The Jackson Redevelopment Authority managed to sell $9 million of bonds to finance the construction of a Westin Hotel in downtown Jackson. The city was even nice enough to guarantee the bonds in a 2014 contribution agreement. However, JRA is also seeking bids for the construction of a convention center hotel. Everyone loves a construction party. However, a former USA Today reporter pointed out in a recent Wall Street Journal column how Cleveland has gone down this path and reaaaally put itself on the hook for hundreds of millions of dollars in debt. Dennis Cauchin writes:
This year’s Republican National Convention will be an all-you-can-eat irony buffet. In two weeks a putatively free-market-loving party seems set to nominate a protectionist candidate and former Democrat for president. An extra twist is where many delegates, party leaders and journalists will stay: a glimmering, new $276 million convention-center hotel owned and financed entirely by taxpayers.
The 32-story Hilton Cleveland Downtown, which opened June 1, boasts 600 rooms and 50,000 square feet of meeting space. A quick walk from the GOP’s main stage at Quicken Loans Arena, where LeBron and his championship Cavaliers play, the hotel is a grand, glass-faced skyscraper overlooking Lake Erie and the Rock and Roll Hall of Fame.
Yet despite its name, the Hilton hotel company doesn’t own the Hilton Cleveland Downtown. Instead, the hotelier is hired help, employed for its brand name and expertise. The true owner is Cuyahoga County, via a lease-purchase agreement with the Cleveland-Cuyahoga County Port Authority. Taxpayers are 100% responsible for its $276 million cost and the financial risk attached to its general-obligation debt.
When Cleveland bid in 2014 for the Republican and Democratic conventions, taxpayers had already financed a mammoth expansion of the city’s convention center. But an attached hotel was urgently needed to close the deal, and helped elevate Cleveland over Dallas, the other finalist. After touring Cleveland for a final time in 2014, Republican Party Chairman Reince Priebus praised the city’s “hunger, commitment and just the willingness to do whatever it takes to make this work.”
The county built the hotel because private firms weren’t interested. “Private developers,” the Plain Dealer reported, “expressed little interest in building anything but parking on the project site.”
Rejected in the marketplace, county officials recast the hotel proposal as a reflection of government’s “entrepreneurial spirit”—as the county’s top executive put it at the groundbreaking. In the old days, this might have been called socialism or a public-works project. Today, it’s called economic development.
Many cities subsidize convention centers, even attached hotels. But few places have been as systematic about a government-driven economy as Cleveland and Cuyahoga County. Seemingly every major building, business and institution in northern Ohio receives political favors—tax abatements, sales-tax forgiveness, direct subsidies, tax-exempt financing and so on—that benefit established interests at the expense of ordinary residents, workers and entrepreneurs.
The 20-block area surrounding the Downtown Cleveland Hilton should be called the “Government Subsidy District.” The Rock and Roll Hall of Fame has received more than $125 million in support from state and local government since it opened in 1995, according to the free-market Buckeye Institute (where I once worked). The three professional sports stadiums—where the Cavs, Browns and Indians play—all were (and are) government projects. Next to the convention hall, the grandly named Global Center for Health Innovation—225,000 square feet of county-owned office space constructed with the same tax hike that built the Hilton—has failed to meet leasing or revenue projections since its 2013 opening.
What Cuyahoga County does have is lots of taxes, regulations and union rules designed to protect high-wage workers. Cleveland’s Democratic mayor, Frank Jackson, wants to raise the municipal income tax—paid even by commuters who work in the city but live elsewhere—to 2.5% from 2%. Unions are pushing for a city ballot initiative to raise the minimum wage to $15 an hour, far above Ohio’s $8.10. On top of all that, the total sales tax in Cuyahoga County, 8%, is Ohio’s highest.
Much of the money for convention projects comes from a specially designated quarter-cent sales tax passed in 2007, which brings in about $40 million annually. Yet that’s still not enough to cover the costs. The city is kicking in tax revenue from downtown’s Jack Cleveland Casino. The 5.5% county bed tax paid by Hilton guests will be diverted to hotel debt, as will the property taxes it pays, except those for public education.
