Tom Moulton is Pima County’s Director of  Economic Development and Tourism.  His annual salary tops $100k.

The county’s website states:

“The department of Economic Development and Tourism act as primary liaison with the business, academic and tourism community to enhance the economic well being of the region. It provides business development, marketing, training and revenue enhancement programs to Pima County’s leased asset partners (i.e. Arizona-Sonora Desert Museum, Old Tucson Studios, Colossal Cave Mountain Park, Pima Air and Space Museum, Pima County Fairgrounds, and more.”

He is also the county’s expert and watchdog on the $2.6 million it spends on tourism promotion.  He is supposed to make sure the taxpayer dollar is being used wisely by the folks at the Metropolitan Tucson Convention and Visitors Bureau.  Last year, he made this marvelous statement about his job. (Love the hat, Mr. M!)

A few months back Rep. Antenori at the request of the Green Valley Chamber of Commerce, took aim at the MTCVB for lack of love going down Green Valley way. Antenori worked up a bill to allow funds to be diverted to the GV Chamber. The bill was stopped and appears a deal was struck.

(From Green Valley News – Follow below link)

Pressure helps bring tourism dollars to GV

By Daniel Newhauser, Green Valley News

Published: Tuesday, June 9, 2009 7:17 PM MDT
Green Valley will see an influx of money to help spur tourism thanks to months of negotiations and pressure from a bill that would have changed the way hotel bed-tax money is doled out.
In an agreement with the Green Valley Sahuarita Chamber of Commerce, the Metropolitan Tucson Convention and Visitors Bureau, which receives 3 percent of county bed taxes from hotels in unincorporated areas, will use a percentage of tax money that comes from Green Valley hotels to promote tourism in the community, said Jim DiGiacomo, chamber president.

“It’s a milestone for the chamber and this area,” he said. “It’ll bring more people here and, in turn, it helps businesses.”

Rep. Frank Antenori, who represents Southern Arizona and Green Valley, mediated the discussions between the two organizations in his Phoenix office. He said the contract stipulates that the visitors bureau will calculate the total bed-tax revenue collected in Green Valley and give one-third of it in the form of a grant to the chamber to use to promote tourism.

“We sat down, hammered it out, and came up with a deal,” Antenori said. “Now, (Green Valley is) going to be able to pull the resources of all the hotels and resorts in the area and get a good marketing effort together.”

DiGiacomo said the money will be used to pay upkeep for the chamber office as well as produce and distribute pamphlets showcasing tourist attractions and beef up online promotions.

The agreement also gives the chamber representation on the visitors bureau’s marketing committee and a chance to be on the board of directors, he added.

The change will take effect July 1 and last for three years after which both parties have the option to renegotiate.

Jonathan Walker, the Tucson visitors bureau’s president and CEO, said Green Valley should see more tourist spending as a result of the efforts.

“We’re going to figure out how to work hand-in-hand to better market Green Valley as a tourist destination,” Walker said. “We’re trying to do something positive for the Green Valley area.”

He added that the bureau has similar agreements with other Arizona communities.

The change comes on the heels of a now-dead state bill that, if passed, would have change the way bed-tax money is divided.

Currently, Pima County levies a 6 percent tax on hotels and motels in unincorporated areas such as Green Valley; the tax netted $8.7 million in fiscal year 2007-08. Half of that, per state law, is designated for the county’s “recognized tourism promotion agency.” The only such agency in Pima County is the Metropolitan Tucson Convention and Visitors Bureau, whose Web site — www.visittucson.org — describes it as “the chief marketing agency for Tucson and Southern Arizona.”

With four major hotels and a number of bed-and-breakfasts, Green Valley pays a significant amount of money into the bureau’s funding stream but doesn’t get its fair share back, said Randy Graf, chair of the chamber’s governmental affairs team.

“We felt that most of that was being concentrated in Tucson itself. We didn’t feel like enough of it was coming here,” he said. “The word ‘metropolitan’ in there sort of indicates that they are working for the greater Tucson area.”

So chamber officials proposed to Antenori HB 2487, which would have allowed more than one recognized tourism promotion entity to receive part of the distribution from the county. That would give the Green Valley Sahuarita Chamber of Commerce, or any number of agencies from unincorporated areas, the opportunity to get a piece of the county funds.

Instead of seeing the bill through the Legislature, however, chamber officials met with visitors bureau officials several times since March to negotiate a way to share existing funds, Graf said.

“Bills like this can get people’s attention, bring stakeholders to the table,” he said. “If they can get together, negotiate, then the bill is no longer necessary.”

After the deal was struck, Antenori said, he killed the bill.

“The bill had its desired effect, which was to basically level the disparity in how the bed tax was done,” Antenori said. “I think everybody wins. In the long run, I think it’s going to pay off big time for Southern Arizona.”

