CITY LIMITS: Philadelphia is getting a new convention center

Some city's leaders are calling it an economic cure-all, others are calling it a drain on the economy and a boon for the politically connected. Some city leaders say that the center, slated for completion in 1993, will be an unparalleled economic catalyst for the city. They point to the building's Center City location -- between 11th and 13th streets and Arch and Race streets, near the Gallery mall and many hotels -- to the jobs that will come from the construction and operation of the center, and to the money that convention-goers might spend in Philadelphia. But not everyone is so optimistic. Opponents of the center worry that the city's payments to the Pennsylvania Convention Center Authority, the government organization ultimately responsible for the center, will drain money from other services. And some say that economic forecasts have painted a rosier picture of convention-goer spending than may actually be borne out. A $523 Million Project The convention center is scheduled for completion in the spring of 1993. It will house 440,000 square feet of exhibition space and 90,000 square feet of meeting rooms. The old Reading Terminal train shed will be renovated to house a Grand Hall which could serve as a ballroom. Attached to the convention center, on Market between 11th and 12th streets, will be a 1200-room Marriott Hotel, scheduled for completion in 1994. The total cost for the project: About $523 million. Amid heated debate last December, City Council approved the Marriott Corporation as the center's hotel developer. Opponents argued that Marriott had previously shown hostility toward unions and that the hotel company had a weak record in contracting with minorities and women. Marriott supporters did not refute the company's record with unions, but they denied the charge about its business with minorities and women. According to Jon Weinstein, legislative assistant to Council member Thacher Longstreth, the 12 council members who voted for Marriott felt that the vote was needed to save the convention center. Further delays could have resulted in greater difficulty for the authority to sell the bonds. "They felt they couldn't wait any longer," Weinstein said. Five council members voted against Marriott. The PCCA sold approximately $280 million in bonds last December to finance contruction of the center. Arlene Friner, PCCA chief financial officer, said that favorable market conditions at the time allowed the authority to incur annual debt payment of $21.7 million -- saving over $3 million from what was predicted. Under a "lease and service agreement" passed by City Council last summer, the debt service has two main sources. First, the PCCA receives a percentage of the city's hotel tax -- which will increase gradually. The balance of the debt service is funded mostly by a service fee that the city will pay to the PCCA. The PCCA projects that as its share of the hotel tax grows, and as convention-related hotel business grows, the city will need to pay the fee for only about 10 years after the center opens. After that, the city would be paid the excess of the tax over the debt service. The state has contributed $185 million and the city has contributed over $40 million to land preparation costs. The city's contribution was mainly for the Marriott's site. An Economic Boost? In 1988, the accounting firm Pannell Kerr Forster studied the market effects of the construction of the convention center. Over the long term, the report said, almost 6000 jobs could be created and $234 million in increased tax revenue to the city, $284 million to the state, could be attributed to convention center construction. University Professor Theodore Hershberg, who is director of the Center for Greater Philadelphia, said he sees good times ahead for Philadelphia's hospitality industry. He said recently that the "world is shrinking" due to improvements in communications and transportation technology. This trend leads to the need for infrequent, large face-to-face gatherings -- namely conventions. The convention center will "pull Philadelphia's economy," Hershberg said. But City and Regional Planning Professor William Grigsby said last week that the convention center is not going to be a "money winner." He said that economic forecasts were too optimistic, adding that he does not expect as many conventions to come to the center and doesn't expect delegates to stay in Philadelphia as long as forecasts predicted. Grigsby said that the center will be a drain on the city's economy. The drain will not be so much the annual service fee the city must pay to the authority to operate the center, but the "invisible" figure -- the amount the city will not be getting back in such ways as predicted tax revenues. City Planning Director Barbara Kaplan said that restaurants and entertainment venues in Center City look to the covention center to boost their business. But Linda Morrison, legislative assistant to Councilman James Tayoun, said that the center is a "big pork barrel" for the politically connected. "Other businesses aren't as organized to go in and raid the city treasury like the hotel industry," Morrison said. Market Merchants The two blocks cleared for convention center construction have left a large vacant space north of the Reading Terminal Market. The PCAA will renovate the Market's roof after acquiring the building. Duane Perry, the executive director of the Market's merchant's association, said that before the blocks were cleared, 5000 people worked there and 500 people lived there. "Those people used to shop at the Market," Perry