The proposed 200,000 square foot expansion of the Anaheim Convention Center is good, solid, sensible public policy. It recommends itself for a number of reasons, but primarily so for two reasons: it maintains the Convention Center’s competitive edge, and it establishes a mechanism wherein the Resort District businesses fund this expansion as well as future modernization needs.
Anaheim has been in the convention business since 1967. It has been a source of economic vitality, jobs and opportunity for the city. The Anaheim Convention Center is presently the largest convention facility on the West Coast and in the top-tier nationally. Staying on top requires any enterprise to periodically invest in its competitiveness. For the Anaheim Convention Center, that means expanding its size and nature of its facilities. Standing pat is a recipe for stagnation and decline.
Anaheim wants to keep shows like NAMM, and be in a position to attract bigger and better shows – the kind that bring with them more affluent attendees who stay longer and spend more money. That requires having convention facilities that meet the needs of those kinds of shows – such as more “flex” space – and this expansion will give ACC that ability. It also adds the ability for the Convention Center to “stack” shows – to have two large shows simultaneously, which in turn generates more room nights for Anaheim hotels.
And that’s really the bottom line here. The Anaheim Convention Center doesn’t exist in a vacuum. It’s a part of the economic ecosystem of the Resort area. The Convention Center’s success translates into success for Resort district businesses, which generates employment and TOT and sales tax revenue for the city.
The Anaheim Tourism Improvement District (ATID) was formed in 2010 formed by Resort district hotels, which are essentially taxing themselves to fund marketing of the Convention Center and local tourism, as well as transportation improvements in the ATID boundaries. They understand that it is good for business to do so. Since they are actually on the ground and in the business, I would tend to favor their judgment over that of Prof. Heywood Sanders way out in Texas.
Formation of the ATID freed up the TOT revenues previously dedicated to those activities to be re-programmed for the Convention Center expansion.
The debt-financing of the ACC expansion will cost $409.2 million. That covers not only the actual expansion, but the city’s $35 million liability for the structurally unsound Carpark 1 – which the city would have to replace if it were not the site of the expansion. It also includes $20 million for neighborhood improvement tacked on by the city, and it pays for the Convention Center Grand Plaza.
The revenue freed by the formation of the ATID – $6 million in 2010 – is projected to generate $450 million by 2046. For the mathematically-challenged, that is more than $409.6 million. Furthermore, that $450 million projection is, to reiterate, based on a 3% annual growth in TOT revenue. Since that is only half of its historic growth rate, it is more likely that more than $450 million will be generated.
What the city ought to do is obligate excess revenues – which there will be even under the ultra-conservative projects, to retiring the debt sooner – which would have the added advantage of preventing the city from using that revenue for other purposes. It would then be available to fund future Convention Center betterments. Also, any such obligation should be contingent on the maintenance of the ATID.
As perceptive readers have by now discerned, what the City Council has the opportunity to do is establish a mechanism to fund not only the proposed Convention Center betterment, but future ones, as well, using a portion of TOT revenues freed up by the decision of Resort area businesses (including some in Garden Grove) to tax themselves to fund marketing and transportation improvement in the Resort area.
Yep – obviously, the Convention Center expansion is obviously a reckless “gamble” that is “guaranteed to fail.”
Anaheim can heed the counsel of doubt and act from dread and trepidation, or it can continue a successful tradition of boldness and vision. The latter has unquestionably worked for Anaheim, and there’s no percentage in switching to the former.