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What Is the Convention Center Worth to Dallas?

The Kay Bailey Hutchison Convention Center is facing hundreds of millions of dollars worth of repairs and upgrades. Is that really the best use of our public money?
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If the city of Dallas keeps a filing cabinet for stashing away all its various master plans, it must be close to full. In the last six months, we’ve written about city plans for crime, economic development, trees, Hensley Field, sidewalks, historic preservation, traffic safety, and mobility. But to build on a phrase from Mike Tyson, everybody has a plan until they get hit in the mouth—or run out of money. None of these plans are leaving that cabinet without funding.

So supporters of Dallas’ master plan for Fair Park should take heart at the news, detailed over the weekend by the Dallas Morning News’ Sharon Grigsby, that the state gave the OK for the city to use hotel occupancy taxes to help restore the South Dallas landmark. The idea is that the city could issue bonds, repaid with a 2 percent increase in the tax on hotel guests, to funnel about $100 million toward fixing up Fair Park. The City Council, and then voters, would have to sign off. I don’t have much more than a hunch to back this up, but letting out-of-town visitors foot the bill for the restoration of widely cherished (and badly neglected) Fair Park probably sounds like a good idea to most people.

But the money for Fair Park is just 20 percent of it. The rest of those bonds, or about $400 million, would pay for a heavy-duty makeover of the city-owned Kay Bailey Hutchison Convention Center. People may feel more ambivalent about this part of the package, for good reason. (Voters will approve both as a package deal, not individually, says former Councilman Lee Kleinman, who advocated for the arrangement to the Legislature.) 

Dallas’ convention center, like many convention centers, loses money. A city official told me last week that just repairing and updating the convention center’s facilities and technical systems would cost $250 million. A master plan for the convention center (there is always a plan) is still in the works, but the project’s website floats more ambitious proposals that would cost much more. The convention center business has always been marked by more busts than booms, and the COVID-19 pandemic saw Dallas’ convention center emptied out when it wasn’t being used as a virus testing site or as temporary housing for migrant teens. The city is already carrying hundreds of millions of dollars of convention center debt.

It’s fair to ask: How much more do we want to spend on this thing?

Boosters say that a convention center’s “economic impact” is felt elsewhere: in the dollars conventioneers spend at hotels and restaurants, the creation of hospitality jobs, and the generation of tourism. Think of the conventioneer who likes the place enough to bring her family back for a visit, says Rosa Fleming, the city’s director of convention and event services.

“Our conferences generate [hotel occupancy] tax, which we then use for the convention center, but also for arts and culture and other projects. We also pay debt service with that,” she says.

The city owns the convention center. VisitDallas, the convention and visitors bureau, markets the city as a destination and books major conferences. The private operator Spectra took over day-to-day management of the facility in 2019, and is supposed to fill in gaps on the calendar. (The city also handed management of Fair Park over to Spectra a few years ago.)

If the city, VisitDallas, and Spectra can’t regularly fill the convention center, then hotels suffer, Fleming says. “And then retail suffers, and the restaurants. So our funds may not necessarily come to the city of Dallas as a municipal entity, per se. But we are the engine that keeps these hotels filled.”

As critics have noted, the sorts of economic impact studies that are often used to justify convention center spending are vague and unreliable, and their upbeat projections almost never pan out. The convention industry has been declining for decades. This isn’t news. A UT San Antonio professor named Heywood Sanders got a book out of it, Convention Center Follies, which “exposes the forces behind convention center development and the revolution in local government finance that has privileged convention centers over alternative public investments.”

None of this has stopped cities across the country from pouring millions of dollars in to revamping their convention centers, as the New York Times reported in December. Never mind that COVID-19 paused most conventions for the better part of a year, or that the pandemic’s long-term effects on the business look dismal. The convention center game is an arms race between cities, essentially, driven by much of the same mentality that sees local governments hand out huge tax breaks to try and draw corporate relocations.

Dallas doesn’t want to be left out of the action. Fleming says that in 2019, city and tourism officials went to check out of the competition in cities like Denver and Los Angeles and New York, which have all decided to overhaul their convention centers in recent years. The city’s own master plan for a makeover won’t be ready for City Council and public consumption until at least next month. But documents hosted on the project’s website indicate that what’s coming is big, ambitious, and very optimistic about the future of the convention business.

The convention center and its immediate surroundings are, right now, not especially attractive. “When you look at where [the nearby DART station] is, it’s dark, it doesn’t appear to be walkable. It creates a perception that things are not safe around the convention center,” Fleming says. “Once you pass it, you’ve got our dock area, a lot of vacant lots and parking lots.” It’s a pain for conventioneers to leave the convention center itself and spend money downtown, so why would they? 

The master plan’s project website mentions three possible options, ranging from updating the current facility to replacing the whole center, freeing up space for new development. In any configuration, the idea would be to better connect the convention center to its downtown neighborhood and further south, toward I-30 and the Cedars. There are further signs that other developments are picking up near the convention center, Fleming says. Investment in the convention center could–maybe–help spur that along.

The parts of the coming master plan that could prove most intriguing have to do with the district surrounding the convention center. The convention center’s southwest corner of downtown is a little too quiet. How can the city encourage developing it into a walkable, lively urban district? And if we’re asking ourselves that question, here’s another: Why do we need the convention center to make this place a walkable, lively urban district?

Last year, the thinktank City Observatory asked a version of that question in a piece co-authored by former Seattle Mayor Mike McGinn. At the time, Seattle had its own convention center headaches. When hotel revenue completely dried up at the start of the COVID-19 pandemic, local taxpayers (rather than tourists) suddenly found they might be on the hook for a $1.8 billion expansion to the Washington State Convention Center. Convention centers are a bad investment subsidized by public funds that could be better spent elsewhere, McGinn writes with co-author Joe Cortright. They address the notion that hotel occupancy taxes should be reserved exclusively for “selected parts” of the tourism industry.

“Room taxes are taxes on economic activity, just like sales taxes–and earmarking them for big projects like [the convention center] comes at the expense of every other tax-funded activity in the city,” they write.

That doesn’t mean a city should neglect tourism, according to McGinn and Cortright:

“If Seattle–or any city–wants to capitalize on the tourism business, it’s not going to succeed by throwing money at the ever larger non-descript barns that are convention centers. One windowless basement conference room or banquet hall is indistinguishable from every other. The city’s real asset is its unique urban quality, its public spaces, art, culture, nightlife and its distinctive small businesses, like the restaurants, boutiques and vendors…”

Dallas isn’t Seattle. Tourists are almost always going to choose the Puget Sound over the Trinity River, the Space Needle over Reunion Tower. They might even choose that city’s expensive convention center over our city’s expensive convention center. But that should only lead us to invest more in Dallas’ “public spaces, art, culture, and nightlife” and small businesses, not in a convention center that’s interchangeable with every other city’s convention center. Putting money instead toward Dallas’ “unique urban quality” benefits tourists as much as the people who live here. But the arrangement ties the city’s hands; voters will go to the polls and approve a deal that will steer 80 percent of a pool of hotel tax revenue to making improvements at the convention center. That is the only way Fair Park gets a dime from it. 

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