Monday, November 21, 2005

Sell Cobo Hall

Detroit officials love big, high-profile projects and the potential for good public relations that often comes with them. Around these neck of the woods we are always reminded of Detroit's “comeback."


Major projects in the city can become “expensive” and “controversial.” Such is the case with Mayor Kwame Kilpatrick’s original desire to build a new Detroit convention center. Mayor Kilpatrick and his allies decided this past June that the proposed $1.3 billion project would be too expensive, even if they charged a percentage of the costs to county and suburban governments under the rubric of “regionalization.”

I thought regionalization was a curse word in Detroit.

Now they are focusing on expanding the existing Cobo Conference Exhibition Center at a cost of between $650 million and $665 million. This project would most likely require an additional sales tax on food and beverages or some other tax in addition to the one already imposed on hotels in Wayne, Macomb and Oakland counties to finance the debt on Cobo. The tax might also include a broader base of counties, such as Livingston, St. Clair, Washtenaw and Macomb. Reports indicate, however, that Oakland County Executive L. Brooks Patterson won’t sign on to any deal that involves increasing sales or property taxes.

However, Detroit nor the region needs new taxes. In my opinion, the city would be better off scrapping plans for an expanded government-owned facility and selling the Cobo Conference/Exhibition Center to the highest bidder.

I just been cursed to hell for saying such nonsense!!!!

The fact is Cobo was built in 1960 and expanded to 700,000 square feet in 1989. It hosts many events each year, including the North American Auto Show. The current proposal to expand the facility to 1 million square feet of contiguous exhibition space is an attempt to entice up to five additional groups to schedule events at Cobo each year.

There are several problems with this approach. To begin with, the city’s treasury is already straining to meet its commitments, and convention centers are not known for producing profits. Even among money-losing facilities, Cobo stands out for its large annual losses.Cobo’s scheduled fiscal 2004 deficit was $19.7 million, and this figure is likely underestimated because the report does not account for administrative costs. Expanding the center to attract new business is to gamble in a very risky game after a run of losses.

Nothing says a convention center must be government-owned. In contrast to Cobo stands the Novi Expo Center, a privately built and operated convention center in metro Detroit.
The Novi Center has been in the news this year, because it has announced that it will build a new $18 million, 320,000 square-foot expo center with 2,500 parking spaces. In a June 29 Detroit News article, Blair Bowman, executive director of the Expo, said that one of the biggest challenges in preparing for the new Expo was fighting off rumors that it would be government-funded. “We’re doing it privately,” he insisted. “What we’re doing is something that would normally have to be subsidized by the taxpayers.”

Mayor Kilpatrick should take note. There may be private-sector entrepreneurs willing to build a Detroit convention center at no cost to citizens.

Also, there are many entrepreneurs interested in building and operating a new convention center in Detroit. What should happen is coupling a private-sector convention center with hotel and casino facilities, the city might not only entice private investors to purchase Cobo, but also allow for the development of the additional hotel space.

The city of Detroit has numerous fiscal troubles already and should not add another high-profile, high-cost project. Selling Cobo will allow Motown’s leadership to focus on the proper knitting of government: safe streets, good schools and an efficient use of scarce resources. Involving the city in a proven money loser is no way to improve Detroit’s bottom line, especially at a time when the city needs private investment and owns a convention center in which entrepreneurs already may be interested.

Hey Mr. Mayor do us a favor. Sell Cobo to the highest bidder.

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