Tuesday, June 14, 2016

We report, you decide: Convention Center predictions

Friday's post about the Jackson convention center prompted a reader to send an old column opposing the construction of the convention center written by Howard Ross. (R.I.P.) It was written in late 2004 and was very prescient.

Some Observations on the Proposed Convention Center

[article by Howard Ross]

The past several weeks has experienced a sort of "on again - off again" effort in completing this compilation. With a short lull between conventions the decision was made to get this off to you this week. It is simply a matter of coincidence that this is sent to you on the same day of your editorial endorsement.

"Economic Development" financed by the government falls generally in the category of "swimming against the tide." It is oft times the government engaging in an activity which private enterprise shies away from because it knows better. In short, such efforts usually require ignoring the facts and one usually pays a penalty for doing this. The following justifies, so it is believed, such stark observation.

When the government undertakes an activity which private investors won't touch it might be termed entrepreneurial defenestration. Allow me to particularize in a somewhat disjointed manner.

The proposal, as I glean from the enabling legislation, is for a local government commission to construct a building solely for conventions. To pay for this construction the city of Jackson will issue its bonds.

To pay the principal and interest on these obligations new taxes are required. This, in itself, means the public pays for the project. It is not a project justified by the economy, but on the premise the public wants it and is willing to pay for it through taxation. In such case, it is no more than a new library, park, zoo, or highway. To tie it to private enterprise as a "money maker" is misleading and a distortion.

Another problem is, if the financial projections on the tax revenues are not accurate on the low side, look for an increase in taxes - ad valorem or sales taxes.

In short, Jacksonians will underwrite a venture with the hope that taxes on restaurant sales and hotel rooms rented will be sufficient to retire the indebtednesses incurred. If increased restaurant sales and room rentals are generated the profit goes to the owners of these establishments not the general public which made it all possible. The argument that the project is a joint venture between the public and private sectors is not defensible. It is public money financing private profit.

The arithmetic is rather simple: according to Mayor Johnson, restaurant meals and hotel rentals must generate $5 million each year from the increased sales and hotel taxes to pay for the convention center.

Experience throughout the country of late has been these centers actually lose money. As a result these new taxes must, therefore, generate additional funds to cover this operating loss.

Proponents claim a "multiplier effect" from tourists who spent their money while attending events in the center. Such folks claim money turns over and over all adding up to cash in everybody's pocket. People who know about convention centers tell us, "Don't you believe it." Mayor Johnson says the center will generate $38 million annually. Experts in the field contradict our mayor.

What is patently obvious but never mentioned is Jacksonians will be investing millions in a grand monument solely to protect downtown property values. That is the real reason Capitol Street property owners are such avid fans of this project. Jackson parking garages built in the early 80s were financed by the public so private enterprise could rent its office space.

It is a similar syndrome one sees in cities with major league baseball or NFL franchises. The cities put up the money for a stadium and the team owners make the profits. Convention centers are cut from this same bolt of cloth.

Interestingly, it is the folks urging that we spend our tax dollars to fund convention centers who are the ones claiming federal and state taxes are too high. That is why some experts call it a shell game. "Don't raise taxes unless it is for my benefit," is their apparent battle cry; a sort of corporate welfare for the bigwigs - a term you have heard me use before.

Common judgment tells us if this were a good deal private enterprise would have jumped on it years ago. In fact most major hotels already qualify as a convention center by almost any criterion and they are the ones who will make the real profits.

It creates jobs proponents claim. In Cleveland, Ohio they cost $160,000 each. And we know what type of jobs are created, too; waiters, parking valets, cleaning people and other minimum wage workers. Not so strangely, purveyors of high ticket items such as fancy foods (shrimp, oysters, lobster, etc.) are from outside Jackson anyway effectively limiting the multiplier assuming one exists. And if the convention goers decide to shop at the newest malls, they are located in Rankin County not Hinds. Northpark is in Madison County. Should they want to have at some one-armed bandits, well, Vicksburg isn't Jackson. To add insult, what out-of-town guest in his right mind will head out west Capitol Street and retail shops are virtually non-existent short of Highland Village. Taking a break from the convention to attend a movie means a trip to either Madison or Rankin County. There isn't a cinema in Jackson.

Feasibility studies paint a glowing future which experts tell us is baloney. Ask the folks in Houston or Los Angeles or Providence. In Dallas, with flagging attendance, the call last spring was for a hotel closer to the existing center to be built at public expense. Need a convention center? Must have a hotel to go with it.

