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Convention center puts Tacoma finances in even deeper hole

Post by TNT Editorial Board / The News Tribune on April 29, 2012 at 5:37 am with No Comments »
April 27, 2012 5:56 pm

This editorial appears in Sunday’s print edition.

Three years ago, the manager of Tacoma’s convention center was so concerned about the facility’s financial condition that he wondered whether he should start preparing to shut it down.

Today, the situation is still grim. Besides presenting a huge budget problem for city officials, it’s become the subject of an investigation by the State Auditor’s Office.

A report today by News Tribune business reporter C.R. Roberts homes in on how the $80 million Greater Tacoma Convention & Trade Center sank into its financial morass. Although it was never expected to break even – that’s rare among such facilities – it’s not earning nearly as much through bookings as early supporters had projected. And its two other main funding sources – from the hotel-motel tax and a cut of the state sales tax – decreased during the recession.

Most problematic, however, is the disappearance of a city parking fund that was supposed to supplement the revenue stream and help pay off the $32 million convention center bond issue. With that fund gone – apparently to pay for other city projects – Tacoma likely will be forced to raid its general fund to help pay for operation at the convention center.

But the general fund already faces a projected $22 million deficit in 2013 and $24 million in 2014. Jobs and services have already been trimmed, but further cuts appear likely – even without subsidizing the convention center.

No one at city government seems willing – or perhaps able – to say exactly what projects the parking fund money went toward or why that fund was plundered when it was supposed to be held in reserve for the convention center. But there is a convenient suspect: former City Manager Eric Anderson. The fund evaporated during his tenure.

As for the state audit, if it finds that the covenants for the convention center bond issue specify that the parking fund must be maintained as a reserve fund, the city could face legal penalties for gutting it.

Digging into the general fund to keep the convention center operating is a short-term fix. As Roberts’ report pointed out, if the facility were run differently, it could be more successful in attracting conventions.

According to a consultant hired by the city to look at convention operations, the city has no agreement with local hotels to reserve blocks of rooms for large groups. And he recommends contracting with the Tacoma Regional Convention and Visitor Bureau to handle sales, marketing and booking.

The consultant also said the convention center needs “significant” capital investment over the next decade for improvements and a more reliable parking payment system.

The city must stop digging itself into a deeper hole with the convention center and come up with a strategy going forward. Inattention to details – such as failing to preserve the parking fund – helped create the current dilemma. That has to come to a screeching halt.

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