Convention Center Follies: Politics, Power, and Public Investment in American Cities

Chapter 2. Paying for the Box

C h a p t e r 2 Paying for the Box The grand public convention halls of the 1920s and 1930s—Cleveland’s Public Auditorium, Kansas City’s Municipal Auditorium, St. Louis’s Kiel Auditorium—were built by city governments and financed by city governments with general obligation debt. Those debts were backed by the “full faith and credit” of a city government, effectively the full stock of property and other tax revenues available to the city. And under state laws in these states and the vast majority of others, general obligation debt had to be approved by a majority of the local electorate. Cleveland’s Public Auditorium was approved by the city’s voters in 1916 and finally completed in 1922. But when voters were presented with a scheme for financing and developing a new convention center in 1957 and 1958, they turned it down both times. Finally, in 1960, a smaller, restructured convention center scheme won voter approval. That center was supposed to vault Cleveland to the front rank of convention cities. As of 1981, it was still ninth largest in the United States. When, after some twenty years of use, the center required improvements and refurbishing, in 1985 Mayor George Voinovich chose to invest some $28 million without asking the voters to decide. The city issued notes, largely financed by the Greater Cleveland Convention and Visitors Bureau through the bureau’s receipt of countywide hotel taxes, that avoided both a public vote and the limits of the city’s fiscal circumstances. Cleveland’s business and political leaders repeatedly sought to develop an entirely new downtown convention center, beginning in the late 1990s. They ultimately chose a scheme in 2007 that neatly avoided the city government and its ongoing financial problems. Instead, the initiative for the convention center and a “Medical Mart” trade mart came from the overlying Cuyahoga Paying for the Box 43 County government. And in financing the $450 million project, the county’s three commissioners (by a vote of two to one) avoided the need for any public vote by committing the revenues from a special countywide quarter-cent sales tax. Cleveland’s fiscal evolution neatly illustrates the changes over the twentieth century in convention finance. Where city governments once dominated development of public assembly facilities, the public role has increasingly shifted to other government entities, a diverse group ranging from county governments, as in Cleveland, to public authorities (such as the New Orleans Morial Convention Center Authority), regional entities (like the Greater Richmond Convention Center Authority), and state governments. And where the initiative to finance and build a convention facility once commonly required a majority vote of the local electorate, the new financing and organizational arrangements now regularly avoid the need for voter review and approval. The restructuring of convention center finance away from direct voter approval was not happenstance. It reflected the increasing willingness of the national bond market to accept revenue bonds—debt issues backed solely by a limited tax or revenue source, such as a hotel or car rental—and the imagination of investment bankers seeking to serve local officials. But far more important, it was a choice, imitated and repeated across scores of cities, that served the political and development ends of both elected officials and local business leaders, as the changed social and political environment of major cities after 1970 made voter approval increasingly unlikely. Kansas City’s business leaders had long viewed their community as a natural locale for major national conventions, as it is a major Midwest rail hub. The city’s Convention Bureau regularly boasted dozens of major meetings, including some 24 national conventions, 54 regional meetings, and 36 state conventions in fiscal year 1929. The city had erected a new convention hall in 1900, just in time to host the Democratic National Convention. But by the 1920s this was increasingly viewed as outdated and too small. The minutes of the convention committee of the Chamber of Commerce said, “We are gradually being eliminated from consideration through the lack of two important civic facilities now possessed by virtually all of the larger cities in the country . . . . One is dining and meeting space in hotels . . . and the other is of course the lack of a convention hall with which to care for the larger gatherings.” In language that would be repeated decade after decade in Kansas City and beyond , the group argued, “Until they are realized, Kansas City must accept the [18.220.160.216] Project...