No WhiteWash!

The citizens of Kingsport, Tennessee need to be aware of the decision by the Kingsport, Tennessee Board of Mayor and Alderman to use the taxpayers money to build an executive conference wing onto the City of Kingsport MeadowView Convention Center. The Board of Mayor and Alderman railroaded this to a vote at the September 15, 2008 BMA meeting without public input. It is estimated that the expansion will cost $14 to $15 million dollars.

Alderman Shull and Marsh voted against the expansion, while Mayor Phillips, Vice Mayor Ben Mallicote, and Aldermen Valerie Joh, Larry Munsey, Jantry Shupe voted to proceed with the expansion. See More hissy fits in Kingsport, Tennessee Board of Mayor and Aldermen.

BMA members below that voted for the expansion at MeadowView Convention Center (gang of five))

Mayor Dennis Phillips	Vice Mayor Ben Mallicote	Alderman Larry Munsey	Alderman Valerie Joh	Alderman Jantry Shupe

I am very passionate about this expansion and feel it is the worst decision the Kingsport BMA has made lately.

First of all, I do know a thing or two about hotels, meeting facilities, conventions, and trade shows. I have literately stayed at many thousand overnight stays at hotels and have participated in setting up meetings, conventions and trade shows across the Untied States. I have worked with events planners from major corporations to set up meetings. I have also worked with major corporate hotel owners to help them promote their hotels and conventions facilities in many cities.

The current MeadowView Convention Center was paid for using the sales tax that voters voted on some years ago. However, the convention center debt is paid up, but the City of Kingsport is still pouring money into it because it is not a profit maker.

Now the city wants to expand it and build a plush executive type facility that could cost up to $15 million dollars. The risk is upon the citizens of Kingsport who as taxpayers will be footing the bill. The city is proposing to pay for the expansion out of the regional quarter cent sales tax rate that the voters approved in 1992 for the construction of the original convention center.

If this expansion is such a great idea, then why not share with the citizens of Kingsport the business case or economic justification for the expansion.

It appears that this expansion will cater to the special interests of firms/people who desire this expansion, but are not at risk, because it is not their money. The incestuous relationship by Mayor Dennis Phillips, Vice Mayor Mallicote, and Aldermen Munsey, Joh, Shupe with special interests groups should be of concern to the citizens of Kingsport.

With the glut of similar available facilities that Kingsport wants to build, it is beyond me how Kingsport can justify this expansion.

Kingsport, Tennessee is not the easy to get to if traveling by airplane. Companies look at how long it takes to travel to a convention site. The small size of the TriCities airport and the available airlines servicing it makes it undesirable. Flying into Knoxville is better, but again the available flights are limited and the Knoxville airport is two hours away.

Companies also look at the attractions that the convention site area has to offer. Kingsport does not have the attractions that are needed for diverse convention attendees. Sorry Kingsport, golf does not appeal to everyone. Also, the smell from Eastman makes undesirable for out of town people.

Companies will ask for deep discounts on hotel rooms or convention facilities. Will Eastman Chemical Company, the owner of the hotel give the discount or will the taxpayers absorb the discount for the it’s convention facility use?

I would propose that Kingsport sell the current convention facility to Eastman. It appears that they benefit the most from the convention facility. The Kingsport Chamber Of Commerce operates Kingsport Convention and Visitors Bureau and their members also will benefit. If there are others that feel that the expansion of the convention center is needed, then let them build it with their money.

Kingsport have stated that they have talked to companies about this type of executive conference center. What Kingsport needs to do is ask for advice from the CEO’s of companies they have talked to. Tell the companies that about twelve years ago, the City of Kingsport invested $19.5 million dollars to build the Meadowview Conference Center, but the conference has not been a money maker and the city has to put money in to keep it going. Tell them that Kingsport is going to make it better/bigger and put up to $15 million dollars into a expansion. Also, tell them that the city owns the adjoining Cattails golf course, that cost $6.2 million dollars and is not a money maker. Tell them that the convention center helps line the pockets of Eastman by driving sales to the Eastman hotel next door. Based on the above, ask them if they would invest in the expansion considering the competition in the convention business and the glut of conventions centers. If they say that they would invest, then ask if they would build it.

If building a new convention center in Kingsport is such a wonderful way to make money for our community, why isn’t some wealthy business person or company telling the city, “I’ll build the convention center and let you use it (at a cost of course).”

Since this is such a brilliant idea, don’t you think that some venture capitalist would seize upon the opportunity and run with it?

The simple answer is it’s not worth the risk.

Venture capitalists are in the risk/reward business. The bigger the risk, the bigger the reward. But successful venture capitalists weigh the risk before they make an investment, and if the risk is too big they won’t do the deal. It seems to me that the lack of any real business people putting their own money into this project is a clear indication that the risk is not worth the reward.

With all of the down-side associated with this project, no business person in their right mind would put their own money into this thing. So why in the world are our elected officials willing to do this project?

The simple answer is that it’s not their money they’re playing with, it’s ours.

And that’s why it’s worth the risk.

Express your views to the BMA if you have a concern with this expansion. Should we have a petition to remove certain BMA members from office? You can leave a comment on this blog, write letters to the local newspapers, tell your friends, go to BMA meetings and express your concerns on TV, etc.

Below is some background information from the Brookings Institution.

Space Available: The Realities of Convention Centers as Economic Development Strategy

Heywood Sanders

The Brookings Institution

To cities the lure of the convention business has long been the prospect of visitors emptying their wallets on meals, lodging, and entertainment, helping to rejuvenate ailing downtowns.

However, an examination of the convention business and city and state spending on host venues finds that:

• The overall convention marketplace is declining in a manner that suggests that a recovery or turnaround is unlikely to yield much increased business for any given community, contrary to repeated industry projections. Moreover this decline began prior to the disruptions of 9-11 and is exacerbated by advances in communications technology. Currently, overall attendance at the 200 largest tradeshow events languishes at 1993 levels.
• Nonetheless, localities, sometimes with state assistance, have continued a type of arms race with competing cities to host these events, investing massive amounts of capital in new convention center construction and expansion of existing facilities. Over the past decade alone, public capital spending on convention centers has doubled to $2.4 billion annually, increasing convention space by over 50 percent since 1990. Nationwide, 44 new or expanded convention centers are now in planning or construction.
• Faced with increased competition, many cities spend more money on additional convention amenities, like publicly-financed hotels to serve as convention “headquarters.” Another competitive response has been to offer deep discounts to tradeshow groups. Despite dedicated taxes to pay off the public bonds issued to build convention centers, many—including Washington, D.C and St. Louis—operate at a loss.

This analysis should give local leaders pause as they consider calls for ever more public investment into the convention business, while weighing simultaneously where else scarce public funds could be spent to boost the urban economy.