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‘I’m with the government … how can I help?’

A reader advisory: if you are of the firm ideological persuasion that the words “government” and “efficient” are not only mutually exclusive, but a form of heresy when combined in the same sentence, then you might want to skip this week’s blog and tune in instead to a more credible media source … say, Fox News. The story I’m going to tell may be a bit too disturbing for you.

Michael Boss

Michael Boss

Over the past couple of weeks I’ve been working on a series of articles for the annual Idaho Business Review “State of Downtown” magazine, publishing April 19: a collection of articles that provides insight into the business environment in Boise’s urban core. The magazine coincides with a similarly titled event hosted by the Downtown Boise Association, which will be held at the Boise Centre on April 22. The keynote address at this year’s State of Downtown annual meeting is Charles Royer, the former mayor of Seattle.

As a public servant, Royer boasts an impressive pedigree. Through multiple careers he has become one of America’s foremost urban experts, commentators, executives and enablers. As mayor of Seattle, he led the city through a 12-year period of rapid regional growth, innovation, and ultimate recognition as both the nation’s “Most Livable” and “Best Managed” city. His career also includes teaching at the John F. Kennedy School of Government, where he directed Harvard’s Institute of Politics, and he was national program director of the Robert Wood Johnson Foundation’s Urban Health Initiative.

I had the opportunity to briefly interview Royer by phone for one of the stories I wrote for the “State of Downtown” publication. Thinking back to his time as mayor, between 1978 and 1989, Royer reflected during the interview that “you can never escape the politics around any infrastructure issue, but back then we always found ways to deal with it.” By contrast, Royer notes that today, “It has gotten increasingly difficult to support even the best ideas. For one thing, with the changes we’ve seen in the traditional media, there are now a multiplicity of messages you have to deal with – and whatever you’re trying to accomplish, if you don’t get the politics right, you won’t get the rest of it right.”

Royer’s remarks resonated during another of my “State of Downtown” interviews – this one with Pat Rice, the general manager of the Boise Centre. Idaho’s largest convention facility turns 20 this year, and my article focuses on its history and accomplishments. But my interview with Rice took a slightly edgier turn when we discussed the politics of his facility’s prospects for expansion.

Make no mistake; there is a genuine “feel good” story about the Boise Centre. Its history begins with the creation of the Auditorium District in 1959, which was a government entity funded in part through local hotel room taxes. Given its intended role as an economic development generator, the expectation was that the Boise Centre, which was ultimately constructed in 1990, would lose money at the rate of $200,000 to $300,000 a year. While conventional wisdom regarding government projects typically argues for more pessimistic outcomes, the reality for the Boise Centre has been just the opposite.

“We were bottom-line profitable three years after we opened,” Rice proudly noted proudly. “We paid off the debt assumed by the Auditorium District in June 2008 – 18 months early – at a savings of $100,000. We’ve certainly benefited from the growth in our local economy over the years, but we’ve also contributed directly to that growth as the largest venue in the state for hosting private and public sector events.”

Fortunately for Boise, Rice believes, the city had a core of entrepreneurial leaders back in 1959 whose sense of vision was matched by their willingness to take risks – people like Joe Albertson and Winston Moore (founder of the real estate development enterprise, W.H. Moore Co.).

“There was plenty of talk about the Auditorium District being a boondoggle, a waste of taxpayer money … and even some of the hotels in the area were against it because room taxes would be used to help fund the construction of a convention center,” Rice remembered.

Today the Boise Centre owns its land, has no debt, maintains a growing bank balance that currently totals $8.5 million, and benefits from a dedicated funding source. “We’ve been criticized for being a government entity,” Rice mused, “but we’re the most profitable government entity I know of.”

The history that Rice relates takes on a “past as prologue” tone when he reflects on the failure of a bond measure that would have funded the Auditorium District’s expansion of its convention facilities on the more-than-5-acre parcel of land that it owns between 11th and 13th streets, and Front and Myrtle. The 150,000-square-foot expansion that Rice still hopes to see take place would mean that Boise could compete in 60 percent of the convention market, compared to the 20 percent it is presently limited to based on capacity. Given the current construction market, Rice noted that a project that might have cost $45 million just three years ago would cost $38 million today.

Of course, the market forces that have driven down construction costs are the very same forces that make the expansion plans riskier than they were in 2007, when the Boise Centre saw record revenue of $4.5 million. In 2009, revenue dropped to $380,000, but Rice believes there is a good chance that the Centre might at least break even this year – and signs of a turnaround are encouraging. “Micron is showing some profit, HP is stable, the hospitals are stable, and other companies who form our customer base are stable or showing some profit. While we saw demand at local hotels decreasing month after month, it finally flattened in August 2009, and in January demand was up 7,000 rooms from the year before.”

What concerns Rice more than the next quarter, however, is the next decade. His fear is that politics will trump leadership when it comes to the vision that created the Boise Centre two decades ago – with the result that Boise may lose an opportunity for economic expansion that more farsighted cities will capitalize on once an upturn begins. To bolster his case, he cites a study by Boise State University that the Auditorium District commissioned last fall. Using the Centre’s 2008 convention business (roughly a quarter of its revenue) as a benchmark, the study data revealed that the economic impact of the nearly 30 conventions held that year generated $31.4 million in revenue for the Treasure Valley, and supported nearly 300 jobs.

Rice believes that the Boise Centre could play an even greater role in stimulating the Treasure Valley economy, and that voter rejection of the recent effort to finance its expansion was due in large part to misinformation about funding sources and their potential impact.

“I think people understand the need for infrastructure in concept, and that the taxes used for this expansion would be paid by visitors,” he noted. “But we live in a political environment where a tax is still a tax, and some folks just don’t believe in investing in brick and mortar. But the reality is that if we are going to grow, we need to make these investments. As a government entity, it’s hard to us to walk into a room and tell folks, ‘I’m with the government … how can I help you’?”

In the end, however, Rice believes that the biggest obstacle to the Boise Centre’s mission as an economic development driver is a lack of vision and risk-taking on the part of community leaders. “Joe Albertson and Boise and Winston Moore were entrepreneurs and risk-takers by nature … they were not risk-averse. They realized that creating the Auditorium District was more than just sitting down and doing an ROI calculation, but about our vision of who we are and the legacy we want to leave.”

I’m not sure if Charles Royer and Pat Rice will get an opportunity to meet on April 22, but I have a hunch that if they do, they’ll have a lot to talk about.


About Michael Boss

6 comments

  1. Your article looks great!Thanks for you sharing.

  2. It is a nice article.I like it.

  3. Scott Nicholson

    Good article, Mike. There are times when local funding project can be used effectively. I don’t understand all the issues, but I’m often curious why the State of Idaho resists local community funding districts. I’m not trying to stir up anything (today), it’s just that I don’t understand the State’s role (read that to mean overly restrictive role) over cities when it comes to local tax districts; especially in a state that on the surface resists other outside controls. Again, I’m really not stirring the pot, it’s more of a curiosity. Pas as you go has a lot of benefits, no doubt, but there are times when well screened investments by using debt is also prudent.