To politicians’ credit, the hotel was completed on time, on budget and scandal-free. If all goes well, Cuyahoga County thinks it can pay off the debt after 30 years, let the sales-tax increase expire on schedule in 2027, and in the meantime make a small annual profit. What could possibly go wrong?
Mr. Cauchon, a former national reporter for USA Today, lives in Granville, Ohio.
Tuesday, July 26, 2016
Is Jackson becoming Cleveland?
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42 comments:
Temporary or time-specific taxes are NEVER temporary or time-specific.
Wasn't it just about five years ago they finally killed the tax levied to finance the Spanish-American War? Wasn't it a tax on that new-fangled doohickey "the telephone" from the late 19th century?
as a life long resident of Jackson, and one who recalls shopping downtown on a regular basis, and one who believes their is significantly more good people than bad in this city, but "oh boy" the bad people are really bad!!!! This is concerning b/c our elected officials (no need in using the term political leadership as we are devoid of leadership) show no signs of bearing these cautionary signs. The city of Jackson has no development plan, has no desire to use it's capabilities as a municipality to improve development, urge development, provide for proper coding and restrictions that allow proper development and protect neighborhoods. It is a shoot from the hip, screw the residential, build another gas station / cvs / walgreens / dollar general and lets get that 1/4 of a million in sales tax revenue, mentality. The property manager of the shopping center next to the Chic-Fil-A on County Line is in the process of putting in a Burlington's......the city has allowed all street trees to be cut down alongside County Line, ruining the street scape, even though from the street, no signage would have been blocked, and while they have re-landscaped all the parking islands, they are miniature plantings and it is now visually 2 football fields of parking, and what was once a nice thoroughfare is now obviously destined to take on the worn out and run down appearance of all the other old strip malls in the 3 county area (YES, they exist in all 3 counties). I simply can not help but wonder when they will realize that throwing everything at deterring crime in conjunction with deciding that they are a municipality with time and zoning on their side, will the city finally show signs of a true desire to be a legitimate place of business and residence.
At least Cleveland isn't Detroit, but it still stinks.
First--let me say that the Rock and Roll Hall of Fame should be in Memphis--not Cleveland.
I've been to Cleveland. There's only two reasons to go-the above mentioned Rock and Roll Hall of Fame is one of them. Watching the Cavaliers is the other.
It's like Detroit--brownfields, crime, pawn shops, payday loans, booze stores...AND it has a bunch of hipsters who live in a very sanitized downtown area who completely ignore the plight of the other 90% of the city.
9:58....Be honest now. You "ignore the plight of the other 90%" of Jackson don't you? Be honest...
If thie issue is whether governments should dole out cash for economic development that would not otherwise occur, is Jqckson becoming Pearll with its taxpayer-purchased stadium and outlet mall? Or Ridgeland, with it taxpayer-purchased "lifestyle center?"
No, taxpayers should not be footing this bill. Let the market decide, assuming capitalism is still okay.
Is the convention center still open?
@ 10:32.....I don't think anyone should blame you for moving, it is your choice and right to do what you feel is best for you and your family. You should never be judged on such.
concerning the racial make-up of Fondren, whatever it may be, "Fondren's First Thursday" always show a good mix of races that our out to support the area. I see the same when I shop @ McDades, Cups, Rooster's, Pig and Pint.......frankly, it is what it is, and will work itself out as long as the area has an appeal to people, and there is obviously a desire for a neighborhood in a urban setting that allows for certain amenities to be w/in a reasonable walking distance. Fondren, it's environment, it's commercial make-up and opportunities have proved themselves desirable and sustainable to many groups.
fondren garage is nothing more than a glaring example of the failure of this city to get up to speed on developmental codes / zoning / ordinances that work together wrong commercial and residential, allowing for proper "buffers" to exist b/w the 2. This is a total failure on the part of the city, and the result that played out the other week in the news and council meeting is a direct result of the cities deficiency in the areas of development
@ 9:39am
Well said.
Glad the discussion on this thread is productive compared to what you see on WLBT, WAPT Facebook posts in regards to all things Jackson.
Mississippi needs a strong Jackson to show the rest of the country we have evolved past the civil rights era.
