the little firehouse that couldn't beat the convention racket

A "little thing" pissed me off earlier. The City of Philadelphia is demolishing an architectural gem known as the Race Street Firehouse. Constructed in 1926, it's one of those whimsically functional buildings no one would design today, and it was adorned with what are probably the world's only "firemen gargoyles" -- an architectural detail I've blogged about before with pictures.

Here's a front view of the building:

race_st_firehouse.jpg

And a side view -- showing what a charming and dignified little castle it is -- defying its executioners to the last.

race_st_firehouse_side.jpg

I know I'm being anthropogenic, but it's as if the castle is saying,"Modern barbarians may be able to tear me down, but their vandal culture will never be able to build another one like me!"

It's true. The type of masons capable of such intricate brickwork, and kind of craftsmen capable of carving stone gargoyles, are beyond the practical capabilities of today. I think it's a tragedy, and I'm sure Mayor Nutter cares about as much about the Race Street Firehouse as he does the Second Amendment to the U.S. Constitution.

What makes this post especially hard to write is that I'm being emotional about a building, which may seem trivial, because it is not a living, breathing, suffering human being. Well, nor were the Bamyan statues in Afghanistan, but people still cared about their demise, even though they did not suffer as the Afghan people suffered. Of course, the Race Street Firehouse does not compare to ancient statues, so the comparison is inapt in that regard. However, they make the point that culturally significant things do not have to be living to merit at least a modicum of respect. All I can do here is speak up for them on their passing, and reflect on the whys.

Had the firehouse been purchased by a private developer who wanted to tear it down, I would be willing to bet that there'd have been a lot more trouble. The building is on the list of the National Register, and many people love it. As it is a valiant and enlightened campaign was mounted to save it, but to no avail. That's because there was no private developer to be pressured, no way to launch an effort to raise money to buy it.

It is being torn by the state to make way for a vastly expanded Pennsylvania Convention Center. Governor Rendell bulldozed aside the preservationists' concerns, because this is said to mean progress, and money for Philadelphia. Governor Rendell and future Mayor Nutter (who chaired the Pennsylvania Convention Center) positively gloated over the demolitions, which they said would bring jobs and development:

"This demolition is one of the most exciting events in this city's history," said Michael Nutter, former chairman of the PCC and democratic nominee for Mayor of Philadelphia. "The expansion of the Pennsylvania Convention Center will provide jobs, economic development, and cultural enrichment for the entire region. But most importantly, this expansion will catapult Philadelphia into the highest leadership ranks of convention centers in the world. I am very proud of our collective accomplishment."
I'd be more inclined to just heave a big sigh and say "That's progress!" if I believed it really was.

As a libertarian and a realist, I recognize that old buildings often do stand in the way of progress, and have to come down. In real estate, there's the principle of the "highest and best use" of land, and let's face it, a charming 1920s firehouse in the middle of downtown Philadelphia is not what most reasonable people would believe to be the highest and best use.

But the highest and best use principle assumes a normal operation of the free market system. What is happening here is that the state has decided to go into the convention center business, and it has made the decision to raze an entire area and radically change its character based on the notion that a bigger convention center will necessarily bring more conventions.

So, while my regret over the loss of the charming firehouse is a "little thing," it's one of those little things that has heightened my awareness of a much bigger thing -- government going into huge business ventures with taxpayer money.

A link from Glenn Reynolds to Nick Gillespie's video at reason.tv touched on a question which is very closely related to the convention center business:

Are publicly financed stadiums and other sports subsidies really worth the cost to taxpayers?
No they're not. Despite the usual contentions of "$600 million worth of economic development" Dennis Coates (professor of economics at the University of Maryland) says that overall impact is negative:
"They don't make any money; they just generate new spending in one location by taking it from another. That's no benefit to the society; that's just a benefit to people who got the money given to them at a cost of the money taken from someone else."
Professor Coates has an article here exploring the issue in more depth.

And if government involvement in the stadium business is bad, government involvement in the convention center business appears to be worse. Until the doomed firehouse forced me to take a look, I had no idea what an massive boondoggle it is. Far from being limited to Philadelphia, it's become a city government bandwagon, with virtually every large city locked into an imaginary game of "competition" with every other large city. I placed competition in quotes to stress the artificiality.

Steven Malanga looked at the phenomenon in detail in The Convention Center Shell Game.