And he added that the agreement could serve as a precedent for other unincorporated communities: If they organize chambers of commerce and a solid marketing plan, they could appeal for a chance to get funding, too.

“That’s a fair way to do it,” he said. “I don’t see what’s wrong with that.”

dnewhauser@gvnews.com

Seems like a case of too much leverage, too much supply and a decline in tourism landed 6 Phoenix developers in major hot water.

Read the Wall Street Journal article HERE.

Southern Arizona’s La Paloma and JW Marriott Starr Pass changed hands in the last few years.

Word is La Paloma’s financing deal was predicated on a 10 to 15% increase in revenues (that didn’t happen). A deal between lenders and NCH Corporation has been worked out and the new owners live for another day.  The next hurdle is that major room and amenities upgrades are long over due. The remodel was part of the original plan but given the current market conditions an over haul is unlikely.

The La Paloma sale info HERE.

The Starr Pass refi info HERE.

PUBLISHED ON MARCH 19, 2009:

Recession Dining

Restaurateurs respond to the economic downturn in different ways–and some even say there’s a silver lining
By ADAM BOROWITZ
This is turning out to be a rather unappetizing recession.From the foothills to the southside, people are eating out less to save money, leaving restaurant owners scrambling for ways to adapt.

Tucson is debating a new convention center and high rise hotel. Who’s paying for the $150m hotel, well that’s a great question.

 Our current facility is old and apparently outdated. It’s too small for big events and there’s not enough small meeting facilities for big events or something like that.  

A study was commissioned in 2005 which showed a positive economic impact of a new arena – read the AZ Star article HERE. 

And the beat goes on…..new arena + new high rise hotel + government funding = huge economic impact – or will it? Is the facility needed? Is it big enough to fill a market niche? Can we ever host a NCAA Final 4?

Up north in Phoenix the new $600 million convention center just opened – HERE.

By tripling the convention space, the center opens Phoenix up to large conventions and events, which can bring tens of thousands of business tourists into the city at once.

Nearly 70 groups are expected in Phoenix for 2009, said Alexandria Van Haren-Pierce, spokeswoman for the center.

The NBA All-Star Game plans to use the convention center for several events in February including the basketball theme park NBA All-Star Jam Session.

Members of the National Rifle Association are expected to bring up to 60,000 attendees to Phoenix in May.

Phoenix began making over the Civic Plaza with the 155,400-square-foot West Building.

The $600 million price tag was split between city bonds and state funding. The tab doesn’t include $18 million in upgrades to the South Building, which Phoenix bankrolled.

The 1985 facility was renovated so that the interior matches the newer North and West buildings.

(More about the Tucson Convetion Center HERE).

Here’s another look at the convention center business from Antiplanner.com

Operating in the Black, Government-Style

posted in Regional planning |

The director of Metro, Portland’s regional dictator planning agency, offers some insight into how government planners view such concepts as profits, losses, and sales. It is not a lot different from the way soviet managers looked at the same ideas.

Phil Stanford, a columnist for the Portland Tribune, recently commented that Metro’s Oregon Convention Center “has been losing money by the bucketload.” Two years ago, this convention center was the centerpiece of a Forbes magazine article about how cities are losing millions overbuilding their convention centers.

The pretentiously named Oregon Convention Center.
Flickr photo by Premshree Pillai. 

Back in 1998, the convention center was losing money and Metro, which owned and operated it, was convinced that the solution was to lose more money by doubling its size. Portland-area voters were asked for the money to do this and they said no. So Metro did it anyway, spending $116 million on the addition.

By 2005, reported Forbes, the center was losing $5.5 million a year. But Metro was undaunted by Forbes‘ criticism, and proposed to build a new hotel next to it, saying that the city’s downtown hotels were too far away. (So what geniuses decided to build the convention center too far from hotels? Oh yes, it was urban planners.)

Anyway, Stanford is not enamored with the hotel proposal. But Metro’s executive, David Woolson, took offense at Stanford’s column and wrote a letter claiming there were some “inaccuracies” in Stanford’s article.

In particular, Woolson wrote Stanford, “you state the Oregon Convention Center ‘has been losing money by the bucketload.’ That’s not accurate. Actually, the OCC has operated in the black the last four years with its operating revenue and its share of the transient lodging tax.” (Notice that the “last four years” includes the year in which Forbes says the convention center lost $5.5 million.)

In other words, Metro doesn’t have to actually rent the convention center to fee-paying users. It is enough that someone increased the local hotel tax (at 11.5 percent, Portland’s is the highest in the state) and dedicated it to the convention center.

Now, I hope that even the planners who read this blog can spot the flaw in Woolson’s reasoning. If you have to count taxes to consider yourself “in the black,” you aren’t really in the black — even if those taxes are dedicated to your boondoggle convention center.

