Pueblo’s RTA economic impact is a moving target
While some data doesn’t exist, other numbers point to no improved economic impact from the Pueblo Convention Center expansion.
Until last month it was largely unknown what kind of economic impact the Pueblo Convention Center was having on the community, despite major plans to expand the facility by 35,000 square-feet.
There were, however, projections done in 2010 of what is expected of the expansion. But the convention center expansion is just one piece of a three-phase project that is in the works to bring Pueblo more than 880,000 visitors each year, yet no hard data points to what kind of economic impact the entire project will have on Pueblo, and the data that does exist shows just part of the picture but fails to show economic growth in the community.
Projecting what kind of wealth the expansion and other tourism projects will bring Pueblo is difficult because, even after nearly six years after the initial application, the project isn’t set in stone.
The Pueblo Urban Renewal Authority is facilitating the convention center expansion and several other tourism projects through the state’s Regional Tourism Act, which incentivizes communities for building ‘unique and extraordinary’ attractions that draw out-of-state visitors.
It was often said by city officials that for every dollar put into the convention center — in it’s current, unexpanded form — the community benefits $7. It was assumed that the subsidized convention center — which costs the city approximately $1.8 million to operate each year — attracted enough visitors who spend money at hotels, restaurants and shopping that there was a positive relationship between the subsidy and Pueblo’s economy.
But there was no data surrounding the assumption. In February 2015 PULP Newsmagazine pressed the Pueblo Urban Renewal Authority, City of Pueblo, Pueblo County, Pueblo Economic Development Corporation and Pueblo Chamber of Commerce for any data that may confirm the ‘$1 generates $7 in the community’ statistic, but there wasn’t an agency that had any data supporting the claim.
This summer the Pueblo Urban Renewal Authority finally learned whether that statistic is true. It is, according to a report authored by Chicago-based Johnson Consulting.
In 2014 the Pueblo Convention Center resulted in $13 million in direct, indirect and induced spending. Two years prior the convention center resulted in $13.4 million in total spending.
“I don’t think we have a clear picture (of economic impact) because things are changing.” — Pueblo City Council President Steve Nawrocki
Direct spending includes visitors purchasing hotel rooms, meals and shopping downtown. Indirect spending is the respending of direct spending, so a restaurant purchasing more food. And induced spending is the money spent by an employee of a facility impacted by direct spending — an example would be a waitress who buys new shoes.
With an operating cost of just under $2 million, Johnson Consulting said the statistic holds true.
A 2010 study of the projected impact of the convention expansion showed that total spending would be $13 million once the facility hits the stabilized year of operation, which is expected to be four years after marketing and long-term bookings occur.
The projected spending numbers have already been realized with the current Pueblo Convention Center facility, which has been deemed too small to catch the attention of conventions and trade shows.
In the latest total spending report the convention center created $7.4 million in direct spending and $5.6 in indirect and induced spending.
The spending numbers are similar despite difference in space and difference in expectations in attracting visitors.
Pueblo City Council President Steve Nawrocki said he hadn’t compared the numbers before, but anticipated that when the RTA project completes all three phases, the spending numbers would be different given that there would be more attractions bringing in visitors, such as the waterpark and PBR University.
“I don’t think we have a clear picture (of economic impact) because things are changing,” Nawrocki said. “But I think it’s going to be positive.”
The RTA application submitted to the state in 2011 did include fiscal impact estimates to local government and expected job growth, but not numbers that shed light on direct, indirect and induced spending.
Since the application was submitted, Pueblo’s RTA project has evolved, revisited by the state and had projects moved to other phases — all while PURA has been in the midst of high employee turnover and difficulty figuring out how to get enough money to get the project off the ground.
“I think things have changed and things will change. We’re talking about a document that is almost six years old,” PURA executive director Jerry Pacheco said of the projections in the 2010 Hunden report.
During the course of the RTA project, and after, an annual report document the economic impact is required by the state, so as the project progresses Pacheco said he expects those numbers to be different.
“Any time you do a study, it’s based on certain assumptions, but if those assumptions are changed in any way you have to go back (and rerun the numbers),” Pacheco said.
The changes for the project have been abundant. The state dropped a bombshell on the city early in 2016 cutting back the amount of funds the city would be getting from state sales tax for the project, and the Professional Bull Riders University was moved from phase two construction to phase one construction, adding the possibility of a private developer adding a hotel into the mix.
The recent Johnson study of the convention center’s impact in its current state was done so that success of the expansion, no matter what else changes, can be better tracked.
“We needed a baseline to present to the state,” said Pacheco, who was also the city manager when the RTA application was submitted to the state in 2011.
The study of the existing convention center points out that Pueblo’s facility runs middle of the pack for facilities of its size and market, and just like in similar markets the Pueblo Convention Center has a high number of meetings and banquets, but has trouble attracting trade shows and conventions.
“We don’t discourage this,” said Charles Johnson of the consulting firm to the PURA board last month, “But we would like to see a few more anchors downtown.”
In 2012, the convention center hosted 36 conventions and three trade shows — a seemingly low number of events compared to the number of meetings, 246, and banquets, 118. Two years later the facility saw an overall decrease in events, but the same trend. In 2014 there were 35 conventions, one tradeshow, 224 meetings and 152 banquets.
Projecting what kind of wealth the expansion and other tourism projects will bring Pueblo is difficult because, even after nearly six years after the initial application, the project isn’t set in stone.
During the course of the two years meetings made up 55 percent of events, but generated just 17 percent of attendance, according to the report — a point many see as justification for adding space to the convention center.
Another hotel with more meeting space would be suitable for downtown, Johnson suggested to PURA.
“We would like to see a complement to the convention center,” Johnson said.
Pacheco thinks that can be a reality. Since the state refinanced the RTA project and moved the Professional Bull Riders University to the first phase of construction, Pacheco said PURA is exploring the possibility of working with a developer to add a hotel on top of the PBR facility.
Those plans, however, are in very early stages. Adding another hotel near the convention center was originally proposed in the RTA plan, but wasn’t possible without a private developer.
“We’re leveraging public dollars to get private investment,” Pacheco said, adding that the land near Pueblo’s Riverwalk is highly desirable, but expensive and requires a lot of cooperation from city and county agencies to develop.
So far, the only plot of land on the Riverwalk that has been developed is the PBR building
PURA has $14 million available to use for the RTA project via the City of Pueblo’s half-cent sales tax, which is to support only primary job growth. But Pacheco said the first phase is going to require $20 million, and it’s uncertain, at this point, where that other $6 million will come from.
“We’re going to see what we can get on the bonding market,” Pacheco said.
The city has made it clear, Pacheco added, that using the half-cent fund money and a bank loan or bond would be near impossible, as Pacheco said the city has said it wants its loan repaid first.
It’s possible that PURA may bond out the entire first phase, according to Pacheco.
Pueblo takes a loss of approximately half a million dollars each year to run the convention center, but the Hunden report noted that: “Once the building stabilizes after the fourth year, marketing and long-term bookings occur, it is expected that 2017 revenue will be $2.8 million with $3.1 million in expensse, leading to a smaller deficit. These projections are conservative and it is also possible that the facility could break even or generate a net profit at stabilization.”
The Hunden report also predicted that over the course of construction of the expansion — not including the rest of the RTA project — there would be roughly $8.3 million in new income added to the economy and 77 job-years — ’ job years’ translates into one job for one year.
