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Business Observer Friday, Feb. 4, 2005 17 years ago

Build It, And They Will Come

Philosophically, there are multiple reasons to naysay the latest proposal from the Greater Sarasota Chamber of Commerce to increase the county's hotel-room tax from 3 cents to 5 cents per room night to construct and operate a new downtown conference cente
by: Adam Hughes Staff Writer

Build It, And They Will Come

Philosophically, there are multiple reasons to naysay the latest proposal from the Greater Sarasota Chamber of Commerce to increase the county's hotel-room tax from 3 cents to 5 cents per room night to construct and operate a new downtown conference center.

Nobel economist Milton Friedman said it in his 1974 classic, "Free to Choose": When it comes to asking for government favors, business is always first in line. He also said: What you give to one (cash for a conference center), you must take away from another (impose higher taxes on condo rentals).

Or another favorite, Ludwig von Mises, wrote in his opus, "Human Action": "State and government are not ends, but means." The private sector has declined to take the risk on a conference center, so it is turning to the state.

Sarasota lawyer Dan Lobeck, our resident Nabob of Negativism (as it relates to economic and population growth), cut to the quick Monday afternoon after Tim Clarke, chairman of a conference center task force, made his case for a higher bed tax and conference center before the Sarasota County and Sarasota City Commissions. Lobeck says he'll be representing several Sarasota County condominium associations against the tax increase. The money, Lobeck says, clearly is being used to "bankroll hoteliers" at the condo owners' expense.

And then there's this simple cardinal rule, which the conference center proponents violate: If you want something, pay for it yourself.

Let's not forget this, either: The United States has a glut of convention and conference centers, 90% of which require annual taxpayer subsidies because they are money losers.

We had to chuckle when Sarasota County Commissioner Jon Thaxton, after seeing proformas projecting a surplus at a new conference center, said (appropriately): "Why does this operate in the black for the public sector and not the private sector? Everyone says the private sector operates more efficiently than government."

Clarke responded: "The power of compounding money makes this work" - a reference to the strategy of stockpiling two years of bed revenues in a savings account before the center would open.

Of all financing plans that have been suggested over the years, this one is smart - that is, once you get over the idea of taxing tourists countywide to finance a high-tech conference center in north Sarasota County. (On that note: When Clarke was asked how the conference center financing plan might be welcomed in south county, where the benefits would be few, Clarke noted that only a third of the county's bed taxes come from south of Blackburn Point Road.)

To be sure, the ideal proposition remains a privately owned and operated conference center. Of course, the standard line is it cannot be accomplished. Once you figure in land costs and construction costs and then the cost of competing against centers that are subsidized, the prospects quickly deteriorate. Still, it's worth imagining a locally-based, for-profit entity raising capital in an equity offering to allow people who believe in the value of a conference center here to put their money and risk where their mouths are.

That would be much more preferable to what is likely to be - an appointed commission who are friends of the politicians, who in turn will end up much like the appointed airport authority members - people who have no real dogs in the hunt. This brings to mind another Friedman-ism on the difference between the private sector and public sector: "Those who spend their own money on themselves are careful about how much they spend and what it buys ... Those who spend someone else's money on someone else aren't careful about how much or what it buys." The latter, says Friedman, is government.

But enough wishful thinking. A privately owned conference center is the same as a Sarasota snowstorm - it isn't going to happen. Not enough people have the will.

So here we are - again. After 20 years of studies and no action, thanks largely to his efforts, Clarke has pushed the issue to the top of public officialdom's agenda.

The response was remarkably predictable. Except for Sarasota Commissioner David Mills who is tired of putting this off, all of the others dug their foxholes and called for the old "we need to go slow" and "we need to study this" approach. In 60 days, County Administrator Jim Ley and Sarasota City Manager Mike McNees will come back and say the proformas are realistic and there are many hurdles to overcome, and like good administrators, they'll dump the decision back in the laps of the commissioners.

And at that time, they must be bold. In spite of all of the reasons not to do increase the bed tax and not to build a conference center, it must be built.

Sarasota needs to move forward. Tourism will always be one of our leading industries. And it's a great industry. It brings in new wealth to the region, it's clean and it's a wonderful export - most of them go home! We must build on that strength and diversify it to the business sector.

We need this type of tourism because we desperately need to expand our commercial base. Sarasota County has the smallest commercial, business tax base as a percentage of the total tax base of all the Southwest Florida counties. This means homeowners are increasingly carrying the tax burden. If we attract more business-oriented conferences, we increase our chances of expanding the county's commercial tax base. This is essential to creating an economy with a middle class.

What's more, financing and subsidizing a venue that attracts outsiders, as well as residents, with tax dollars certainly would not be a precedent. Except for five to seven years of its 30-year lifetime, the Van Wezel Performing Arts Center has always received a taxpayer subsidy. And yet most everyone refers to it as one of this region's jewels.

Finally, most of us would like to live in a great city. But Sarasota is not great - yet. Very good, but not great. Think of this: When you drive on U.S. 41 into downtown and see the old Municipal Auditorium, and when you drive from I-75 on Fruitville Road past Robarts Arena, it's difficult to look at those rickety, aging public facilities and think of Sarasota as a great city. Those places say we are stuck in time.

Will a conference center make us great? Not by itself, not by a long shot. But it will make us better than what we are. Despite all of the negatives, it's time to move forward. Build it. Be bold. Make it work.

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