I suppose, for the benefit of some, I have to clarify the difference between taxes and user fees again. If a user pays a fee or tax and the money goes to whatever it is that the user is paying for, then it is a user fee no matter what you call it. But when a fee that is dedicated to a convention center is paid by motel or hotel users who aren’t going to the convention center, that is a tax.

Back in 1990, The Economist sent a reporter to the then-disintegrating Soviet Union to interview factory managers. The factories were going to have a hard time adjusting to markets, the reporter concluded, because their managers didn’t understand such basic concepts as “sales,” “profits,” or “costs.” (“Life in a Soviet Factory,” December 22, fee required.)

I’ve encoutered the same puzzlement from Forest Service officials when talking about the profitability of national forest timber sales. In the 1950s, the Forest Service was proud of being the only federal agency that actually made a profit, but by the 1980s, when it was losing $400 million a year from its timber program alone, its attitude was, “We’re the government. We don’t have to make money.”

When I would ask forest officials to calculate their profits, they would count tax dollars appropriated to them by Congress as revenues and timber sale receipts that they returned to the Treasury as costs (because they didn’t get to spend it on things they wanted to do). No wonder they lost money!

Anyone who thinks government is good needs to spend some time reading agency budgets. They may seem dry and boring, but that is deliberate: they don’t really want you to know where your money is going, so they overwhelm you with material. Just skip all the text and read the numbers. If you can’t read numbers, call up whatever school district ran your high school (another government agency) and ask for your money back (that is, the taxes your parents paid for you to go to school there) because they failed to teach you to understand and analyze numbers.

Mr. Woolson might be foolish enough to believe that taxes are “revenues” that can be counted when determining whether an operation is running in the black. It is too bad Metro was foolish enough to hire him and too bad that Portland-area taxpayers are saddled with an agency like Metro.

This entry was posted on Tuesday, August 28th, 2007 at 12:00 am and is filed under Regional planning. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Another analysis of the trade show industry from 2006.

The Brookings Institute study from 2005;

The data on the supply of exhibition space are clearer than the data on exhibition space utilization because it is much more easily tracked. On this point Sanders is more guilty of mischaracterizing the data rather than using it selectively. He claims that the last few years “have seen a remarkable boom in the volume of exhibit space in convention centers,” calling it a “building frenzy.”

By expressing the ratio of demand to supply, one can calculate a utilization factor for convention centers. This is similar to occupancy rates that are used to measure performance in the hotel industry. The utilization factor reflects the percent of gross exhibit space that is used each year by the events that are tracked by Tradeshow Week.

Utilization Index
.

Good Money after Bad?

A number of cities have chosen to improve their convention environment by investing in the development of headquarters hotels. Sander says, “Many cities wind up, as they say ‘throwing good money after bad’.” This assertion implies that the original investment in a convention center is a bad one (a claim that most cities that have made the investment would dispute) and that hotel investment is just adding more of the same type of public costs. But the rationale for, and expected financial outcomes of, convention center and hotel investments, are quite different.

The most commonly used rationale for investment in convention centers is to generate economic impacts from out of town visitation. Nearly all convention centers in the U.S. are built without any expectation that project income will repay capital costs and most are not even expected to cover operating expenses. This has long been a fact of life in convention center development, although Sanders implies that convention center financial losses are a new and growing problem. In contrast, the rationale for public investment in hotels is to maintain competitiveness (not necessarily to generate new economic impact) and they are usually expected to pay for their capital costs from project income. In fact, all publicly financed hotels are expected to provide a significant return on investment to the sponsoring municipality in the form of residual cash flows and potential sale of the asset.

Since 1996, sixteen communities have successfully financed hotels using tax-exempt municipal debt. All of them planned to repay that debt with project income. The choice to use public rather than private financing is driven by the lower costs of tax-exempt funds which makes projects more feasible with less financial commitment on the part of the sponsoring municipality. Three of the early projects in Chicago, Sacramento, and Miami Beach have already fulfilled their promise to generate a financial return. Others more recently financed such as in Austin, Overland Park, and Cambridge are on their way to providing a financial return despite opening under stressful market circumstances.

As an established industry, continued growth in demand will come not from latent sources, as occurred during the last few decades. Rather, industry growth will depend on new demand, which is affected by numerous factors such as the cost of travel, the importance of face-to-face interaction in certain industries, improvements in facility design, resources available to promote events, trend in how firms allocate their marketing budgets, and overall growth trends in the national economy.

In most industries that go through periods of overbuilding (e.g. hotels, residential, shopping malls, and office space), the ability to generate private return on investment eventually limits the expansion of supply. Since most convention facilities are publicly financed, this market discipline is not necessarily present. Instead limited resources of governments and the public decision making processes that consider the merits of capital investment place limits on supply growth. In our experience, most municipalities are not “willing to try almost any investment in their quest for more convention visitors.” Concern over the proper allocation of limited resources and historical experiences of success and failure play very important roles in the decision making process. Which brings us to a point of agreement with Sanders’ overall conclusions: careful and realistic consideration of the chances of success should inform the public decision making process about investment in convention centers.

