Testimony before the Metro Council on Resolution No. 07-3868 authorizing creation of a finance plan for the development of a Convention Center Headquarters Hotel

Steve BucksteinPresident Bragdon and members of the council, for the record my name is Steve Buckstein. I’m Senior Policy Analyst and founder of Cascade Policy Institute in Portland. I’m here to oppose this resolution.

Originally, we built the Oregon Convention Center thinking it would encourage everyone to come to Portland and spend lots of money eating and shopping when they weren’t attending conventions.

But the same idea occurred to people in other cities, and it sparked an ambitious municipal competition that is still going strong.

When our original $90 million center didn’t generate the expected revenue, we spent another $116 million to expand it, even though voters turned down a property tax to pay for it. Occupancy rates dropped after the expansion, so now we’re here talking about spending another $244 million for a headquarters hotel.

Of course, no one wants to listen to critics like Professor Heywood Sanders who came here in 2005 to tell us that other cities such as Chicago, Philadelphia and Houston already tried the headquarters hotel route, and it didn’t work. Not only didn’t they significantly increase convention business, but they didn’t make their hotel occupancy projections either. Now those cities are saddled with money losing convention centers and money losing hotels.

Phoenix, San Antonio and Baltimore are currently building headquarters hotels, and they’re all bigger than the one you’re considering.

The fact that the private sector wouldn’t put up its own money for such facilities somehow didn’t matter in those cities. The question is: Does it matter to us?

We like to tell ourselves that Portland is different; but does that difference justify spending more than $400 million on a convention center complex and hotel, betting that enough visitors will come to make the bet pay off? Promoting tourism is great, but not at all costs.

The EcoNorthwest study leaves out some alternatives you may want to consider. Rather than just decide between building a headquarters hotel to compete for national conventions or concentrating on local events, you may want to consider getting out of the convention business altogether. Before throwing good money after bad, you might want to either sell the convention center and cut your loses, or change its business altogether. I don’t know what other activities might generate more revenue from that building, but I’m sure there are analysts out there who can help you find out.

I know it’s not easy to admit that our convention center may have failed to achieve its goals, but it is your fiduciary responsibility to avoid taking undue risks with future public investments. Enough other cities have tried and failed to make headquarters hotels pay off that it seems clear what your decision should be.

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