Reimagining Cities With Savior Projects Can Lead to Bad Outcomes

Some of the proffered answers to city revitalization have long been big projects. Add a sports complex. Include a convention center. Bring in the business travelers, recreational tourists, and even the locals who will spend money on hotel rooms, restaurants, retail, and transportation. Add tax revenue for the city. Everything will be fine.Except as data has shown, the strategy often doesn’t pan out. The New York Times just questioned whether convention centers, in particular, are worth the spending they require. Development consulting firm Hunden Partners in Chicago told the news outlet that most of the 175 convention centers in the U.S. operate at a loss. The sprawling constructions occupy large amounts of ground space that in many metro areas are frequently empty. They typically displace local businesses to build, losing tax revenue, and they don’t bring the constant crowds that are supposed to flood the remaining retail, hotels, and restaurants with money.The U.S. Travel Association’s figures say that 2019 meetings, events, and incentive travel created $139.3 billion in spending, $23.1 billion in taxes, and 1.1 million jobs. In 2023, the spending was down to $119 billion — a significant number but 14.6% off from pre-pandemic times. No mention of taxes or jobs in the more recent report. The paper reported that 20 convention centers host 82% of the 250 largest recurring events. There are too many locations chasing a limited amount of business.Even when a city becomes home to a large event, the results can taper over time. Attendance at the annual Consumer Electronics Show was off by 24.2% from 2018 to 2023, according to data provided to the Times by Heywood T. Sanders, an emeritus professor at the University of Texas at San Antonio. Vendor attendance was down by 40.4%.Wishful spending isn’t limited to convention centers. Sports complexes are notorious for their cost, subsidies of large private businesses, and lack of returns that planners say will come. For decades, public planners and economists have argued that proponents employ bad economic reasoning that overstates potential benefits and undercounts the true costs and tradeoffs. The large projects typically look to taxpayers to offset the multi-billion-dollar costs, as The Week reported in May in a recent examination that reflects studies and reporting going back at least to the 1990s.Cushman & Wakefield issued a report two months ago that examined 15 cities and considered each metro region as a CRE portfolio. The authors suggested that cities could provide incentives to change the balance of use between living, work, and play. That could in theory include projects like stadiums and convention centers, but only if there was regular use and it developed foot traffic. Pouring tax funds into such projects makes little sense if the buildings aren’t in regular use and don’t create ongoing flows of people. In addition, the money used could have gone to a broader set of smaller conversion projects that might add to a vital base of activity that a city needs.