The Convention Center Shell Game from City-Journal.com – HERE.

The Convention Center Shell Game Steven Malanga

EMAIL RESPOND PRINT

 

Although Boston’s gleaming new $800 million convention center is set to open in a few months, so far it has booked only a handful of conventions. So dire is the facility’s outlook that it will need a $12–15 million annual public subsidy in its first few years of operation and may not reach its full booking potential for a decade, say Boston officials. Even that may be too optimistic, judging by what’s going on in Baltimore. There, a vastly expanded convention center that reopened in 1997 is finding it so hard to lure business that city officials are now searching for ways to make the facility more attractive, including spending millions in public money to build a subsidized hotel next door.

What is happening in Boston and Baltimore is not an anomaly but merely the latest chapter in what is turning out to be one of America’s biggest civic boondoggles.For more than a decade now, cities and counties have been rushing, at enormous public cost, to build new convention centers or add space to old ones, including a $191 million expansion of San Francisco’s Moscone Center, a $291 million new facility in Omaha, and a $354 million center in Pittsburgh. The increase in space has vastly outpaced the growth of the convention industry and often failed to generate the kind of economic activity predicted by boosters. Rather than energizing local economies, in fact, some convention centers are emerging as a drag on civic finances, requiring taxpayer operating subsidies on top of their huge, publicly financed construction costs. What’s more, the situation is only likely to get worse. Another eight to ten million square feet of exhibition space is scheduled to come on line within five years, an increase of about 15 percent in an industry where demand is barely growing.

Although those numbers should be sobering to any city contemplating building yet more space, in New York officials are plunging ahead with plans for the most costly convention project to date—proposing to spend a staggering $1.5 billion nearly to double the size of the Jacob Javits Convention Center. The proposal comes despite the chronic fiscal problems of both the state and the city and the absolute lack of any credible evidence that the expanded center would pay back such a colossal public investment.

Indeed, to finance the expansion, the state and the city, both already heavily indebted, will likely have to float huge debt offerings and may even increase some taxes.

New York’s headlong plunge into this new project is evidence that local officials rarely let the facts get in the way of their love of big projects. Back in the early 1980s, when the state and city built the Javits Center, there were far fewer convention centers and little actual data on whether the business that these facilities generated helped a city’s economy enough to justify the investment. New York officials saw Chicago’s giant McCormick Place bringing visitors into the city to fuel the local hotel, restaurant, and entertainment industries, and figured Gotham could compete for that business.

But today, after a generation of frenetic building and with much better data available, the inescapable conclusion is that few of these new projects are worth doing. Boston, for instance, spent nearly $230 million to renovate its existing convention center in the 1980s, and the result was barely a blip upward in its hotel occupancy, says political scientist Heywood Sanders of the University of Texas at San Antonio, the foremost expert on publicly built convention centers. Yet Boston officials brushed that experience aside and went ahead and built its brand-new—and already troubled—center anyway. Similarly, a vast expansion of Chicago’s McCormick Place, costing $1 billion in the mid-1990s, didn’t prevent a drop in that city’s share of major conventions. Meanwhile, Atlanta’s huge expansion of its convention space has done little for the city’s struggling downtown: a major retail project there, Atlanta Underground, has struggled to survive even as the city’s convention business has grown. “The payoff is not there,” says Sanders.

But local politicians have typically argued that their projects will work better than those in other cities—on scant evidence for such conclusions. New York officials, for instance, justify expanding Javits on the grounds that the city is already a major trade-show destination and therefore won’t suffer like other cities from significant new competition. Yet Chicago was an even bigger force in the business when it expanded McCormick, but still saw its market share decline. And even if a bigger Javits were to attract some new business, it is highly unlikely to generate enough spin-off activity to justify its enormous public cost (including the eventual cost overruns likely with such a gigantic public project).

Gotham officials are relying on the optimistic predictions of government-sponsored economic studies that an expanded center would create thousands of temporary construction jobs and up to 16,000 permanent new jobs, mostly in the hospitality industry. But political scientist Sanders argues that such studies tend to be unrealistically optimistic. For instance, says Sanders, one study used to justify expanding Javits does not take into account that the center doesn’t generate nearly as much hotel business as other centers, because many convention attendees already come from the New York area, and because New York’s high hotel rates discourage some conventions from using the city. Another word of warning: city-commissioned studies almost always wind up recommending convention centers—meaning that the industry of consultants who churn out such studies has a pretty lousy track record, considering the long list of underperforming centers around the country.