I'm beginning to wonder if Jackson even matters to other areas in Mississippi. The coast could care less. North Mississippi could care less. In and out traffic is common place when folks have better choices to live. The rest of Mississippi seems to be doing just fine without Jackson.
Go back to your dark basement, 4:38. Are you also 11:10? Yes, of course, the Convention Center is wide open for business.
1:27 is absolutely right. We must have a strong Jackson.
The coast would really like to split off from Ms. Anything north of I10 is completely different than the coast.
Jackson doesn't matter. Jackson is lost.
The city of Shreveport has a Hilton and a convention center. Big money losers
/look west, Jackson....see you financial destiny.
/who the hell would ever come to Jackson for a convention?
Can someone name a convention that has come to Jackson? I don't mean some state agency that is using the facility. I'm talking about a private company or trade organization that reaches beyond the borders of the state.
Has a regional organization chosen Jackson over New Orleans, Memphis, Destin, etc. for a major, week-long event yet? Have we scored a single big event for a concern not based in Mississippi?
This is not a rhetorical question. I seriously am unaware of a single big convention that has picked Jackson as its destination over other cities. I'd be interested to know if the CVB has pulled anyone into the city.
It's been open for seven years. Isn't it about time we see at least one big convention in our "convention" center?
4:38: Mississippi is Jackson. It's the only state in the region with a shrinking population and a stagnant economy. You're welcome for Jackson and it's ability to provide a smokescreen.
10:51 pm There is an event's calendar posted each month.
In August, it will host some of the Rhythm and Blues Festival.
The Mississippi Marathon uses the Convention Center as do some of our larger businesses and organizations.
The fact is that there is only one other Convention Center large enough to hold some events and that is in Biloxi which is not centrally located.
I have been involved with events for some regional and national organizations who want to consider Jackson ( often because the head of their organization is involved in the leadership) and aside from the casinos, none of Mississippi's large event spaces have sufficient adjacent hotel accommodations. People coming to large events want to be able to walk to the meetings/ activities. They do NOT want to park and drive after travelling.
The entire State needs this Convention Center to work because it's the most feasible spot to pull off adequate hotel room space to compete for bidding on large conventions.
@ 5:26pm
You really are telling the truth. The Mississippi Gulf Coast has better restaurants, the shopping is a little better - its seems like its the most progressive part of the state. Makes you wonder how the hell they elected Palazzo?
North Mississippi ala Shelby County is cheaper shopping for the Memphis residents and is the suburbs of Memphis, that's why they are sufficient.
However, the state operates out of Jackson - so go Jackson - so goes the rest of the state. Southaven, Biloxi, and Gulfport can only offset so much. They are not the largest municipalities the main draw will be Jackson, until one of those aforementioned municipalities can grow into a major attraction. Which none of them will considering the social politics of this state.
But the thing with Jackson, Southaven, Gulfport and Biloxi - they are pushing to make this state progressive, not regressive.
@ 8:06am
Well said. Conventions come to cities that can host and entertain to large numbers of people.
People scream they want businesses to thrive in Mississippi, but we can't survive at the rate the state is going.
We are losing people, that's sales revenues that go into businesses, that's tax revenues that go into educating our residents and maintaining our infrastructure.
The unnecessary self-imposed austerity measures taken by the legislature in the last 2 years, add in the lost of residents
to the state - will be detrimental to our short term fiscal future.
If we do not have another special session by September, because the state is short on revenues, will be a surprise?
In seven years all we have is some regional and national organizations who want to consider Jackson? Have there been any that actually used the convention center?
I agree with 8:06 on the statement that "people coming to large events want to be able to walk to the meetings/activities". So - lets say someone comes to downtown Jackson to scout out the place for a convention and meet with the convention staff. They would probably stay at one of the downtown hotels - the Hilton or the Marriott. What would their experience be today when they depart their hotel and walk around downtown? On Capital Street they would see the new beds along the sidewalk with weeds growing up in them. Then they would have to deal with their 2nd or 3rd panhandler asking for money. If they make the choice to walk under the rail line towards the Iron Horse at night they would have to run the gauntlet of the underpass with its darkness due to non-working wall pack lights, trash, broken glass, spray painted walls, pigeon crap and the over whelming smell of urine. Arriving via Amtrak would showcase the deplorable condition of the grounds and sidewalks at Union Station. Not a good first impression and possibly key to making a decision NOT to host a convention in downtown Jackson. The exact opposite experience is needed in order for the revitalization of downtown to succeed.
