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Already a Financial Sinkhole, The Tucson Convention
 Center Hopes to Expand, Attract 500 room Hotel

The Arizona Daily Star, Tucson
Knight Ridder/Tribune Business News

Oct. 12, 2003 - City officials are betting a new arena, a renovated convention center and a new hotel will help Downtown Tucson capture a bigger share of the multibillion-dollar convention business.

The result would be more visitors Downtown, some of whom would take in the planned attractions of the Rio Nuevo revitalization project.

With a new, 10,000-seat arena on the east side of Interstate 10 at West Congress Steet, the existing TCC arena could be converted to meeting space. Additional meeting space, along with a few nighttime attractions and a first-class hotel Downtown, would help the city capture more and larger conventions, city officials said.

"We can't get big conventions, because we don't have anywhere for them to meet," Assistant City Manager Karen Thoreson said.

Under the plan, the present arena would be leveled and rebuilt largely as meeting space, raising the amount available from about 10,000 square feet to more than 50,000 square feet. The exhibit space available would increase slightly from about 150,000 square feet to around 160,000 square feet.

With commitments to more meeting space and other attractions in place, the city could recruit potential hotel developers, who would have more reason to invest in Tucson, Thoreson said.

The City Council has not been formally informed of the proposal, and some members question its wisdom.

One major question is whether renovating the TCC and building a new arena would make the convention center an even deeper financial sinkhole than it already is. Over the last six years, the city has covered 55 percent of the convention center's costs, shelling out more than $17 million.

More city money would be needed to build Tucson's convention industry. To pay for the arena, the city would provide the land to the developer and offer tax-exempt financing to cover construction.

The city would pay for the TCC renovation with $30 million in state funds and $30 million in required, matching city funds. It's unclear what proportion of the hotel's costs the city would have to pay.

Another question council members have: Would local residents be priced out of the convention center, which opened as the Tucson Community Center in 1971 on the site of a barrio torn down by the city?

"I'd like to see community groups be able to use the convention center, too," said Council-woman Carol West, the council's liaison to the convention center commission.

Thoreson and convention center director Rich Singer view the construction of an arena and a new hotel as part of a broad transformation of the area between Interstate 10 and the Tucson Convention Center.

The planned pieces include a 500-room hotel at the northwest corner of the convention center, a straightened South Granada Avenue, a broad plaza with 1,000 parking spaces below, the arena, a shopping center and the eastern end of the University of Arizona Science Museum. While Singer and Thoreson say these changes would attract bigger conventions, people in the industry warn that isn't easy.

"It's a very competitive marketplace these days," said Chris Vest, spokesman for the American Society of Association Executives. In the last five years, he said, most of the nation's medium-sized and large cities have either built new convention centers or planned renovations of existing centers.

The draw is a business -- the meeting and convention industry -- that had an economic impact of $98 billion nationwide in 2001, according to the society.

In the fiscal year that ended June 30, 638 groups with nearly 192,000 delegates booked conventions or tours through the Metropolitan Tucson Convention and Visitors Bureau. While here, they spent $148.9 million, the bureau said.

By drawing more conventions, the center could come closer to covering its costs, West said.

More conventioneers would also bring more potential visitors to the attractions planned for Rio Nuevo. The 10-year, $360 million Downtown revitalization project is to include museums, homes, shops and hotels to be built with $120 million in state and city tax money as well as at least $240 million in private investment.

A plethora of Downtown attractions might help the city attract a hotel developer. But attractions aren't all hotel developers will be looking for, said Mike Kass, director of marketing at the Starr Pass Marriott Resort & Spa, a convention hotel under construction west of Downtown, which will boast 575 rooms and 40,000 square feet of meeting space.

"You want to see pent-up demand," Kass said.

Downtown hotel owner Humberto Lopez said he would prefer that the city not recruit a new hotel at all. Lopez owns the 300-room Radisson City Center and 155-room Clarion Santa Rita, the main hotels within walking distance of the convention center.

Lopez said he made this proposal to Thoreson: "Why don't we put together a partnership or a sale where they take over my hotel and expand it?"

It's already difficult to make a profit Downtown, Lopez said, and a new hotel would make it even tougher.

A national conference planner with experience in Tucson said the city should go for the top-flight hotel.

"It's imperative that the convention center have a world-class hotel available," said Carol Kuc, president and CEO of Complete Conference Coordinators in Naperville, Ill. "Most people who come in for conventions don't want to rent a vehicle. They want to be able to get up 10 minutes before they want to be somewhere."

Creating such a situation isn't easy. Phoenix has tried for 20 years to recruit a third big hotel downtown.

Meanwhile, the Phoenix Civic Plaza has gradually fallen behind in its effort to recruit big conventions, hitting 67th place in size among American convention centers, said Sheryl Sculley, Phoenix assistant city manager.

"Many of our customers have outgrown our facility," Sculley said.

So Phoenix began five years ago to plan and fund an expansion, said Sculley, who has spearheaded that drive. This year the city picked up the necessary funding from the Legislature, intended to increase its convention center from about 270,000 square feet to about 900,000 square feet.

Phoenix needs to nearly double the 1,250 hotel rooms downtown in order to accommodate the delegates who will fit into the expanded Civic Plaza. So the city is considering building and owning its own hotel.

Doing so is a trend among cities seeking downtown convention hotels. Denver, Austin, St. Louis and Houston are some of the cities that have either built their own hotels or are planning to, Sculley said. They, in turn, hire a flagship hotel company to manage the hotel.

Downtown Tucson long ago piqued the interest of arena developer Zev Buffman. He and his partners in Arena Management and Construction were interested in building an amphitheater in Tucson, Buffman said. After an aquarium project that had been proposed for West Congress Street and I-10 fell through, Buffman started talking with city officials about building an arena there.

Buffman said he sees Tucson as an untapped market because it is the largest city in the country without a modern sports arena.

"We are extremely serious," said Buffman, who said he has done similar projects in Miami, Toledo and near Palm Springs, Calif.

"This is what we do. We do midsize arenas."

His business would construct the arena and form a new, private nonprofit entity to run it, Buffman said.

It would be busy at least 120 days a year, he said, attracting concerts, home shows and similar events, as well as minor-league sports, such as basketball, hockey and arena football.

The idea of all this, Thoreson said, is that the expansion of the convention center would attract enough business to make up for the money lost by privatizing the arena.

But Councilman Steve Leal said he worries that a city-funded hotel and arena could become a financial boondoggle. Both would cost the city money, and the arena's private ownership would mean the city loses the money it earns from running the present arena, Leal said.

"We're funding the private sector to put us out of business," he said.

By Tim Steller and Shella Jacobs

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(c) 2003, The Arizona Daily Star. Distributed by Knight Ridder/Tribune Business News. MAR,

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