Convention Equilibrium Still Off

We wrote a decade ago about the new convention center and where it stood in terms of national context: as Pittsburgh was expanding so too were many other cities. When the dust settled convention center square footage was up 41% among the top fifty markets. Convention demand, on the other hand, fell rapidly and was up less than 2% per year.

Clearly those trends have not abated: a recent study by the Manhattan Institute found that "In 2010, conventions and meetings drew just 86 million attendees, down from 126 million ten years earlier. Meantime, available convention space has steadily increased to 70 million square feet, up from 40 million 20 years ago." Much of the expansion-then and now-is fueled by feasibility studies and wildly optimistic projections of economic activity, nearly always accompanied by subsidies of some sort.

Those subsidies extend to convention hotels as well, as evidenced by the money the gaming bill set aside (which has since been redirected due to lack of interest) and the fact that cities like Boston, Dallas, and Baltimore have gone full bore on using public money to construct convention center hotels. There is no guarantee that convention boosters won’t come back to the public trough at some point in the future, whether it be from the pot of gaming money or some other source, saying that they really have a committed partner and need a subsidy to make the convention center hotel a reality.

Convention Center and Prevailing Wage

One of the oft repeated assertions of unions in their advocacy of perpetuating the market defying law known as the Prevailing Wage act has been that paying union wages means much higher quality workmanship. That argument has been debunked by a thorough study from the Ohio legislature that examined prevailing wage projects and market wage projects. Overwhelmingly, respondents indicated they detected no quality differences in workmanship.

The new Convention Center in Pittsburgh, a prevailing wage project, has had a number of incidents related to work quality, specifically roof leaks. So bad were the leaks that the Sports and Exhibition Authority has had to sue installers to recover extensive repair costs.

The point is that to get the Center built, workers earned wages and benefits that were as much 30 to 40 percent above market wages. Those costs added tens of millions of dollars to the cost of the overall project. Costs Pennsylvania and local taxpayers were forced to pay.

This madness needs to be stopped. It will require legislative courage, but it must be done. Pennsylvania taxpayers and non-union construction workers deserve better.

Is a Convention Center Hotel Warranted?

Proponents of a convention center hotel are lamenting the fact that, after a decade since the completion of the new center, the hotel project has failed to get underway. Advocates are looking for a 500-room full service hotel that would act as a “front door” for the convention center.  Their argument: the hotel is necessary to maximize the center’s potential and they are willing to throw taxpayer money at it to make it happen. 



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Institutional Amnesia

The surest sign of neurotic behavior is the constant and repetitive use of arguments that have been thoroughly debunked. Now comes City Council’s budget director telling Council that visitors, commuters and non-profit realestate are not paying enough to the City.

The director said "we’re like an amusement park that only charges the people that live there…we’re not charging the people that come and visit." Obviously the director forgets that non-City taxpayers funded two new stadiums and a convention centerandgaming revenue from around the state underwrote construction ofthe hockey arena. In the spirit of Thanksgiving, where the City’s gratitude for that support?

Guess what? All these structures are property tax exempt. And theCity receives virtually all the economic benefits these facilitiesspin off. Parking, restaurants, bars, hotel room nights, retail sales,etc.

Then there is the amusement taxand non-resident sports tax. The director suggested asking the state to allow the City to raise the amusement tax. But that tax was cut in half from 10 to 5 percent in 1995 asrequired by the Regional Asset Tax law. In exchange for huge amountsof support for City cultural, entertainment and education organizationsthe City was previously funding, the City lost half the amusement tax-a small price relative to the RAD benefits. Any gratitude for all thetax dollars pouring into Pittsburgh from the rest of the County? Not aword.

RAD was touted as the City’s financial savior; ditto the newstadiums and convention center. The lack of prudent spending never enters into the cloudedmental processes of elected officials or those who work for them.

Addicts have to admit they have problem if they ever hope to getwell. No such admission has been forthcoming. And so it goes.

Labor Day in the ‘Burgh Will Find No Joy in the Employment Situation

Compounding the litany of financial difficulties confronting the City of Pittsburgh the latest jobless figures (July 2010) show a recession-high unemployment rate in the City’s labor force of 9.1 percent-a level not experienced in well over a decade.  The unemployment rate has almost doubled since the July 2007 reading of 4.7 percent.


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