But politicians ignore such inconvenient facts. For them, building big projects is often far more engrossing than building a strong economy, because giant construction projects directed by government agencies offer opportunities to reward friends and potential supporters with plum contracts.Thus the original construction of the Javits Center was perhaps the quintessential New York boondoggle, an effort rife with mob influence, bid rigging, and cost overruns that brought the ultimate bill to $486 million, 30 percent more than projected. And the center has never fulfilled all the promises. When it opened, a New York Times headline proclaimed the widely held belief that the new center “kindles dreams for West Side,” but in 18 years, the center has had almost no impact on its neighborhood.

New projects also enjoy the support of private-sector interests likely to benefit from them. In New York City, a perfect storm of private interests is raging to push forward the Javits expansion, including the construction industry that would build it, the Wall Street bankers who would underwrite the financing, and a hospitality industry hungry to benefit from even a marginal increase in its business no matter what the public cost. The hotel industry has even signed on to a possible hotel tax increase to pay for the Javits expansion, when a decade ago the same hoteliers vociferously protested a rise in the tax, producing studies showing that the increase hurt the local economy. Small wonder that politicians often doubt the claims of executives that taxes kill jobs when an industry reverses itself as cavalierly as the city’s hotels are now doing. In fact, of course, the innkeepers were right the first time: after New York cut its hotel tax by six percentage points, hotel occupancy rates jumped to 84 percent from under 76 percent in just three years.

The Javits expansion, as expensive as it is, only partially encompasses New York’s grand design for the Far West Side of Manhattan. Hoping to lure the 2012 Olympics to Gotham, the Bloomberg administration also wants to build a domed sports stadium adjacent to the convention center, which boosters argue could provide hundreds of thousands of square feet of extra convention space when needed.

With a $600 million taxpayer contribution, the stadium would be an even worse investment than the convention facility. Numerous studies have already documented that publicly financed sports facilities don’t return anywhere near their investment. One study by economists from Stanford University and Smith College, for instance, estimated that Baltimore was receiving only $3 million a year in additional tax revenues or new job benefits from its $200 million investment in the Camden Yards sports complex. Even projects generally touted as successful often don’t turn out to be, under careful economic scrutiny. A mid-1990s study by urban economist Mark Rosentraub of Cleveland’s arena and baseball stadium, often held up as a model of how to build downtown sports facilities, found the projects created only 2,000 jobs at an average public investment of $160,000 for each job—an improvident use of public money.

The real role of government in stimulating development should be more limited than what New York is attempting with its Javits expansion and its stadium. Government’s role on the Far West Side should be only to develop the infrastructure necessary to encourage private development: to extend public transportation into the area and to change zoning codes to allow privately financed office and residential construction there as the need develops. To do any more would place far too much taxpayer money at risk and would put government officials in the role of trying to predict what the market wants—a task government is ill-suited to carry out. But New York State is contemplating the exact opposite—balking at extending the Number 7 subway and, presuming to know better than the market, threatening to use eminent domain to take the land for the Javits expansion away from developer Larry Silverstein, who has other plans in mind for it. The state’s vast, monolithic scheme could well repel rather than attract high-value commercial development.

Meanwhile, the hospitality industry has learned that it can sit and wait for local government to finance its dreams these days. The Javits expansion, for instance, was originally tagged at a “mere” $1 billion but grew costlier when the center’s board stuck in a publicly subsidized hotel as part of the building frenzy. The hotel supposedly needs to be built with public money, because so far no private hotel company has been willing to pay to put up a property on the Far West Side.

The Javits hotel scheme is not unique by any means. Publicly financed hotels have now become the latest craze in the municipal convention-center wars. Cities like Dallas, Baltimore, and Knoxville are all contemplating building them, on the theory that these properties will help boost sagging convention-center business. Though hotel companies won’t finance these properties themselves, because they know they are unlikely to repay their investment, they are more than willing to move in and operate them after government has built them. The result is a version of the rat and cat farm: we use tax money to build a convention center that supposedly will stimulate the hotel industry, and then use tax dollars to build a hotel that supposedly will stimulate the convention industry.

The nationwide convention-center fiasco is striking testimony that much government-centered economic development these days is a “me-too” affair that involves spending public money on what others are doing, regardless of market dynamics—perhaps because politicians who benefit from these projects can avoid blame by claiming that they were only doing what other cities were doing. New York State seems especially infected with this disease right now. With its huge public complexes in Albany and its vast string of publicly constructed state universities, the state has always specialized in state capitalism, and it is not to be outdone in the area of convention centers. In his state of the state address, Governor Pataki advocated not only the Javits project but a new $185 million convention center in Albany to replace its existing facility and the modernizing of another facility in Lake Placid. Soon after, officials in Erie County renewed their lobbying for a publicly financed center in Buffalo, while in Syracuse, a group that has put forward a far-reaching plan to remake that city added a convention-center proposal to its agenda, too. These proposals would join an estimated 40 or so convention projects already under way in cities throughout convention-center-glutted America.

