Tax-Funded Raleigh Convention Center Subsidizing Conventions to Get Business

September 30, 2008

Raleigh Convention Center

In North Carolina, land of gasoline shortages due to state-imposed price controls, a new convention center opened this month in Raleigh. Funded by taxes on meals and hotel stays (and therefore not a tax increase, since only “they” pay the taxes not “us”), the $221 million center is already turning into a “money pit,” according to the local John Locke Foundation:

“Analysis of 164 convention and meeting contracts shows that Raleigh Convention Center officials have given conventions a whopping $2.26 million in discounts for RCC room rentals,” [report co-author Dr. Michael Sanera said]. More than $500,000 in discounts cover events scheduled in the next 10 months, and some discounts cover events scheduled as late as 2023.[…]

Taxpayers would be wrong to assume that the convention center could operate like a private business, Sanera said. “You might think prices for space and services would cover the operational expenses and even pay off the debt incurred to build the convention center,” he said. “Unfortunately, the opposite is true. The only way for the RCC to attract users is to offer deep discounts on rooms and services and even pay large subsidies to attract conventions and meetings.”

Of 68 events scheduled through June 2009, room discounts have averaged 58 percent, Sanera said. “Some groups are paying nothing or as little as $1 to rent space,” he said. “This might make sense for a city organization, like the Raleigh Appearance Commission, but large corporations are getting similar deals.”

Check out the full report here.

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