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DNC economic impact: Boom or bust?

CHARLOTTE, N.C. In visitor spending, the Democratic National Convention will dwarf other conventions Charlotte has hosted.

The Charlotte Regional Visitors Authority first estimated the event would generate 75,000 hotel room nights and $75.4 million in direct spending. The CRVA has also said it could generate as much impact as the 2008 DNC in Denver, which officials there reported brought $134 million in new spending.

That’s more spending than the Charlotte Convention Center would generate in a typical year.

In Charlotte, millions will be spent upfitting Time Warner Cable Arena. Police officers will receive overtime pay and caterers will take in hundreds of thousands of dollars for private parties. Hotels will be nearly full during one of the slowest weeks of the year – when only 20 percent of rooms are sold – and they will also be able to charge higher rates.

But some economists caution that the net effect of new dollars may not be what it seems. One reason is the so-called crowding-out theory.

A large security zone could thwart visitors from spending and keep locals at home. It’s possible that thousands of Charlotteans will not go to work or will avoid their regular lunchtime restaurants.

On the last day of the convention, for instance, the John Belk Freeway around uptown will be closed.

At the NATO conference in Chicago in May, the heart of the city was a ghost town during the two-day event. Workers stayed home; stores and restaurants suffered. Some businesses boarded their windows in anticipation of protesters.

Wells Fargo is encouraging workers based in other cities to avoid Charlotte during the DNC.

“When you consider all of the security now, it may well be that you impair the free-flow of commercial activity to negatively affect the local economy,” said Robert Baade, a professor of economics and business at Lake Forest College in Illinois who has studied the impact of conventions.

Charlotte Mayor Anthony Foxx, during an August press conference announcing the federal security plan for the city, stressed that uptown will remain open. He said there are some businesses who are expecting more business from the DNC, including restaurants and a FedEx Office on South Tryon Street.

And DNC officials say there will be little crowding out on Labor Day, which is the day before the convention starts. Much of uptown would be quiet anyway.

Instead, delegates and media will already be in Charlotte, awaiting the start of the convention the following Tuesday.

Boston DNC: Lost business hurt

After the 2004 DNC in Boston, the Beacon Hill Institute at Suffolk University in Boston said the city’s net gain for the convention was marginal, at $15 million, because of lost business.

It’s also unclear how much DNC attendees will spend. The host committee estimates there will be 15,000 media members and 6,000 delegates. It’s likely those visitors will have their own hotel rooms and eat out frequently.

But the DNC expects a total of 35,000 people – with 14,000 being a mix of volunteers, campaign staff, demonstrators and organizations.

Baade co-wrote a paper in 2008 that compared convention cities with other metro areas, and found no change in employment or personal income per capita in cities where conventions were held.

City: Can’t quantify the attention

Sales-tax receipts from September can be scrutinized to help determine the economic impact. But city officials believe the worldwide attention focused on Charlotte is priceless.

“Attracting conventions to town heightens the visibility of the city, and you may attract businesses because of it,” said Harrison Campbell, an associate professor of geography at UNC Charlotte. “But I don’t think we know how many businesses came here because they came to Charlotte for a convention and said it’s a great place, let’s move there.”

The Charlotte Chamber supports having the DNC due to the publicity it will bring the city, and it hopes that will translate to companies deciding to invest in Charlotte.

The Chamber, however, isn’t aware of any companies deciding to relocate or expand in Denver after the 2008 DNC.

Harrison: 704-358-5160
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