While politicians and private businesses push such efforts, resistance from taxpayer groups is growing. The Texas chapter of Citizens for a Sound Economy, the national taxpayer group headed by former House Majority leader Dick Armey, is opposing a publicly financed convention hotel in Dallas. Knoxville citizens will soon get to vote on whether to spend tax dollars on a new convention hotel, after opponents of the effort collected thousands of signatures to get the issue on a ballot. In Raleigh, North Carolina, government supporters of a new convention center are trying to avoid a vote on public financing for the project—which they are sure to lose—by proposing alternate but even more costly financing that doesn’t require a referendum.

The mounting opposition shows that the public understands what a fiasco the convention-center business has turned into all around America. If only urban leaders could figure that out, too.

 The Tucson Citizen weighs in with ‘Construction Starting in 2008′ – HERE. 

By Patrick Finley

Arizona Daily Star

Tucson, Arizona | Published: 07.22.2007

When he served as the UA’s athletic director, Cedric Dempsey had a nickname for Tucson.

“We used to call it the biggest college town in America,” he said.

Some would say he’s still correct.

Pima County has passed 1 million residents — more than enough to support a minor-league sports team — yet the area is littered with gravestones of franchises that have failed to turn a profit, or survive, in Tucson.

For many reasons — our demographics, our transient nature and the business market, to name a few — minor-league sports franchises have failed to find a foothold here.

The unsuccessful past impacts the future of pro sports in Tucson.

“It’s a proven statistic that it’s not working,” Pima County Supervisor Ray Carroll said.

Does the area need a pro sports franchise? Some say it improves the quality of life and instills community pride, while others believe the University of Arizona serves as the town’s main point of interest.

At least 18 franchises or sporting events have folded or left Tucson in the last three decades.

That number will grow in the next two years. The Triple-A Sidewinders are being sold to a group that will likely move them to Reno, Nev., for the 2009 season. The Chicago White Sox want to move their spring training operations to Glendale in 2009, but first need to find a replacement team to move to Tucson Electric Park or pay a buyout.

With the Sidewinders’ departure, Tucson will become the second-largest city in America without a big-league team in one of the four major sports or a Triple-A baseball team. On that list, only El Paso is bigger.

According to 2006 U.S. Census figures, Tucson is the 32nd-largest city and the sixth-largest without a major pro sports team. Louisville, Ky., Las Vegas, Oklahoma City and the Austin area all have Triple-A baseball.

On paper, Pima County seems ripe for a minor-league team.

It is home to world-class events during temperate months in the fall, winter and spring — the WGC-Accenture World Match Play Championships, spring training, UA football and basketball and La Fiesta de los Vaqueros, to name a few.

AZ Star ran a story on this year’s Gem Show being off due to economic challenges nationally and internationally.  Decent story read it – HERE.  A couple local hotels were asked about bookings this year compared to last and the consensus is we are down 25%. No doubt challenges this year are beyond our immediate control. The main thing we can do from an economic development point of view is DIVERSIFY our tourism and industrial base.

Once again the online comments are where the real stories develop. Here’s a great set of comments that are worth a second look;

Tucson’s government has never cared to develop an economy based on industry. I remember when the City Council ran Firestone out of town. So, we go through this every time there is a downturn in the economy.

Companies don’t want to come here – there isn’t a skilled workforce. Those same companies can’t get their managers to move here because the schools are mediocre – at best.

But, you can’t tell the City Council, Board of Supervisors, City Manager anything. They don’t care – they have their own vision of what they want to accomplish and never mind the city.

Instead, we hear that the Tourism Board is busy advertising in Mexico. Wonderful, they can spend some of their drug money at our hotels and restaurants.

We’ve never had a leader to organize the citizens to put a stop to the mismanagement of the city.

A response to the above comment;

15 years ago my employer announced they were moving our jobs to Albuquerque because they were getting tax incentives to do so. We knew it would be only a matter of time before they moved other jobs to other cities for the same reasons.

Stupid us, we figured that the Tucson Ecomonic council might want to know and DO SOMETHING like offer the same tax incentives to keep those well paying jobs here. So we called them up and filled them in. The reply: “Well it’s their company, they can do whatever they want” and hung up on us.

So after 15 years I’ve only managed to make 50% of the wages I used to make thanks to the low paying jobs the Tucson Economic Council has brought in. And sure enough my old employer moved almost all other jobs out of Tucson. They only have a small workforce here now.

Another short and to the point comment;

Less tax revenue from tourism=higher property taxes for residents. Fewer jobs means more people on welfare. Fewer people=lower real estate values.