But the problem is even deeper. Baltimore built three stadiums, several tourists attractions and a convention center yet it continues to lose residents while Virginia opted for improving its education system. The result: in the same time period Virginia created 196,000 jobs while Maryland created 13,400.

A real anomaly exists. Just when municipalities have been privatizing such services as garbage collection, sewage treatment plants and even potable water plants we are told tourism, which has always been private, is just the ticket for public funds; strange, indeed. I was heavily involved in these privatization efforts a quarter century ago and, where appropriate, we accomplished it with effect. There private enterprise made a profit for the government not the reverse.

Another factor, cities shouldn't construct a building at public expense and then give it to those plying the tourism trade or any other type of private enterprise.

And, for the most part, you can throw feasibility reports in the garbage can. History shows they all conclude: "Build it, you'll do great." Before you buy into any such projection, take a look at their previous recommendations to determine whether dreams really came true.

But if you want to put the proposal to the financial acid test, issue the bonds on a revenue basis; that is, principal and interest will be paid only from the avails of a properly defined sales and hotel tax and the bonds are not issued under the full faith and credit of the city.

Let's ask if it can pass muster in the nation's financial markets, not whether citizens are willing to increase their taxes? When I was city attorney a common expression, with much wisdom, was often bandied about. It was don't just throw money at a problem. It made good sense then and it still does. Revitalization of downtown Jackson may or may not be feasible, but simply throwing money at it doesn't make good sense.

Objective experts tell us convention center construction, ownership and management are best left to entrepreneurs who will do a better job wherever the bottom line is a consideration.

Dr. Heywood Sanders of the University of Texas or our own university professors who qualify as real experts in the field can give you information far beyond these "notes;" a real insight before Jackson falls victim to "irrational exuberance."

Across the street from the University Hospital is the twin brother of a convention center. It was constructed and enlarged on the "build it and they will come" philosophy. Ole Miss and Mississippi State won't touch it. In that instance the state of Mississippi picks up the tab; here a city with a dwindling tax base and declining population must do so. Certainly, Jacksonians can pay a little more for a meal, but this proposal has all the earmarks of a Memorial Stadium in the making.

With today's editorial one supposes the die has been cast as respects The Clarion-Ledger's stance. The original purpose of this memo was to give a word of caution to investigate further. In this connection I can give you a number of citations which are authoritative. Your staff is at least as well equipped as I at this sort of thing - although nearly 50 years of law practice was largely a "sifting through of the evidence." If nothing else these thoughts were prepared to give you a leg up. This memo comes too late for that, apparently.

Surely, your paper is entitled to its views on any matter of public interest. Therefore, in the interest of fairness may I suggest a two pronged course.

First, verify the numbers you cite as being reasons for construction of the convention center. It is assumed these "rosy scenarios" come from reports by those in the business of making projections. It is recommended some investigation behind these projections be made. I could, but refrain from, nitpicking either the projections made by you or Mayor Johnson. Since you chose these numbers as justifying your belief in the worth of this project I feel the responsibility for their accuracy lies with you. Similarly, the accuracy of statements I make in articles sent to you for publication is my obligation.

Second, give the public both sides of this venture. Many assertions are made in this memo. I believe they are accurate or I would not have included them. In whatever fashion seems fair to you, I would think these factors should be made available to your readers, or better still, solicit the detailed views of knowledgeable experts in the field. There are many of them and they should be happy to assist citizens in making an informed decision.

As you know, I am, and will continue to voice my views on issues affecting us. Frankly, I want to restrict myself to only a few columns each year and, more importantly, I do not want to give the appearance of being an expert on convention centers when manifestly I am not. The information offered in this memo was gleaned from what I felt was a responsible search for information on the subject, but even so, I do not qualify as an expert. As it happens, however, I was the City Attorney for several years and corporate finance was one of the areas in my law practice so I do possess a measure of expertise not shared by laymen generally. Taking the matter as far as I felt appropriate there is a real basis for these observations, or so I believe. I feel I must leave it at that.

I recognize this is an outsized memo. I make no apology for this, and, a fortiori, in a larger sense it is a memo in the interest of the citizens of Jackson. If you want me to forward it to others at The Clarion-Ledger let me know and I will do so. I don't want to impose on you or our friendship which I value highly.

