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Convention Center Authority

Convention Center Authority. Republican Policy Group Presentation March 9 th 2015. Contents. History of the Convention Center Authority Discussion of the Lease Agreement Relevance to the Pawsox Constituent Contact Future Agenda. Timeline.

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Convention Center Authority

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  1. Convention Center Authority Republican Policy Group Presentation March 9th 2015

  2. Contents • History of the Convention Center Authority • Discussion of the Lease Agreement • Relevance to the Pawsox • Constituent Contact • Future Agenda

  3. Timeline • Three distinct periods of time for the Convention Center Authority • The Early Years • The Quiet Years • The Recent Years 1994 2004 2015 1984

  4. The Early Years • 1984: Providence Foundation Study • “Convention Center would run a deficit $600k to $1.9 mm” • “No major convention center pays its capital costs” • 1986: Proposal for 45,000 ft2 hall & 2,000 car garage • 1987: City State Task Force Study • Call to increase hall size to 50,000-95,000 ft2 • Potential cost of the Convention Center $100 mm 1984 Providence Foundation Study 1986 Contractors Partner 1987 City State Task Force 1987 Cost $100 mm

  5. The Early Years • 1987: General Assembly Passes Legislation • Title 42-99 creates Convention Center Authority • 1988-89: Land Purchases by the CCA • Buy 7.7 acres for $32 mm • “$4 mm than CCA’s own real estate appraisers said the properties were worth” • 1989: Internal knowledge of potential cost overruns • “This will be the most expensive convention center on a ‘per-square-foot basis’ in the history of the country” 1988-89 Land Acquisitions 1989 Internal Concerns 1987 G.A. Involvement

  6. The Early Years • 1989: Larger 100,000 ft2 Hall Commissioned • “This won’t cost the taxpayers one dime.” Richard Oster • 1991: General Assembly passes new amendments for CCA • CCA can build/operate a hotel • 1991: State signs a lease agreement with the CCA • Taxpayers to pay debt service and operational costs 1989 New Projected Cost $147 mm 1991 G.A.’s New Amendments Nov 1991 Lease Agreement 1989 Bigger Hall

  7. The Early Years • 1991: First Bonds Issued by the Conv. Center Authority • Issued $225 million in debt; no public vote needed. • 1991: Hotel Plans • Studies claim Providence did not have enough hotel beds for the bigger conventions • Proposal for 363 room $47 mm with $10 mm dome June 1991 CC Const. Begins 1991 New Projected Cost $214 mm 1991 First Debt Issued 1991 Planned to Build Hotel 1991 New Projected Cost $356 mm

  8. The Early Years • Jan 1993: Consultant Report • By 1995, the project would require state subsidy of $18.6 mm • Previously estimated subsidy was $8.6 mm • Actual money provided in 1995, $17,214,610 • 1993: More Debt Issued • CCA issued another $98 mm • Again, the public never had a vote for this debt 1993 Westin Providence Built Dec 1993 Convention Center Finished July 1993 More Debt Issued Jan 1993 Consultant Report

  9. The Quiet Years • 1994: First state subsidy is made to the CCA • $5.5 mm appropriated for debt service, roughly $9.1 mm in today’s money • Subsidies have been appropriated each years since • $454,500,000 has been appropriated from 1994-2015 • Within 10 years, the state paid $183.5 mm • Rhode Island has paid many ‘dimes.’ 1994 Subsidies begin 2004 Total subsidy cost $183.5 mm

  10. The Recent Years • Mar 2005: CCA Sells Westin Hotel to Procaccianti Group • $95.5 mm price. • Against Governor’s wishes based on moral reasons • Proceeds from the sale used to pay down CCA debt • Procaccianti Group defaulted on $14.7 mm in credit union crisis • Nov 2005: Lease Agreement • RI and the CCA sign another Lease agreement to include the Dunkin Donuts Center Mar 1993 CCA Sells Hotel Nov 2005 Lease Agreement

  11. The Recent Years • Dec 2005: CCA Buys Dunkin Donuts Center • Pays $28.5 mm to Providence for the Facility • Renovations cost $64 mm over the next two years • 2006: Issued More Debt, $92.5 mm • Debt used to pay for the Dunkin Donuts acquisition Dec 2005 CCA buys Dunkin Donuts Sept 2008 Dunkin Donuts Reopens 2006 More Debt Issued

  12. The Recent Years • July 2008: CCA Acquires Operational Management over the Veterans Memorial Auditorium • 2014-15: VMA Renovations • Multi-year projects costs the state $15.5 mm • June 30, 2016: CCA’s agreement with the state expires June 2016 VMA Agreement Expires July 2008 CCA Operates VMA 2014-15 VMA Renovations

  13. Highlights • Cost of the Convention Center • The final cost was more than triple the initially projected cost of the project • Debt service increased from $9.4 mm to $24.3 million • Value for Money Spent • Paid more for land than appraised worth • Building cost more than other centers • $15 more per foot than AL Conv. Center • $35 more per foot than PA Conv. Center • RI is the “Rolls-Royce of Convention Centers”

  14. Lease Agreement • Bond Language • State was not liable for bond repayment • “Obligations issued by the [Convention Center] Authority do not constitute a debt or liability or obligation of the state” • Security of Debt • “Bonds are secured solely from the pledged revenues or assets of the Authority”

  15. Lease Agreement • Pursuant to a “Lease & Agreement” • signed 11/1/1991 & 11/30/2005 • CCA leased the Convention center facilities to the state • State is obligated to make lease payments “in an amount sufficient to pay the operating expenditures of the Authority and the debt service” • Subject to annual appropriations by the GA

  16. Lease Agreement Importance • Rhode Island Appropriations • State has spent over $450 million • Was not an obligation of the state. • Was not expected to cost the state a dime. • Voters • Rhode Islanders never voted to issue debt • Legality • Completely legal and could happen again . . .

  17. Pawsox • Original Forecasts • The Convention Center would “pay for itself” • Actual usage never hit estimated projections • Economic studies advocated for the project • Studies can be manipulated or misleading • Be wary of Lease Agreements • Can cost Rhode Island millions • No voter approval is required

  18. Constituent Contact • Recommendations • Need for better marketing of our convention • No mention of RI in tourist specific books • Readers Digest, Travel & Leisure • Yearly calendar of events? • Nashville Hotels issued materials in conjunction with Conv. Center • “I didn’t realize the amount of activities available” • “I’m going back there to do it all”

  19. Constituent Contact • Recommendations • Need better venues that have a greater draw • Why are vendors foregoing the Conv. Center? • One event was held at the Conv. Center but now held at the Crowne Plaza • Why did the venue move? Cost prohibitive? • “Some local business advertise on TV how they are not at the Home Show.” • Why are they proud not buying a booth?

  20. Next Agenda • Continued Call for Greater Transparency • APRA Request Information • Additional Follow-up of Information • Next RPG Meeting 3/23/2015

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