TAXPAYERS STUCK WITH THE TAB FOR DEVOS PLACE

Kent County is going to stick residents with the bill in 2008 for bond payments on the DeVos Place convention center in downtown Grand Rapids.  The county government issued two rounds of bonds totaling $93 million for the convention center with the promise that the payments would be covered by the county-wide hotel-motel tax.  That promise was made by touting a long-term trend of 7% in the annual growth in revenue collected by that tax.  But that was a bit disingenuous because, by the time the bonds were issued in 2001 and 2003, that growth had stopped and revenues were in decline.

Now the hotel-motel tax can't cover the convention center bill.  So instead of out-of-towners, presumably flocking here to go to events at DeVos Place, we locals get to pay for the bricks and mortar that promoters get to use to turn a profit.  So remind me.  Why was this convention center such a good deal for us working and living in River City?  I see why promotors like it.  They get to pay a discounted rental rate for DeVos Place.  The taxpayers, whether hotel guests or local residents, are subsidizing their events by paying for the place hosting them.  When do we get our cut of the action?

Comments

[todd]

interesting, but how much will kent county taxpayers have to pay?
obliviously there is some money from the hotel/motel tax.
it seems unfair and misleading to state the full bond amount, but not state the bottom line. If the amount needed to cover the shortage is unknown, let us know it is unknown.

[Rollnggrnade]

Great article - these questions must be asked.

[The Executive Director]

Hi, Todd.

The county budgets the bond payments only one year in advance, so it is not known how much of the bond local taxpayers (as opposed to hotel guests) will end up covering.

A big part of the problem is the low hotel occupancy rate -- only 57% for the past year. That can improve, of course. However, another problem that is not helping that improve is that DeVos Place is booking more and more events that do not draw an out-of-town crowd -- and so fill local hotels which pay the hotel-motel tax which in turn pays for DeVos Place's bond payments.

None of this would be a problem for local taxpayers if DeVos Place charged enough to event promoters to cover the cost of the convention center. Now that charge can end up being pretty stiff if DeVos Place can't book enough events to spread out the fixed cost of its bond payments -- and so drives away potential customers. But then that is a problem not unique to the convention center business. It is a general risk that many businesses must deal with.

However, in business it is those who stand to benefit from success that take that risk. In the case of DeVos Place, it is the local taxpayers who take the risk while receiving no benefit from the convention center's success. Of course, this is why so-called public-private partnerships like the DeVos Place convention center stink. The benefits are concentrated into the hands of a few while the risks are spread across the general public.

Regards,
Bill

[The Executive Director]

Thanks for the thumb's up, Grenade.

Regards, Bill

[Todd]

Thanks for the fast answer Bill

[Tim]

I'm not a resident of Kent County, but I recently worked on an event that was held at DeVos. I contend that they might be able to book more events if they did away with the utterly worthless union that exists only to paralyze that venue. With only two exceptions, the union workers (the term "workers" may be a stretch) seemed to have not even the foggiest notion of customer service. Our access to the venue was delayed by more than two hours and, even then, there was no sense of urgency to get back on schedule. Supposedly, these schmucks know their jobs, but they had to be handheld and spoonfed every step of the way. Nothing got done unless they were constantly pushed. They were more interested in watching for violations of union regulations than they were interested in serving the needs of the client. Despite the late start and the mountain of work that had piled up as a result, they adhered to their smoke breaks and meal breaks with religious fervor. They were not there to earn a paycheck. They simply collected it and waited until it was time to punch out. If DeVos could hire motivated people with a solid work ethic who could take home all of their paycheck instead of sacrificing so much of it to the union shakedown artists, event organizers would be more inclined to go there.