Our Opinion: Subsidy talk signals city must proceed with caution

News Tribune editorial

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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