Tourism is down nation wide. Qudos to the Metro Tucson Convention and Visitors Bureau for thinking outside the box.  Check out the MTCVB annual report – HERE.  From the MTCV newsletter;

Bold New Programs Target Meeting Business
The MTCVB has launched a bold program to draw group meetings and conventions to Tucson. We are offering up to $20,000 credit to groups booking meetings in Tucson in 2009.  In December, we began an electronic and direct-mail campaign offering groups $1,000 – $10,000 credit per meeting for their master accounts, dependent upon the number of peak room nights booked. We will provide half the appropriate credit, and participating meeting hotels/resorts will pay the other half in the form of master account credit. Groups booking consecutive multi-year events (2009 and 2010) will receive incentive funding for both meetings. Meetings booked in 2009 for 2010 dates will receive 50 percent of the outlined incentive credit.

A separate but complementary incentive program rewards Tucsonans who provide the MTCVB with qualified leads that result in booked meetings. Every individual who submits a qualified lead referral will receive a $100 gift certificate to Tucson Originals restaurants and be entered into a drawing for prizes, including a $1,000 shopping spree at La Encantada, a $500 spa day at Miraval Tucson Resort, a $5,000 radio advertising schedule at a Citadel Broadcasting Radio Station with a custom marketing consultation, and a set of roundtrip airline tickets.

The goal of these programs is to stimulate meeting business for Tucson hotels and resorts and to aid meeting professionals with budgetary concerns. For more information, contact Graeme Hughes, MTCVB Director of Convention Sales, at 770-2174.

Tucson has had a relationship with baseball since the 1940′s. That relationship is under some stress as the Chicago White Sox recently left our community for greener (as in $80.7 million in green backs) ball parks in Glendale.  First off, why would the State of Arizona Dept. of Commerce, or the AZ Sports Authority let one community poach from another. I guess we aren’t on the same team.

With the White Sox leaving the two remaining teams have clauses in their contracts allowing them to leave if there aren’t 3 Tucson MLB spring training teams. Baseball really could be heading north. The Cactus League of Spring Training teams is really becoming an economic boom to Arizona. Just not Southern Arizona.

Groups are working to build a new stadium, fix Hi Corbett and attract a third or fourth team. If all goes well the voters will get a crack at passing a special sales tax to fund the projects. Good luck with that in this tough economic climate. 

The reliable estimates are that MLB spring training brings in $10 million per club to our local economy. The $30 million injection annual means more hotel booking, golf course rounds of play and fans to eat and drink in local restaurants.  The big question is; Is it worth investing in staduims to attract or retain new teams?

Footing the Bill for a Ballpark

By David Wilkening

The once popular practice of spending public money to finance sports stadiums has recently been striking out. That’s no surprise when you consider the books economists and journalists are writing these days: “Loot, loot, loot for the home team,” is a chapter in a 2005 book called The Great American Jobs Scam by Greg LeRoy, founder of the Washington, D.C.-based nonprofit development watchdog group Good Jobs First. The 1999 book Field of Schemes offers a similar take. Its author, journalist Neil DeMause, sums up the situation as follows: “In almost eight years of reporting on stadium deals, I’ve spoken to every economist I can find about the impact of sports stadiums. And I’ve yet to find a single independent economist (by which I mean one not actually working for a sports team or league) who thinks that stadiums are any use as an economic engine.”

LeRoy explains in his book that the whole system of public financing is usually traced to the 1950s. Until then, team owners paid for their own stadiums— with few exceptions. The trend started in 1953 with the first team relocation in half a century, the Boston Braves’ move to Milwaukee. They were lured there with a new stadium built with public money. Since then, politicians everywhere have been “taken in by the assumption that the presence of a professional sports team is a leading contributor to the vitality of cities,” LeRoy writes. “That notion has so captivated politicians that they are willing to give sport team owners subsidies that are far beyond wha tother private-sector businesses can hope for.”

  Nationwide, there is growing opposition to funding sports programs with taxpayer monies. In a 1997 Rasmussen poll on the subject, 64 percent of respondents answered “no” to the question of whether taxpayer dollars should be used to build a professional sports facility. Still, Adam M. Zaretsky, an economist at the Federal Reserve Bank of St. Louis, wrote in a 2001 policy paper on the subject, “Should cities pay for sports facilities?” that between 1987 and 1999, 55 stadiums and arenas were refurbished or built in the U.S. with more than $8.7 billion. Fifty-seven percent of that, or roughly $5 billion, was financed by taxpayers.

Clearly, the debate about whether stadiums are good for cities extends far beyond Miami. The NFL’s San Diego Chargers spent five years trying to secure funds and a location to replace the outmoded, 40-year-old Qualcomm Stadium. San Diego residents also want a new stadium: in a January 2006 poll conducted by the San Diego Union-Tribune, 68.6 percent of 27,575 residents polled said the city should donate land to build a new football stadium. An overwhelming 95.6 percent said they would support a new stadium if the Chargers paid for it, along with the requisite infrastructure improvements.