What is happening in Boston and Baltimore is not an anomaly but merely the latest chapter in what is turning out to be one of America's biggest civic boondoggles. For more than a decade now, cities and counties have been rushing, at enormous public cost, to build new convention centers or add space to old ones, including a $191 million expansion of San Francisco's Moscone Center, a $291 million new facility in Omaha, and a $354 million center in Pittsburgh. The increase in space has vastly outpaced the growth of the convention industry and often failed to generate the kind of economic activity predicted by boosters. Rather than energizing local economies, in fact, some convention centers are emerging as a drag on civic finances, requiring taxpayer operating subsidies on top of their huge, publicly financed construction costs. What's more, the situation is only likely to get worse. Another eight to ten million square feet of exhibition space is scheduled to come on line within five years, an increase of about 15 percent in an industry where demand is barely growing.

Although those numbers should be sobering to any city contemplating building yet more space, in New York officials are plunging ahead with plans for the most costly convention project to date--proposing to spend a staggering $1.5 billion nearly to double the size of the Jacob Javits Convention Center. The proposal comes despite the chronic fiscal problems of both the state and the city and the absolute lack of any credible evidence that the expanded center would pay back such a colossal public investment.

Indeed, to finance the expansion, the state and the city, both already heavily indebted, will likely have to float huge debt offerings and may even increase some taxes.

New York's headlong plunge into this new project is evidence that local officials rarely let the facts get in the way of their love of big projects....

Malanga does not mention Philadelphia's boondoggle, but obviously, they're trying to keep up with the other, bigger boondoggles.

Like Baltimore.

Despite a publicly financed Hilton convention hotel set to open next year, Baltimore's major convention business appears to be declining, prompting concern among officials for the city's investment.
Pittsburgh:
Critics say inflated costs and the failure to produce more shows drawing more patrons make the $373 million complex overlooking the Allegheny River a bad investment. A $150 million state subsidy and bonds financed by Allegheny County's hotel/motel room tax paid for the center..
Los Angeles.
Don't feed downtown L.A.'s white elephant

Convention Center giveaways line developers' pockets at the expense of the rest of the city.

And let's not forget that flagship city of urban boondoggles, our nation's capital:
Nearly four years ago, city officials opened the $850 million Washington Convention Center with a string of superlatives. The largest publicly financed project ever built in the city, they said, would attract more than a million visitors a year, fill hotels and set off an economic boom.

Instead, convention attendance is dropping, the surrounding neighborhood is yet to be transformed by the promised new development, and conventioneers are filling fewer hotel rooms than expected.

The number of large conventions and trade shows booked at the Washington Convention Center has declined since its first full year of operations, 2004, and, on average, those events have been smaller. Hotel bookings, a key measure of a convention center's performance, have failed to meet projections in all but one year.

The number of hotel rooms booked is especially significant because it is the most accurate measure of performance, and last year hotel convention bookings missed projections by 13 percent. Bookings are likely to fall short of projections by 24 percent this year and 29 percent next year.

To pay for the center, the city raised its tax rate for all hotel rooms and restaurant meals.

Ditto the Syracuse, New York area, and Lancaster, PA.

It's not as if they weren't warned.

A major Brookings Institute study by Heywood Sanders pointed out that the convention business has been in decline:

* The overall convention marketplace is declining in a manner that suggests that a recovery or turnaround is unlikely to yield much increased business for any given community, contrary to repeated industry projections. Moreover this decline began prior to the disruptions of 9-11 and is exacerbated by advances in communications technology. Currently, overall attendance at the 200 largest tradeshow events languishes at 1993 levels.

* Nonetheless, localities, sometimes with state assistance, have continued a type of arms race with competing cities to host these events, investing massive amounts of capital in new convention center construction and expansion of existing facilities. Over the past decade alone, public capital spending on convention centers has doubled to $2.4 billion annually, increasing convention space by over 50 percent since 1990. Nationwide, 44 new or expanded convention centers are now in planning or construction.

* Faced with increased competition, many cities spend more money on additional convention amenities, like publicly-financed hotels to serve as convention "headquarters." Another competitive response has been to offer deep discounts to tradeshow groups. Despite dedicated taxes to pay off the public bonds issued to build convention centers, many--including Washington, D.C and St. Louis--operate at a loss.

And that's not even taking into account today's fuel prices, or concerns about the carbon footprints of the conventioneers. (The full Brookings study is here in PDF.)

Needless to say, Philadelphia's convention industry is also declining, and while you might not read that in the Philadelphia Inquirer, some brave souls were at least concerned enough to allow that the enormous expansion just might entail risk.

Still, the convention advocates advance the view that Philadelphia has not kept pace with other cities, and "needs" a larger convention center, and I guess they're content to ignore evidence to the contrary.

