RALEIGH -- With the Raleigh Convention Center facing increased competition from other cities, the City Council on Tuesday approved a one-time, $150,000 increase to a fund used to offset deep discounts given to organizations that book the $221 million facility.
But council members balked at the bigger request by convention center officials. The council opted to delay action for two weeks on a pitch to boost the fund from $350,000 to $500,000 a year through 2018, an increase that convention staff say is necessary to keep booking business until the city and county review the convention center's performance in December.
Instead, the council approved the one-time bump to the annual pot of money known as the Business Development Fund for the current fiscal year. They also voted to extend the life of the fund at the lower, $350,000 rate through 2018. The fund was set to expire in 2014.
Citing other cities offering bargain-basement discounts on their facilities, officials say they may need to request even more money next year to stay competitive, depending on the outcome of the city and county review.
Officials originally asked the county to boost the fund to $750,000 a year and grant a seven-year extension on its life. But convention officials scaled back their request after Wake commissioners debated the issue Aug. 9.
"It's really important that we know these funds are available," said Denny Edwards, president and chief executive officer of the Greater Raleigh Convention and Visitors Bureau. "What they voted on today gives us the ability to at least continue to book business through 2018."
Raleigh's City Council also approved a $316,000 bump to the fund to cover expenses for next year's NHL All Star Game.
The council's actions are subject to county approval, and commissioners are expected to consider the issue at their Sept. 20 meeting.
Money for the Business Development Fund comes from countywide hotel/motel and prepared food taxes, which have declined in recent years. The convention center uses it to pay for groups to use the downtown facility. It's common practice for convention centers, which justify the lost revenue by pointing to the money injected in the local economy by conference attendees sleeping in hotels, eating in local restaurants and dropping dollars in local shops.
For example, at least 14groups attending conventions from last month through next June will pay $1 or nothing, a discount that deprives convention center coffers of nearly $532,000. Convention center staff point to the $22 million they estimate those groups will spend locally as the reason for offering those deep discounts.
Against the subsidy
Some organizations, such as the conservative John Locke Foundation, have been highly critical of the discounts, arguing that the public loses out twice - first by subsidizing the building, second by paying to attract visitors to a concentrated area of the city.
Some council members and commissioners also are critical. Thomas Crowder, who represents District D on Raleigh's City Council, was the lone vote against extending the fund at Tuesday's meeting.
Crowder said he doesn't want to give the convention center "a blank check" to entice other organizations.
County Commissioner Paul Coble, a Republican, also has doubts about the funding.
"I am extremely concerned that we are going to spend more money to pay people to come to Raleigh to use our convention center, which isn't performing as expected," Coble said.
Staff writer Thomas Goldsmith contributed to this story.
