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New convention center and arena plan critical to Baltimore's future

Property TaxBusinessFinanceHotel and Accommodation IndustryDonald C. FryBaltimore Convention Center

The Greater Baltimore Committee's proposed concept for building a new 18,500-seat arena and a 500-room hotel on Conway Street and connecting the arena to an expanded convention center has generated a deluge of media "buzz."

Reactions to the idea of combining the construction of a $500 million, privately funded new arena and hotel with an adjacent $400 million, publicly funded, expanded convention center have been largely positive.

However, we should not be surprised that some naysayers are voicing concern about the need for expanding the convention center and questioning its value as a business generator. Some have shown their lack of understanding of state and city financing by suggesting that the bond money being sought from the public sector should instead go toward reducing property taxes.

The Greater Baltimore Committee strongly supports reducing the property tax rate in Baltimore. But suggesting that it's a choice of either building the proposed arena/hotel/expanded convention center or reducing property taxes is a feeble attempt to mislead the public on the realities of the project.

Three critical things must occur to move this proposal forward.

•First, the Maryland Stadium Authority must complete a feasibility study, estimated to take approximately six months.

•Second, during that time, significant private-sector financing for the arena and the hotel must be solidified, and the state and city will need to weigh practical options for financing a convention center expansion, should the feasibility study prove favorable.

•Third, the state and the city must be prepared to follow up the study with a timely and solid commitment to moving the convention center project forward, so that investors feel comfortable launching the construction of the privately funded arena and hotel.

Critics go beyond healthy skepticism into the realm of full-blown cynicism by implying that business and civic leaders' advocacy for a new arena and bigger convention center is ill-informed and not in the best interest of the city and state. They ask "when will it end?" They question the need for Baltimore to engage in what they view as a futile and endless race for convention business. They feel that Baltimore doesn't belong in a competition to be a world-class business-meeting or tourist destination.

One commentator naively suggested that Baltimore "should cut its losses" and back out of publicly funding a convention center. But Baltimore is already in the destination business — big time.

Baltimore is the top visitor destination in Maryland, where tourism is the eighth-largest employment sector. Tourism is among the city's top three economic engines, generating 25,000 jobs in the city, $23 million in city hotel tax receipts, and more than $86 million in state sales tax revenue, according to data from the Sage Policy Group.

In fiscal 2010, convention center events drew 368,000 visitors who generated an economic impact of $580 million, according to Visit Baltimore.

Do critics really want to give up on this economic generator and not strengthen a Baltimore brand that is already well regarded? And speaking of property taxes, how do you forsake $580 million in economic impact and take a large chunk of $23 million in annual hotel tax revenue out of the city coffers and somehow reduce property taxes?

In proposing to expand the Baltimore Convention Center, we're not suggesting a $400 million "spec" building. A sufficient number of conventions have clearly indicated that they want to come here but are precluded from doing so because of the limited size of our facility, which has less than half the average square-foot capacity of centers in competing markets. Our convention center's ranking for size has dropped from 28th to 73rd in the nation since the previous expansion in 1996. (Note that if we hadn't expanded in 1996, our convention center would now rank worse than 200th.)

It's also important to understand that our proposed expansion isn't just about more floor space. It's part of a concept to create an integrated, highly flexible convention center and attached sports arena to give Baltimore unique meeting and event capabilities that would be largely unrivaled elsewhere on the East Coast.

Our proposal goes beyond simply enabling Baltimore to keep up with competitors. It would catapult Baltimore into a leading competitive position in major convention and event markets to which it now doesn't even have access. This proposed project isn't just about keeping up; it's about jumping ahead.

A fact of life in a free-enterprise system is that competition never ends. Changing and growing to maintain a competitive edge is a constant in the business world, and particularly in the world of hospitality and tourism.

As Ben Franklin said, "When you're finished changing, you're finished."

Donald C. Fry is president and CEO of the Greater Baltimore Committee. His e-mail is donaldf@gbc.org.

Copyright © 2014, Los Angeles Times
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Property TaxBusinessFinanceHotel and Accommodation IndustryDonald C. FryBaltimore Convention Center
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