Finally, there is nothing secret about this memo. You should feel free to use it in any manner you believe will benefit the people of the city of Jackson.


rat ON, Rat on said...

In other words............

Anonymous said...

Convention Centers = monorails

Anonymous said...

Great column. Thanks kingfish

Anonymous said...

Don't forget that Wyatt Emmerich (Northside Sun) wrote against it even more often.

Anonymous said...

Are ya feeling unloved Wyatt?

Anonymous said...

All the commercial real estate brokers opposed the CC. They knew it would not justify the expense to the tax payers. You know it was an economic titanic when the local banks would not finance the developments around the CC. This is another example of Ben Allen pushing something that he had no clue about just like he tried to push an arena in downtown Jackson. He just did not know that he did not know !!!!!

All The Kings Horses said...

And he still doesn't know that he doesn't know. Is it possible that people cannot connect all these many dots and conclude that Ben Allen and his legion of nincompoops are toxic?

Anonymous said...

It is never a good idea to put people in charge of a city that does not have the best interest of the city in mind. Putting a person in charge of a city that has only their best interest in mind is sort of stupid. Just because a person is a certain color does not make them intelligent. You can vote them in and find out the hard way.
Next time it comes time to vote for a city leader it might be wise to look past skin color. Something Jackson citizens will never do.
Learn to enjoy the gravel streets and no water.

Anonymous said...

Leave Ben alone, he will the first to tell you that he is dumb as dirt.

Anonymous said...

9:58, I live in Belhaven and keep my 14 year old truck full of fuel to make my trip to my office every day. I don't want to drive my new car on Jackson Streets. Drive down Lakeland Drive just once---please !!!!!!!

Anonymous said...

Maybe, they could put an ice skating ring in the convention center.
Oops, Rankin county already beat them to it. Ice skating ring coming to the Multipurpose Pavilion on Marquette road. Approx. dates December 15, 2016, to late February 2017.

Anonymous said...

All we need to fix this is a monorail.

Anonymous said...

Many people expressed the same sentiment back then, but it was ignored (and plenty of charges of racism were levied) because Farish Street was just about to become Bluesland USA and other amazing projects were coming to the city, including a parking garage staffed by robots! Anyone named Ben or Donna wish to comment?

I went to see Harry Connick, Jr. at Thalia Mara last week and the place was packed. Problem is, most everyone was local, and while we ate downtown at the Elite, it appeared that most people spent their non-concert dollars elsewhere. So no boost to hotels or restaurants. The Elite crowd appeared to be mostly regulars (they all seemed to be known by the staff). My point is that even a big time event held in the complex doesn't bring in the type of dollars Harvey claimed it would. It brings in local money to an extent, but not nearly enough.

We don't need to throw good money after bad.

Anonymous said...

Mississippi's largest industry in terms of work product and employees was built by the taxpayers of the state. The Pascagoula shipyard.
Also the Chevron refinery was built by taxpayers.
That said...the convention center in downtown Jackson was a boondoggle.

Anonymous said...

This is a serious distortion of the facts: "Also the Chevron refinery was built by taxpayers."

Anonymous said...

None of us can say one good thing about Mississippi and most of the criticism is well deserved. The point is, what can we do to change things? The same old boys (white & black) are still in charge. Trent Lott is still living large through our governor and Thad is on a perpetual honeymoon. Everybody retired or working in government positions are still drawing a check and us old taxpayers are barely making ends meet. The only thing that saved New Orleans was Katrina and that quote was from some of the business leaders in New Orleans. We don't stand a snow ball's chance in hell of even moving our state to the 49th position in any category. Someone tell me how !!!!!!!

Anonymous said...

You knew it had to be a dud when the city/contractors did not even pave a decent parking lot across the street. That should have been the 1st clue that this "enterprise" was to fill certain pockets and not benefit the City of Jackson.

Anonymous said...

What are the CC numbers?

Bullet Train Bill said...

How can we expect to showcase our CC without adequate transportation? We need that monorail!!!

Leaving every hour for Metrocenter, Westland Plaza, Lake Hico, Black Diamonds Gentlemen's Club and Cu-camonga!

Oppose it and you're a racist from Niknar.

Anonymous said...

Laugh all you want about monorails, but someone proposed it in LaddRagg last year and it was treated with seriousness.

