, according to numbers compiled last week by the Convention Center Authority and the Greater Providence Warwick Convention and Visitor's Bureau. The authority is planning another economic-impact study this year, one that will take into account the combined impact of spending at the Providence Place mall and the Convention Center. THE CONVENTION Center itself is still losing money every year on operations. Last year, it cost the state $2.7 million more to run the center than the state generated from the center's use. But the hotel, during the last fiscal year, made $7.4 million and the two parking garages had an income of $3.34 million, according to McCarvill. So the complex generated a net operating profit of about $8 million. Of that, $5.3 million was returned to the state to pay interest and principal on the bonds the rest went into a fund for refurbishing and upgrading the complex. That payment cut the state's bond payments from $22.6 million to $17.3 million in fiscal 2003. To calculate the net cost to the taxpayers, McCarvill subtracts an estimated $12 million from the state's debt-service bill. The $12-million figure represents the "indirect and induced multiplier effects" of spending by industries that support the complex and the employees that they hire to service the complex, according to the 2000 study. "We're still $5 million from where we want to be," said McCarvill. And where the authority wants to be "is generating enough tax revenue from the state to overwhelm the subsidy," said McCarvill. TO KICK UP tax revenue, and income, to the next level, the state needs to add hotel rooms particularly in Providence, according to the Convention Center's supporters. One of the main objectives of the Convention Center Authority and the visitors bureau is to focus on attracting out-of-state conventions and trade shows that will use blocks of hotel rooms. In order to attract larger conventions, and more visitors from out of state, the Convention Center Authority needs a place to put them, said Duffy. When the Fraternal Order of Police held its convention in Providence this summer, the largest convention the state has ever seen, conventioneers were staying as far south as Mystic, Conn., said McCarvill. "We still have a problem putting together room blocks that are adequate to the meeting planners' needs," said McCarvill. But outsiders say Rhode Island is doing as well as can be expected and that it's typical for midsized cities to get mostly drive-in business at convention centers. "If they are in use two-thirds of the days of the year, that's about as good as it's going to get," said Michael Hart, editor in chief of Tradeshow Week, an industry publication. "If a place was being used 250 days a year, that's pretty good. Even if you have a local meeting, they still have to move in and out and they pay something." Unlike Miami or Chicago, Providence is not considered a destination city, said Hart. However, Tradeshow Week recently named the Rhode Island Convention Center the Best Convention Center in a Non-First-Tier City a category for centers in smaller cities that hold up to 9,000 people. And that's what Rhode Island's Convention Center has gotten good at. Sure, it holds the RV show and the auto show and the boat show which can each attract up to 25,000 people. But it also plays host to the Rhode Island Bar Exam, Rhode Island Dental Association gatherings, and the Rhode Island School of Design's Alumni Holiday Art Sale. For smaller convention centers, like Rhode Island's, adding hotels is not a guarantee that a convention center will attract more business, according to Heywood Sanders, a professor in the department of public administration at the University of Texas at San Antonio. "Consultants are saying with regularity that your convention [center] is not performing because you don't have enough hotel rooms. You're seeing a number of cities getting in the hotel business," said Sanders. "But having such hotels doesn't draw any additional convention business, and those hotels often turn out to be economic disasters." According to Sanders, these hotels do not attract additional business, because the cities they are in are not considered destinations where conventioneers can turn a convention into a vacation. "The premise that you need more hotel rooms to make the convention center a success is false," said Sanders. "You're looking at an industry that faces a serious problem of oversupply in exhibit space. . . . There will always be other cities that have more hotels. Orlando and San Francisco have in excess of 100,000 hotel rooms." THE CONVENTION Center Authority disagrees with Sanders. It still thinks it has a chance for the big conventions, if only it had more hotel space. Consequently, the authority is considering putting out a request for developers that would be interested in buying the Westin and building another hotel downtown, said Duffy. The purchase would be contingent on the building of a new hotel, to ease room demands, he said. "We've been getting inquiries from national-level developers about the [Westin] just wanting to know what's going on," said Duffy. "I think there's enough interest that the authority would decide to go out with an RFP [request for proposals] I would say sometime next year." The last time the Convention Center looked for developers to buy the hotel, in 1999, there was no serious interest. Also, the Convention Center complex could become significantly larger in the near future. The Rhode Island Convention Center Authority is in talks with the Providence Civic Center Authority about combining the Convention Center with the Dunkin' Donuts Center and marketing the two as one entity, according to Bernard Buonanno Jr., chairman of the Providence Civic Center Authority. "We're talking. Both sides would like to do it," said Buonanno, in a phone interview. Duffy, in a later interview agreed, "We are, as a Convention Center Authority doing a lot of due diligence as to what it would cost to renovate it and run the building." SO, 10 YEARS after its opening, is the Convention Center worth a tax subsidy of about $17 million? According to McCarvill, the purpose of the center is not to be a revenue generator, but rather an economic catalyst. "[The] Convention Center does not create a profit in and of itself. . . . It's not designed to do that. It never was. It's like a school," said McCarvill. One fact is undeniable: 10 years after its birth, the Rhode Island Convention Center has become an Ocean State institution. The little grade-school dancers ride the escalator up to the fifth floor chattering about their dance competition. Marathoners duck into the lobby for energy bars and water after the Ocean State Marathon. And duffers get to try out an in-house driving range during the New England Regional Turfgrass Conference. "It's all the slant that you put on it," said Oster. "It wasn't total fun. We used to get threatening calls at home I had to have a guard service at my home for three years. But I refused to quit," said Oster. "I ride by there with a great deal of pride." |
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