While it wasn't easy to find hard statistics for Philadelphia, Professor Sanders supplied some during House testimony last March:

Philadelphia presents a similar case of overly optimistic consultant forecasts and lagging convention center performance. The new Pennsylvania Convention Center opened in July 1993, supplanting the Civic Center as the city's prime convention venue. The penultimate market and feasibility analysis for the center was completed in May 1988. That analysis stressed the capacity of the planned center to bring new convention and tradeshow events and attendees to Philadelphia. It projected that the center would be an economic boon to the city, generating a total of 4,252 new jobs and yielding 664,800 hotel room nights to the city by 2001.

The new jobs are difficult to find, but the Pennsylvania Convention Center Authority has reported on the hotel room nights associated with center events. They hit a peak of 519,793 in fiscal year 2001, boosted by the Republican National Convention. By fiscal 2004 the room night total had fallen to 363,954. For fiscal 2005 it hit 297,180. The center is thus currently generating less than half the forecast hotel demand. At the same time, the 1998 consultant study predicted that the center would incur an annual operating loss of about $2.2 million. The center's actual operating loss for fiscal 2005 came to $14.8 million,

The Commonwealth of Pennsylvania and Philadephia are now undertaking a $700 million expansion of the center that will add 260,000 square feet of exhibit space. Consultant studies project that the expansion will add more than $140 million in spending impact, by filling a total of 650,000 hotel room nights each year. That figure, post-expansion, is less than the 664,000 room nights promised in 1988 and never achieved.

Of course, if the gigantic new convention center fails to live up to the government's rosy predictions, guess who will have their hand out? The government! The way they act, you'd almost think they believe it's their money.

That's the whole problem, and it's why I don't like government going into the convention business. Like any business owner, the government can fail. However, when a private business entity fails, the consequences take the form of investors and stockholders losing money or becoming bankrupt.

But what happens when government business ventures fail?

MORE: While Nikolai Ceausescu didn't call them "convention centers" he razed huge portions of Bucharest in order to build gigantic government buildings:

Beginning in 1972, Ceausescu instituted a program of systematisation. Promoted as a way to build a "multilaterally developed socialist society", the program of demolition, resettlement, and construction began in the countryside, but culminated with an attempt to reshape the country's capital completely. Over one fifth of central Bucharest, including churches and historic buildings, was demolished in the 1980s, in order to rebuild the city in his own style. The People's House ("Casa Poporului") in Bucharest, now the Palace of the Parliament, is the world's second largest administrative building, after The Pentagon. Ceausescu also planned to bulldoze many villages in order to move the peasants into blocks of flats in the cities, as part of his "urbanisation" and "industrialisation" programs. An NGO project called "Sister Villages" that created bonds between European and Romanian communities may have played a role in thwarting these plans.
This modernization was entirely in accordance with Leninist principles:
Ceausescu considered it necessary to his program of systematization to demolish vast portions of the historic and central parts of Bucharest and replace them with giant representation buildings and high-density standardized apartment blocks. The latter rooted in the ideology of "edifying the multilaterally developed socialist society" and it was considered an epitome of the Leninist formula of the "fight between old and new" (see Historical materialism).

Started in 1974, but implemented some six years later, the program implied a comprehensive nationwide campaign of demolitions, resettlements and reconstruction.

Fortunately, we live in a democracy and aren't ruled by the likes of Nikolai Ceausescu, so in theory there's a limit on urban demolitions.

Still, I find myself wondering...

These ever-more-gigantic and ugly convention centers have all the charm of airports, and this one is destroying much of downtown Philadelphia's charm.

From where came the rule that all cities must have them?

UPDATE: My thanks to Clayton Cramer for the link. Notes Cramer,

Special interests in the area of the proposed development make out like bandits on these projects, while taxpayers as a whole get looted--and business in other parts of the city are the usual losers.
I like the title too. ("Really Bad Ideas Spread, Like Herpes")

posted by Eric on 05.28.08 at 10:21 AM










Comments

But what happens when government business ventures fail?

Answered above: "a benefit to people who got the money given to them." Since that's the purpose of government "business," it can't "fail." They got the money; you got it taken from you. Done deal.

guy on internet   ·  May 28, 2008 12:40 PM

As a bit of trivia, the first convention held at the new DC convention center was the 2004 FDA Science Forum. As I understand it, DC had run out of money to finish and officials in the Bush Adminstration ordered FDA to use the Convention Center (instead of using the buildings FDA already controls - not 'free' but not any more money than normal). The highlight of the event was massive food poisoning due to improperly refrigerated chicken. FDA was forced to go back twice, and then cancelled the Science Forum altogether rather than go back a forth time.

dustydog   ·  May 29, 2008 5:15 AM

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