CACI makes plea for fiscal sanity
Robert D. O'Connor, president of the Citizen
Action Coalition Inc. (CACI), made the following presentation to the
City Council during its annual 'retreat' or goal setting work
In his remarks, O'Connor parrots the citizens view that costs for projects should be able to demonstrate equal or better than offsetting revenue to finance them.
O'Connor puts on paper more than $1 billion worth of pending projects, but can't document much offsetting income. Most businesses require a reasonable return on investments. Council has not reached that stage yet.
The council adjourned without completing the workshop and will resume the meeting next Saturday in the Virginia Marine Science Museum. The meeting is open to the public.
O'Connor's full presentation follows:
Council, you seem to lurch from one major
tourism-related project to another. Unfortunately, there is no specific
plan to identify either the final form envisioned by council or the
total cost or estimated revenue from all of the projects.
Sample Tourism Development Business Plan Outline
State the mission to be accomplished by a Tourism Development Plan. How
is this is to be accomplished: by building the 31st St Project, a new
convention center, a new theater, and a new design for the 19th St
corridor and by the beautification of a number of adjacent streets?
Identify the anticipated results. For example,
identify the expected net return from the 31st St. project, the
convention center, a new theater and the beautification projects.
Identify the target firms. Will these targets be in the financial condition that permits convention attendance? Research is needed to show that a
sufficient number of companies will come even under the current stressful economic conditions. When the economy does turn around, how many firms will be much more strict about spending money for junkets to conventions?
Will the new convention center be too expensive for the shows currently frequented by locals?
The consultant's report (1) states on page 42 that "there is a limited amount of convention class hotel rooms proximate to the Pavilion as compared to other comparable and competitive facilities. This may prove to be a disadvantage in attracting high economic impact professional associations." This concern is emphasized on page 83 of the report; "As past users have indicated, the hotel proximate to the Pavilion has not met the requirements of many convention and trade show users."
The consultant's report states that a successful convention center should have a headquarters hotel adjacent to the convention center and convention class hotels proximate to the center.
The 31st St hotel is much too far away to function as the headquarters hotel and only one hotel is close enough to qualify as a convention class hotel.
(1) Virginia Beach Market, Financial, and Economic Impact Analysis - PricewaterhouseCoopers
Specify how these shortcomings will be overcome and that both the 31st St. Project and the new convention center will return revenue to the taxpayers.
The consultant's report states, on page 99, a clear warning regarding
operating expenses for a convention center. "Increasing competition
among destinations, as well as among competing facilities within a
single destination, for visitor spending has resulted in public
subsidies for operating expenses as well as debt service on capital
Identify the source of funds to construct all these projects. Specify which taxes you will increase. Will you divert funds from other needs to satisfy these projects? Or will you eventually bankrupt the city with excessive spending on tourism projects?
The conclusion must answer, without equivocation that these projects
should/should not proceed at this time. The business plan must evaluate
the current business environment slowdown and determine whether that
will restrict the number of firms planning to spend scarce dollars on
conventions and convention attendance. The conclusion should identify
the funds that are or will be made available for all projects and
specify the tax revenue to be returned to the taxpayers.
This attachment (shown below) details the numerous proposed construction projects and their costs.