Next Time

The next time your legislator or city councilman tries to tell you that increasing taxes in order to bring business to your town, remember this summar of the Minneapolis Convention Center by Steve Brandt of the Star Tribune.

"Eight years ago, the Minneapolis Convention Center opened its long-awaited expansion and waited to welcome a wave of new visitors.  Today the center books just about half its space, a far cry from the 70 percent occupancy operators of such facilities like to see. The center hasn't hit that mark in any year since the expansion.

Meanwhile, its revenues covered only 49 percent of its costs in 2009, compared with as much as 84 percent before the $211 million expansion. Consequently, the center is gobbling soaring amounts of special taxes that the city collects to pay off the building and subsidize its operation.

Proponents predicted that by expanding its Convention Center, Minneapolis could attract more of the top 200 trade shows. But according to Meet Minneapolis, the city-funded nonprofit that books the center, it still can't attract two-thirds of them. Minnesota weather, conflicts with local consumer shows and other drawbacks rule out all but about a dozen.

Trying to lure groups such as Future Farmers of America, Rotary International and the American Public Works Association proved fruitless.

Seventy-seven percent of the center's visitors in 2009 lived within the metro area. The center hosted Minnesota Republicans recently but hasn't helped the city to land the Republican or Democratic national conventions, though it played a backup role when national Republicans came to St. Paul's Xcel Energy Center.

A key consultant in 1994 said the expanded center would lose $3.4 million annually, which inflates to no more than $5 million today. But the facility's operating deficit went as high as $15.6 million in 2008 and consistently has been several million dollars more than projected.

The subsidy that taxpayers and visitors pay comes from special taxes on sales, hotels, downtown restaurants and on-sale liquor. Those taxes were imposed primarily to pay construction and expansion debt, but also to cover the center's deficit. But expenses have outpaced income in the city's Convention Center fund, drawing down its balance.

But they expect the building, portions of which will be 30 years old then, to need work. Already, its three copper domes leak and could cost as much as $15 million to fix. The center budgets $5 million to $7 million annually on improvements and equipment."

Add convention centers to liquor stores, golf courses and railroads as entities that government can't operate.

 

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