As the city of South Bend begins piecing together the 2013 budget today, a common councilwoman is raising questions about how your tax dollars are being spent. Valerie Schey, (D) 3rd District, says the Century Center is producing more than a million dollars in losses every year as the city continues to pump money into the downtown convention center.
Schey has been on the common council for about 7 months now. She is about to start her first budget process.
"There are certain things that stand out to me," she says. Schey has some major concerns, particularly about the money the city is putting into the Century Center.
"I really want the council and the city to take a second look at how we are spending the taxpayer dollars and make sure we are getting the best return on investment," says Schey.
Schey questions whether the city should continue to support the downtown convention center. She says the Century Center has been losing millions of dollars every year: $1.2 million in 2011 and $1.3 million in 2010.
According to City Controller Mark Neal, South Bend paid the Century Center management company Global Spectrum about $135,000 last year to run the facility. And now the company is asking for $4.9 million in capital improvements to the facility over the next 5 to 6 years. All this, Schey says, as the city expects more of taxpayers.
"This is being asked at the very same time that the city is asking residents to sign up for payment plans for new curbs and sidewalks. We have asked our police and fire departments to work without any sort of pay increase for the last 2 years. We, of course, as a city, imposed the local option income tax on residents in 2008," says Schey. "We are asking more and more of the residents while we continue to throw money into these resources that really are not a good return on investment. I find that very frustrating."
Schey says there are alternatives which cost less. She suggests privatizing the Century Center, selling it to a developer to turn into office space, a mall or even an indoor water park. Schey says another option might be to have someone who already works for the city manage the facility and book events.
"I think we need to carefully analyze the overall strategy for the downtown area and determine if we are approaching our downtown area and the assets we have in the best way to produce the results we are looking for."
But the general manager of the century center, Jill Scicchitano, argues that while the convention center does lose money every year, the St. Joseph County hotel-motel tax funds those operating deficits. Plus, she says convention centers are not supposed to generate revenue. Instead, the benefit is the economic impact on other businesses in the area from the events hosted at the facility.
"Nearly all convention centers in the U.S. were built without any expectation that they would cover their operating costs, and certainly not capital costs with direct operating revenue. Capital costs as well as operating deficits are in all cases covered by dedicated tax revenues, most commonly hotel tax revenues and justified by the economic impact generated by these venues," says Scicchitano via an email. "That is why cities throughout the U.S. are continuing to build new and expand/renovate existing convention space."
A few years ago, St. Mary's College Professor of Economics Jerry McElroy conducted a series of studies on the economic impact of the Century Center. He looked at the impact to St. Joseph County since 1990. McElroy's study found that in 2008, the events at the Century Center generated actual total economic impact in direct and indirect spending on St Joseph County of $26.1 million.
"Trade shows and conventions that attract out-of-town attendance of course have the greatest impact, but all events bring incremental spending and benefit to the community," says Scicchitano.
"Those people are going to restaurants. Those people are staying in hotel rooms in the city, and that generates a level of income that we really count on as part of the downtown economy," says South Bend's Mayor Pete Buttiegieg.
Buttigieg commends Schey for looking for ways to save money but says giving up on the convention center may be premature.
"I sure would hate for us to miss out on over $20 million because we thought we were saving a few hundred thousand," says Buttigieg. "We have to make sure we are not pennywise and pound foolish when it comes to the investments we make in our economy."