Read this column and bask in the romantic glow of indoor farmers markets and gas powered trolleys, all funded by free, unlimited money.

Anonymous said...

Someone please investigate the ice skating rink going in Brandon's Multipurpose Center. I'm herring rumblings of some shady shenanigans going on.

Anonymous said...

Someone please investigate the ice skating rink going in Brandon's Multipurpose Center.

Hit KF's tip jar with a healthy 'Thank you' and let him know that story is important to you. Or get off your butt and chase it down yourself.

Anonymous said...

@ 2:10. I agree with your comment about the public sector living better than us private sector. Let's hear more about it! I bet there can be a whole can of worms opened up on that issue.

Anonymous said...

7:12 - Only the few at the top of the pyramid. Only the few.

Anonymous said...

@2:10 - I agree with you to a point. Just don't lump all state employees in one pot. I'm work for a state agency. Although we are small we have been a special funds agency for years. My personal philosophy has always been to treat a job like a campsite - you leave it better than you found it. Our agency is blessed that the top level folks keep everything in check. In fact, we've only increased out budget by 20% over the past 30 years. Some of the accountants out there may disagree but I think that pretty dang good.
Personally, what gets at me as a lowly state worker is that since day one I've made it my mission to improve things where I can and I know my work has saved the taxpayers 100's of thousands of dollars. But yet I get told "no benchmarks" - no raise.
I'm not complaining about my pay. It's around $50K/year. My wife and I live in a modest home that costs around $170K. We both drive 2008 vehicles. My wife actually is a nurse in another state bc the money is better. I also have a part-time job and work about 20 or 30 hours a week there.
All that being said to say, when you work your butt off to try to make things better and try to save the taxpayers money and get no reinforcement for what you've done it makes stories like this even more infuriating.
But please know that there are some of us in government that do go into work day in and day out with the taxpayers on our minds. When people like this get away with what they are doing or when I see pictures of a "working/birthday lunch" at Seafood Revolution while I'm having to pay for lunch in my own agencies cafeteria, it makes the idea of coasting by doing bare minimum that much more appealing.
It also has placed me in a position where after 15 years of service I'm considering getting with a financial advisor and seeing what options I have as far as what is in my state retirement and what happens or what I can do if I go to another state or to the private sector.
The leadership of this state has shown that they care only for themselves and not the taxpayers and certainly not the troops in the trenches making things happen.
I've heard many people that work in special fund agencies are going to go ahead and retire now. I have a feeling PERS is about to be in a very bad position and at this point I have the feeling I'll be able to rely on my state retirement about as much as I will social security.

Anonymous said...

Agree with @2:10 (and most of KF's posts over the last few years), Mississippi can no longer afford government AND corruption.

Anonymous said...

Well, 09:00, the payoff of a state job is that after you do your time (25-30 years), you get a nice guaranteed pension. If you were fortunate to start young enough, you can retire in your 50's and draw full retirement.

And if you are really smart, you can consult for the state, or get a job with a company that does. You'll make more, and pocket your retirement, and when you retire again in your 60's, you'll have a nice nestegg and retirement that most private sector employees dream about. Me? I've spent my life paying taxes and fees and more taxes so that goober,ENTA can keep good (and bad) people employed. No, I don't have enough in retirement because when Murphy hit, I had to cash out the 401k, pay penalties and taxes again, and use the remainder to keep a roof over my head.

I laughingly tell people my retirement will be the "Walmart Plan". You know, "welcome to Walmart!".

Anonymous said...

I predict Bill Yates will buy the CC and turn it into a giant flea market and make millions in the process.

Anonymous said...


Totally agree.

Unknown said...

Great post. Be sure to point out that the same analysis applies to Nissan, Continental Tire, "Destination Shopping Centers"(tax breaks), Toyota, Trust-mark Park (tax breaks), all of these sold on the premise of creating jobs while actually costing more in government tax subsidies, donated land, infrastructure improvements, etc. than the gross wages of the promised jobs promise. See the $160,000 figure example cited in the article. It's not just a "Jackson" thing. It appears that this disease false economic euphoria all across the country in each and every case. On the other hand the long lasting, positive and needed infrastructure improvements of highways, interchanges, frontage roads, increased drainage capacity routes, water and sewer expansions are projects that the politicians and electorate would never have approved on their own merit without the false economies of the aforementioned projects.

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Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).

Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.

In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.

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Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

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