Mississippi is not losing population. That is false.
Mississippi may not be losing population, but, Jackson most certainly is.
Still waiting for 8:06 to name ONE private, regional organization to hold a convention in Jackson in the seven years the Convention Center has been open. Just name ONE.
10:51pm here. Looks like others want to know about the events just as I do, and I'm not seeing an answer.
A decade ago we were told we NEEDED a convention center to make Jackson a competitive city, so we built one. Now we're told we need a hotel. Once that's built, will we see a major convention hosted here?
And one big convention is a pretty damn low bar for success, in all honesty. If the American Bar Association chose Jackson as its destination and brought people in from around the country for a week and it was a big deal, but no one else came, would that make it a success? I know the CVB and DJP and the mayor's office would say so, but our standards should be higher.
One big win (which I don't believe we even have yet) is not a record of success. You can pull in one convention in ten years and then go back to roller derby and Dept of Education luncheons and be deemed a success. One big win in a decade is a record of failure, and we aren't even to that level yet.
So, I'm waiting along with others...what's the biggest score the CC has had in its seven year history?
I seems to recall a car show early on, but not much else at the CC. I know I went a Cisco training session, but it was in the smaller rooms upstairs. Only other thing I can recall is Top of the Hops, but it's been 2-3 years since it's come to Jackson. It still goes to the Biloxi though.
Mississippi has lost 25,000 more people than it has attracted since 2010. 90% are under 35. A vast majority of those have college degrees.
But MS is doing big well.
Of course the City of Jackson is losing population. That fact has been thoroughly documented here on JJ for nearly a decade. Nobody said otherwise.
No population loss huh?
Migration totals for 2014-15, per 1000:
National: 3.6
GA: 6.2
AL: 0.7
LA: 0.2
AR: 0.9
TN: 4.9
MS: -3.2
The Jackson convention center will never be a success. Jackson is a dirty, ill kept, and dangerous City and this is obvious to all visitors. Jackson should cut its losses, board up the convention center, and just let the bums live there like they do with so many other buildings downtown.
Jackson should cut its losses, board up the convention center, and just let the bums live there like they do with so many other buildings downtown.
But...but...but we have Parlor Market!
And great restaurants out the ass!
And a planetarium!
And waiting lists at the King Edward!
And Parlor Market!
And Smith Park!
And Roller Derby!
And Farish Street with BB King's coming!
And robots!
And...um...well...er...PARLOR MARKET!
@July 27, 2016 at 12:06 PM can't find their way out of statistical bag.
4:28: Are you saying the statistics are wrong? Need sources? We have those. I'll leave the interpretation to you whiz-kids who think the state is great while Jackson is the exception.
http://www.governing.com/topics/mgmt/gov-states-losing-population-census.html
@ 9:26am
Deny deny deny until you believe you are right? That's the problem with this state now, too many people deny the facts and supportive data of those facts. Its like people enjoy ignoring real issues in this state.
Mississippi is not losing population. Net migration offset by childbirths. Please go back to school and take a statistics course and also a course on reading comprehension.
6:58 We lost a Congressman after the last US Census. Please go back to school and learn to count.
Idiot.
PS As in most things, Mississippi ranks 50th. We MAY be adding population, but 49 other states are growing faster.
Anyone have any idea why Ms. would want to increase the population of the state? We are already a welfare state. Adding new people to the roles will not help the state.
6:58 We lost a Congressman after the last US Census.
You've disqualified yourself numbskull.
Thanks for clarifying that the fleeing educated are being replaced by babies. Very reassuring.
Thanks for clarifying @3:52 your idiocy.
9:44: You claim to be right, but you don't explain yourself because that would expose your faulty assertions. So, you call names, like some 14-year old playing Call of Duty. You're famous around here.
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