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Shreveport convention center ready to debut as white elephant

On Thursday Shreveport’s convention center opens for business, even though officially it will not be fully completed for another two months. Unfortunately, questions continue unanswered whether it will accomplish what its backers claimed it would do, bringing economic development to Shreveport.

Of most serious doubt is whether it really will attract enough business to make up for its cost. Keep in mind that if it comes in at around the $100 million figure often cited, interest on the bonds to pay for it will consume around another $45 million (over 20 years at 4%; these figures are assumptions probably not far off from reality). This brings the total price tag up $145 million, or $7.25 million a year or $36.25 for every man, woman, and child in Shreveport (assuming a population steady around 200,000) for the next 20 years. This means, without any operating costs worked in, that the total amount of additional taxes and fees the city takes in from its operation must be in essence $7.25 million annually for it to “break even.”

Further breaking this down, given 2005 budgeted figures, sales and use taxes triggered solely by the convention center (such as conventioneers dining out, etc.) would have to increase by about 9 percent to earn back the money being pumped into the convention center just for its building. This means guests would have to spend over $300 million if we assume it all gets made up in sales taxes. Even if the city attracts annually 30 mid-sized conventions of 200 attendees from outside the area, this means each person would have to spend over $50,000 during his visit to Shreveport – in Shreveport.

Theoretically, the revenue contribution is more complicated than this, since some property values could go up, jobs may get created creating other taxable sources of revenue, etc. (one which will not provide much more is additional hotel occupancy taxes – in 2005 their total is budgeted only at $1.5 million). I can’t give a good guess for these – nobody can. Still, it should be apparent that the only way the convention center will pay for its fixed costs is a couple decades worth of large numbers of convention attendees swarming the city spending far in excess of national averages and creating an unprecedented number of jobs as a result.

(Note that almost all of the kinds of jobs produced are hospitality in nature, considered to be the least value-adding of jobs created and among the least able to contribute to the tax base. Property tax receipts themselves rise incrementally and are far below sales and use tax receipts, so no great increase would come from here. Furthermore, let’s say these visitors go crazy on the riverboats – collections there now run only about $12 million a year, so even the a bunch of conventioneers spending money at the casinos like they were flushing toilet paper is just not going to add much revenue from this source.)

Compound this revenue problem by the fact that, as of now, the few clients lined up by the managers of the center are smaller and many are local who would have used other local facilities. In other words, they hardly bring new revenues for the city. And there continue to be plenty of predictions that nationally the convention business isn’t going to improve any time soon.

Finally, potentially discouraging use of the center are political considerations. On both issues of its construction and in hiring its management, the politics of race have been interjected by black Democrats of the City Council. Whether this ultimately inflates the final tab of the joint and/or reduces operating efficiency remains to be seen, but when unofficial quotas get pushed onto an operation, costs of building and operating usually increase. (And in the background waits the hotel attached to the center, now only months from completion, itself perhaps an even greater white elephant and drainer of taxpayer and city resources.)

Still the center is something the citizenry brought upon itself by voting affirmatively for the money to pay for it. Its presence may increase its citizens’ pride, it may raise the city’s profile a bit, and it certainly will allow Shreveport politicians to puff their chests out even more than can their brethren across the river already expert in doing that, but it's unlikely to deliver economic benefits that will pay for itself any time in the near, and likely even distant, future.

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