According to the proposal the Chargers made to the city in October 2005, the new football stadium, completely funded by the Chargers and their development partner, would be built on 60 of the 166 acres of current Qualcomm Stadium land in Mission Valley. The remaining acreage would be used for parks, streets, parking garages, and commercial development. But as the Chargers’ general counsel, Mark Fabiani, explains, the plan didn’t pan out because the city of San Diego, teetering on the brink of bankruptcy, decided to set aside the question of stadium funding for other priorities.

The Chargers consequently could not find a suitable development partner, according to Fabiani, “not because the project wouldn’t have worked out, but because no one wanted to get mired in the city of San Diego’s chaos.” Not surprisingly, last year the city amended the terms of its lease with the Chargers so that they could begin to look elsewhere for a home. And plenty of new cities are lining up to court them, including nearby Chula Vista, National City, and Oceanside, California. Even Las Vegas, Nevada, showed interest, though the Chargers’ contract restricts relocation talks to cities within San Diego County. “Private funding for a stadium is very difficult to pull off,” Fabiani says. “In California, people are just not eager to subsidize these stadiums.”

Stadiums have fared better in other cities. In Minneapolis, for example, after ten years of struggling with the issue, the Minnesota Twins last year reached an agreement on a new $522 million stadium that will be partially funded by a sales tax of 15 cents for every $100 in sales in Hennepin County, where the team plays ball.

But there seems to be a growing heap of evidence that stadiums don’t make such good long-term investments for cities. Robert Baade, an economics professor at Lake Forest College in Lake Forest, Illinois, studied baseball stadiums specifically. He looked at the per capita income in 30 cities that have built new sports stadiums over the past 30 years and found that in 27 of the cities, there was no observable economic impact.

“In the other three cities, income looked to have gone down as a result of the stadium,” Baade says. Stadiums do offer some clear benefits to cities. “Bars next to stadiums see an increase in customers on game days,” Baade says. But even that has a down side, however, because the bars only do well when a team is winning. “When a team is losing, who wants to go out and celebrate another loss?”

Baade found that, “In only a small fraction of the cases examined does manufacturing activity… correlate significantly with the presence of a new or renovated stadium. We conclude that measurable economic benefits to area residents are not large enough to justify stadium subsidies and that the debate must turn to immeasurable intangible benefits like fan identification and civic pride.”

Stadium boosters in Miami are vowing to try again next year, especially if it means keeping the Marlins from pulling up stakes and heading to a new city. One man watching the Marlins’ quest with special interest is Jack McKeon, the former Marlins manager who led the team to their World Series victory in 2003. Now 76 and semi-retired in Elon, North Carolina, the cigar-smoking, tough-talking McKeon (nicknamed Trader Jack) still works as a part-time consultant for the Marlins, mainly as a talent scout. “It would be a shame if they don’t have baseball in Miami,” he says. The sentiment is certainly shared by South Florida Marlin fans, whatever their numbers.

The Tucson region has rested on it’s great climate and influx of new residents for virtually all our economic development. We have three industries that run are the overwhelming economic engines in our region. The big three are; construction and real estate related activities, tourism and the government sector. GTEC settled on bringing in low paying call centers and is no longer in existence. (GTEC background HERE.)  TREO is working on their blueprint and point to successes but at the end of the day the big three still dominate our economy. Info on the 2008 blue print HERE.

Real Estate and construction related activities which are fueled long term by people’s desire to move to our region. This industry was super heated during the sub prime boom and bust we are currently experiencing. We will recover but the bitter pill will be hard to swallow for the short term. The slump started back in 2007, just when the County was INCREASING their staff. 
 

The slowdown was clear by January or February, said Tom Doucette, owner of local builder Doucette Communities.

“I’d have to be awfully skeptical to criticize that decision (to hire), but it seems they ignored the signs of what was happening,” Doucette said. “They hear the development community say things are bad, and they think we just don’t want to pay more fees.”

Tourism is way down all over our valley. The national economic pressures are causing ripple effects all over our region. Tucson International Airport is loosing flights and airlines, bed taxes are down, people are being laid off and again the near future doesn’t look good.

The government sector which makes up 7 out of the top 10 employers in our region is finally starting to slow. The UofA is talking about cost cuts, City and County coffers are slowing down causing departments to downsize. From the federal to the state to local government we are in for the biggest drop in revenue and slow down than we’ve seen in decades.

As a community we live and die on NEW MONEY entering the system. With pressures on our big three industries our NEW MONEY supply will dry up and the circulation system will slow to a crawl.

Economic pressures on a national level effect everyone. Those communities that have diversified their economic base will weather the storm much better than us. Hold on it’s going to be a bumpy ride.