Sunday, September 14, 2008

Ignoring Consultant Costs $100 Million

Sometimes, local government really ought to pay attention to its consultants.

Yes, there are times when there’s really no downside, but we can think of one whose price tag is $100 million.

That was how much city and county governments spent on the expansion of the Memphis Cook Convention Center after their consultant said to move it in the vicinity of the Peabody Hotel.

Good Advice

The consultant – Price Waterhouse, as we recall – took an exhaustive look at the Memphis convention center roughly 10 years ago in light of market forces, trends and competitive context. Memphis and Shelby County Governments – which pay for convention facilities with some of the nation's highest hotel-motel taxes – wanted advice on whether it should expand the existing convention center or build a new one altogether.

After months of analysis, the consultant’s recommendation was given forcefully: don't expand, but rather, build a new convention center near Peabody Hotel and Beale Street. Essentially, the conclusion was based on a simple premise – build where the people are rather than try to make them come to the uninviting area of the convention center.

At that time, city and county officials could not fathom abandoning the area within years of The Pyramid opening its doors, and the officials contended that the convention center was anchor for the businesses in the Pinch District and it couldn't be moved. In response, the consultant said there would never be enough critical mass to make the convention center area more appealing and that with most of the tourist activities on the other end of downtown, it requires too much effort for visitors to enjoy them.

Budget Buster

In the end, city and county governments refused to yield in their opinions, and they confidently embarked on the budget-busting expansion of the convention center. Before it was over, lawsuits had been filed on all sides and the cost of the project ballooned to about $100 million.

While the convention center expansion was not one of government’s shining hours (whether making the decisions or supervising the construction), the cost of the expansion compounds the hurdles facing the new committee appointed by Mayor Willie W. Herenton to consider what it takes for Memphis to become a more competitive convention market.

One thing for sure: their deliberations would be a lot easier if $100 million wasn't tied up in the expansion, because it would be a big piece of the budget of a new convention center estimated to cost approximately $500 million.

Bunker Mentality (And Architecture)

Equally obvious in retrospect, the expansion did little to soften the bunker architecture of Memphis Cook Convention Center or to enhance the experience of convention-goers.

To complement its fortress appearance or because of it, the convention center remains drab and dreary and predestines Memphis to remain a third-tier convention city.

In a world characterized by stylish, airy, light-filled convention centers, Memphis Cook Convention Center is a throwback to another age. Its expansion – setting aside the fact that it cost twice its original projection and took twice as long to complete – does little to offset the gloomy interior and the gloomier meeting experience in the convention center, and in truth, the Cannon Center for the Performing Arts – as much of an upgrade as it was from the old auditorium - is equally meager when compared to similar halls in other cities.

It’s hard to imagine at this point how local government could find enough revenues – about $30 million a year – to pay off $500 million in bonds to fund construction of a new center. Most sources - hotel-motel taxes and the tourism development zone - were essentially maxed out with construction of the FedExForum.

That's why there’s no denying that the $100 million spent on the expansion of the convention center would come in particularly useful about now.


Zippy the giver said...

I heard that terrorists were going to fly planes into it but decided not to because it looked like no damage would occur to it.
Nasa said it looked like a boulder from space.
It looks like a meteor.
I think that once politicians take the hint of fiscal responsibility and demonstrate it for once, for a while, we might trust them again, but, I think that Memphis is in no position to build another center to attract anyone here, since this city is definitely NOT where people want to go.
They should concentrate on making it a place where the people who live here like it and not because they can break the law with no recourse, that's stupid and "old hat".

Zippy the giver said...

OK, anyone that hire Price Waterhouse as a consultant and then ignores what they said is not just an idiot, they deserve to be the wick on a gaslight.

Of course, anyone that thinks that building a new convention center for $600 million in the current and oncoming economy is also an idiot.

Anyone who thinks they will hold to that budget is also an idiot and possibly all this discussion is going on late at a small KEG PARTY.

The kicker: anyone that uses a ten year old consultants report to inform a civic renewal project needs their head examined.

Maybe things have changed in fiscal responsibility and I can go get a busines loan from a bank and use numbers from the 1950's?

Whaddya think?

Anonymous said...

May I point out that the leadership in Memphis is all black
and the population that they control is 65% black and they all are takers, living off the white owned business that are trapped there. Corrupt and greedy is not a good combination, but it IS an accurate description of the city bosses and black crime families that have run the town for years.