Our Opinion: Subsidy talk signals city must proceed with caution
News Tribune editorial
Sunday, June 9, 2013
An ongoing operating subsidy has become the proverbial “fly in the ointment” for Jefferson City’s plans to attract a conference center.
The two remaining developers that have submitted proposals unveiled details at a public session on Thursday. Neither ruled out the potential need for an operating subsidy from the city — which some council members have attempted to avoid.
The need for an operating subsidy also was among the reasons a third developer cited in withdrawing its proposal from consideration.
An operating subsidy is not the only disconnect between the city and the developers.
The city requested development plans for a facility with 30,000 square feet of exhibit space with an accompanying 200-room hotel.
Both developers deemed the request unworkable and proposed downsized projects.
Farmer Holding Company, a local developer, proposed a 20,000-square-foot facility with a 126-room hotel at the Capital Mall, which it recently acquired.
Ehrhardt Hospitality Group, based in Hannibal, unveiled a proposed 22,500-square-foot facility. The concept shows a 200-room hotel, but the developers favor a structure with 150 rooms.
Farmer Holding projects costs at $25 million, Ehrhardt at $36.8 million. The city has committed up to $9 million in lodging tax revenues for construction.
Negotiations are the obvious next step.
Each step forward, however, makes retreat more difficult — even if retreat remains the wisest course.
Elected city officials have an obligation to look ahead — at both best-case and worst-case scenarios.
A best-case scenario is a thriving conference center that enhances economic development and rewards private and public entities.
Worst-case scenarios revolve around a money-losing conference center that must be vacated or infused with a perpetual subsidy of city tax dollars.
The emergence of a subsidy is a signal to city officials to proceed with caution.
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