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Far fewer jobs than promised

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  • Far fewer jobs than promised
  • DNC economic impact: Boom or bust?
  • Viewpoint: Observer fails to tally full value
  • Special Report: Selling Charlotte to visitors
  • Error-filled impact report

    Unlike many convention and visitors bureaus, the Charlotte Regional Visitors Authority doesn’t do a year-end report on how its convention center performed, including estimates on taxes generated and jobs created.

    In response to Observer questions, the CRVA in January commissioned a short study from a consultant, Elliott D. Pollack & Co., to project the number of jobs supported by the center, as well as tax revenue produced from visitor spending.

    The report found the average salary for Convention Center-supported jobs – which include front-desk clerks, maids and wait staff – was more than $59,000.

    When the Observer questioned the number, the CRVA said its consultant made a mistake. A revision of the report put the average salary at $23,000.

    The Observer also questioned a key number behind the analysis – that convention visitors spent $127 million in fiscal year 2011. Last fall, the CRVA changed its formula for estimating what conventioneers spend after years of using a formula that inflated spending.

    The CRVA agreed that the Elliott D. Pollack analysis was based on the flawed formula, which would invalidate the study.

    “Part of our commitment moving forward includes evaluating our research process and being more disciplined with our reporting,” said new CRVA spokesperson Kimberly Meesters in an email.

    There is still no city or CRVA report examining the Convention Center’s impact. Steve Harrison



When the Convention Center opened in 1995, it was forecast to generate enough new money from visitors’ spending to support 6,270 jobs.

It has fallen far short of that, though just how short is unclear.

The CRVA earlier this year said the Convention Center supported 2,283 jobs through direct visitor spending in fiscal year 2011. Those dollars also indirectly supported 599 additional jobs, a consultant’s study found. The consultant who made that analysis assumed that convention visitors spent $127 million that year – a number the CRVA acknowledged recently was created with flawed presumptions.

The actual number of jobs is likely half of what was estimated in the fiscal 2011 report.

Beyond the number of jobs supported, what jobs does the city’s Convention Center investment create?

Convention Center-supported jobs are primarily maids, bartenders, waiters and front-desk clerks. According to the CRVA, the average salary and benefits of those jobs is $26,592.

When the city of Charlotte’s economic development office considers offering a company a subsidy, the new jobs created must pay at or above the region’s average of $44,600, plus benefits. The economic development office believes that if tax dollars are used, the money should support jobs that “can provide a quality of life for the worker.”

The city is considering amending that requirement, allowing incentives to go to manufacturers that pay at or above their industry average, which is about $32,000.

“You are creating low-wage, low-skill jobs,” said Robert Baade, an economics professor at Lake Forest College in Illinois, who has studied the economic impact of political conventions on host cities. “That money could be used to create jobs that are full-time and endure.”

In an interview earlier this year, Charlotte City Manager Curt Walton was asked about the differences between the city incentive program for companies and the tourism-related subsidies for hospitality industry jobs. Walton said the CRVA and the city’s economic development office are two different programs. He also said a lower-wage hotel job is “very valuable to the person who has it.”

“There aren’t enough of those jobs for everyone who wants them,” Walton said.

The CRVA portrays the Convention Center as an economic driver for the region. It often points out the size of Mecklenburg’s tourism and travel industry, which the state has pegged at 43,260 jobs with a payroll of $1.3 billion.

But the impact of the Convention Center on that industry is arguably small.

Using data from the CRVA and the N.C. Department of Commerce, Convention Center-supported jobs are responsible for about 3 percent of Mecklenburg travel and tourism wages.

When the city’s economic development office is considering whether to offer a company incentives to invest here, it examines the company’s projected payroll.

For example, for every dollar in state and local incentives given to Chiquita Brands International, which recently relocated its headquarters to Charlotte, the city will receive about $21 in wages over the life of the 10-year contract. For every dollar given to manufacturer Siemens, which also relocated here, the city will get about $16 in wages.

The payroll return for the Convention Center is much less.

Using the CRVA’s own estimates, for each dollar spent on the Convention Center, Charlotte receives $1.75 in wages. A more conservative estimate would put the return at about $1.16 for each dollar spent.

Tax revenues: Far below mark

When the Convention Center was proposed 20 years ago, consultants forecast it would generate enough new tax revenue to cover all of its bills, including construction debt. The idea is that the city would spend money from hospitality taxes – from restaurants and hotels – and get new money back that could be used for police, fire, schools and parks.

In fiscal year 2011, the city and CRVA spent about $30 million in the Convention Center.

The CRVA estimated that the visitor spending from conventions and trade shows in fiscal year 2011 generated $3.44 million in local taxes. In addition, the state collected $3.13 million in new revenue from direct visitor spending, according to the CRVA.

For local governments, that’s a return of a little more than a dime for every dollar spent.

Economists project the ripple effects of new dollars being spent in a local economy. If, for example, a hotel receives $1, some of that money is paid to a hotel employee, who then spends it in local stores.

The CRVA uses a multiplier of 1.5 to calculate those secondary benefits, while economists will use a multiplier of 2 or even 2.5. None of those multipliers would allow the city to recoup on the Convention Center investment.

The CRVA spending and tax estimates account for all money visitors leave behind — hotels, drinks, food, catering, transportation, shopping and entertainment.

More hotels, but reason disputed

Charlotte Deputy City Manager Ron Kimble, who works closely with the CRVA, said the center is responsible for the construction of “tens of hotels” in the city.

Since the center opened in 1995, a number of hotels have been built uptown – the Westin, Sierra, Aloft, Ritz-Carlton, Hampton Inn and Hilton Garden Inn, among others.

What drove that hotel growth? In the last decade, while the hotel industry was expanding, the Convention Center business was stagnant.

In the center’s first full year in 1996, it produced 170,000 hotel room nights. That was a 4.6 percent share of the county hotel market.

In fiscal year 2011, the center generated 142,000 hotel room nights. That’s a 2.7 percent share.

Michael Applegate, director of research for the CRVA, said the Convention Center’s share of hotel rooms sold could be considered “small by percentage,” but it has a huge impact.

A room sold for $100 on a slow night – such as a Sunday – can be more valuable to a hotel than a room sold for $140 on a busy Wednesday.

Jim Diehl, general manager of the Marriott Center City, said the convention business can help him in slow times. But the most important factor for his hotel is the state of the economy, specifically the banking industry, Diehl said.

“It’s not just what Bank of America spends, it’s all the vendors for Bank of America,” Diehl said.

Backers: Center has subtle impact

Convention Center events, like boat shows and bridal showcases, attract some day-trippers who may fill their car with gas and eat lunch at a restaurant.

The CRVA doesn’t calculate spending on boat shows and other consumer shows because it focuses on events that attract non-locals.

Boosters argue that the center has other intangible benefits.

Visitors who come to Charlotte for meetings are exposed to the city, and can talk about their experience to friends and co-workers, they said.

Charlotte Mayor Anthony Foxx has said the city is like a dinner party guest you enjoy talking to, but “you leave and don’t know their name.”

The Democratic National Convention will change that, Foxx said.

Harrison: 704-358-5160
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