said. The Market has been caught in the middle of troubles in the PCCA's acquisition of the Market from the Reading Company. The roof is decrepit and has leaked frequently on merchants' stands, Perry said. Environmental cleanup of the facility had held up the final transfer for much of this year, but PCCA Communications Manager Patricia Clifford said the Market should soon be certified clear. "The first thing the authority intends to do . . . is to get in there and waterproof the ceiling," Clifford said. Nevertheless, Perry said, many of the the Market's longest and best customers are intimidated by the area's new environment. The bus and trolley lines on 12th Street no longer stop at Arch Street, and the walkways past the large vacant spaces are narrow on 12th Street between Race and Arch streets. Perry said that the authority and the Convention and Visitors Bureau have not properly balanced the needs of the market with the needs of the center. He worries that the market could be changed into a simple tourist attraction. "The box is not going to have people living in it, working in it," Perry said of the convention center. Transportation Depending on who is speaking, transportation is either one of the greatest strengths of the center or a benefit only for a privileged few, that is supported by city funds. The center will be located near SEPTA's Market East Station, where convention-goers could pick up the Airport line or a train to 30th Street Station and Amtrak's Northeast Corridor. But Smith, the architect, said that convention-goers will not tend to go directly from the airport or train station to the convention center, but will stop at their hotels first. Smith, citing transportation studies, also questioned how street improvements and parking arrangements will be handled. Smith said that many questions about who will pay for street widening and parking garages have been left unanswered. But he said Philadelphia taxpayers will probably foot the bill. Planning Director Kaplan said that in order for that area of Center City to be further developed, streets would need widening anyway. Kaplan said that she has seen studies which indicate that while stricter traffic management procedures will be necessary, the public's perception of the traffic impact is worse than what will truly happen. The Marriott has already planned to put a guest drop-off lane adjacent to the hotel, and a privately-built garage is also scheduled for the area, Kaplan said. Large regional shows like the Flower Show and the Boat Show, which create heavy traffic and parking demand, will continue to be held at the Civic Center, Clifford said. 'Back in the Big Leagues' R.C. Staab, communication vice president at the Philadelphia Convention and Visitors Bureau, said that meeting planners are eager to learn about the center, especially the hotel. Meeting planners ask most about the physical dimensions of the center and about nearby hotel rooms, he said. When the center opens, Staab said, 6000 hotel rooms will be within a 20-minute walk of the center. The center's figures have attracted several "definites" starting with a 13,000-person convention of the American Psychiatric Association slated for May, 1994. Staab said that many planners are interested in seeing the center's hotel finished for their conventions. Staab said that many meeting planners had "written Philadelphia off their lists." The Civic Center, Staab said, did not have enough rooms and is relatively difficult to reach from Center City. "We're back in the big leagues now with the Pennsylvania Convention Center," Staab said. 'Taxation Without Representation' The Convention Center has cleared its legislative hurdles, but it still faces judicial obstacles. The center is being challenge on several fronts. In one court case, the constutionality of the PCCA's share of the hotel tax is being challenged. According to architect Gray Smith, the hotel tax is a case of "taxation without representation." Many people who stay at hotels have no contact with the convention center, and, without voting power here, have no say in the tax they pay. "That's the reason we had a Constitutional Congress and the Fourteenth Amendment," Smith said. The case was dismissed by the trial court and affirmed by the Pennsylvania Commonwealth Court. The plantiffs are appealing to the United States Supreme Court, Smith said, after the Pennsylvania Supreme Court refused to hear the case. On a second front, the city is being sued in a challenge of the legality of the lease and service agreement. The suit charges that the service fee violates state law and the City Council did not properly allow public involvement as dictated by the City Charter. The PCCA was not named as a defendant. And most recently, a group of contractors sued the authority, questioning the authority's affirmative action program. Some contractors have alleged that the PCCA has instituted a minority and women "set-aside" program which promises certain a certain number of jobs on the center to minority and female contractors. "We don't have a set-aside program," said Ahmeenah Young, the authority's director for affirmative action. Young said that contractor should show their "best efforts" to include women and minority contractors. She added the authority has given some contracts that did not involve minority or women contractors. In situations where minority and women contractors are available, Young said, the authority examines the supply and sets "target indicators." If contractors fail to meet the targets, the authority investigates with construction experts.

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