Cincinnati leaders grapple with potential U.S. Bank Arena, F.C. Cincinnati, convention needs

Can we afford stadium, arena, convention center?
Posted at 5:00 AM, May 01, 2017
and last updated 2017-05-01 07:53:32-04

CINCINNATI -- For years, local tourism officials have worried that without a renovation to the Duke Energy Convention Center and The Millennium hotel across the street, the city would see a big drop in visitors.

“We’re losing business right now,” said Mike Laatsch, chief operating officer of the Cincinnati USA Convention & Visitors Bureau. “We’re trying to sell business in 2018 and 2019 and 2020, and if we don’t have an acceptable host hotel, we are not being considered.”

If taxpayers don't kick in for a major renovation that adds 100,000 square feet of space and and a bigger, modern host hotel, Laatsch predicts the city will begin to lose 100,000 room nights a year booked by tourists beginning in 2022.

“That’s day in and day out business we would be losing,” Laatsch said.

But competition just got stiffer for those tax dollars, if any become available at all.   

Two weeks ago U.S. Bank Arena announced it had won a bid to host the NCAA men’s basketball tournament for the first time since 1992, on the condition that the 42-year-old building underwent long-awaited renovations. Those first and second-round tournament games would be played in 2022.

Meanwhile, FC Cincinnati hopes to play its first Major League Soccer game in 2020. The soccer club, which currently plays at University of Cincinnati’s Nippert Stadium, submitted its MLS bid in January. The team must have its own stadium plan to be selected.

FC Cincinnati is making a bid to join the MLS.

Laatsch insists convention center renovations should be a top priority for taxpayer dollars, ahead of March Madness or a new major league soccer franchise, because it drives the “meat and potatoes” of tourism business.

While neither FC Cincinnati or U.S. Bank Arena has made a formal request for money from the city of Cincinnati or Hamilton County, leaders are already talking about the possibility that they might.

U.S. Bank Arena leaders were unavailable for comment last week and FC Cincinnati representatives declined to comment.

“We all want to see a new and improved U.S. Bank Arena. I don’t know of any plan right now that would make sense for taxpayer dollars to go into that,” said Cincinnati Mayor John Cranley, who also said taxpayer dollars should not be spent on a new soccer stadium.

Hamilton County Commission President Todd Portune requested the county's administrator put together a list to look at what the county can -- or can’t -- afford to take on when it comes to new development projects.

“My intent is, by the end of the year, to be able to be in position to lay out what I think the county’s role needs to be in all of these things,” Portune said.

‘It’s just one weekend’

Several local leaders interviewed for this story said they would have a hard time supporting projects – such as a soccer stadium – that only have one use.

For example, Hamilton County Commissioner Chris Monzel wouldn’t support spending taxpayer dollars to rebuild U.S. Bank Arena. But, he would consider the project if it were combined with the convention center. Portune has also floated the idea. 

“I love March Madness, I love NCAA basketball and I think it would be great to have them here," Monzel, a Republican, said. "But when you look at it, it’s just one weekend. How much money are we really going to gross? We’ve got to start looking at different ways to do these projects.”

The U.S. Bank Arena just won a bid for 2022 March Madness games, if they make long-awaited renovations.

Combining the convention center and arena is an idea Laatsch is willing to consider.

“If there was a vision and a community discussion of how we might link those two projects, I think we would be very supportive of that kind of conversation,” Laatsch said. “The challenge becomes timing.”

If the two projects were joined, Laatsch said the price tag would get steeper, the timeline would get longer, and funding pathways could become less clear.

A joint project could be tricky because the convention center is publicly owned and U.S. Bank Arena is privately owned.

Funding for a new convention center could be a tough sell.

The city and county are still paying off a $135 million renovation of the convention center from 2006. Nearly $65 million of that debt remains and isn’t scheduled to be paid off until 2033. That debt is paid using some of the city and county’s hotel tax revenue.

“That renovation had more to do with back-of-the-house, operation aspects, and updating systems," Laatsch said. "It didn’t really create any additional space -- it was only about 20,000 square feet.” 

Back in 2006, those renovations made sense, Laatsch said. But the revitalization of Over-the-Rhine, Downtown and The Banks have made Cincinnati a much more attractive destination than it was 10 years ago. More people want to hold conventions here, and Cincinnati is competing against popular cities such as Portland and Austin.

Currently Cincinnati brings in 250,000 hotel room night stays each year. That number could grow to 400,000 with a new convention center, or drop to 150,000 without one, Laatsch said.

City Councilwoman Amy Murray understands the need for a new convention center, she just doesn’t think local taxpayers want to pay for it.

“The convention center attracts a lot of business Downtown and we need an expanded convention center and definitely an appropriate convention hotel,” Murray, a Republican said. “It just depends on where the money comes from. I don’t think anyone has appetite for tax increases.”

A new hotel tax, paid mostly by tourists, could be the solution to paying for a new convention center.

But the city, which at 10.5 percent has one of the highest hotel taxes in the state, needs to be careful about pricing itself out of the market.

“Any plan to spend hotel/motel tax on expanding the convention center is something we should work out with the hotels, to make sure it doesn’t it price them out of competition,” Cranley said. “But I think there is interest there in using some of those dollars for expansion.”

Ultimately, Laatsch said the visitor’s bureau will be pushing to make sure the convention center stays ahead of newer projects.

“As we look around the market at infrastructure needs, we will advocate this as the highest, most urgent priority to get the convention center and hotel at the top of the list,” Laatsch said. “While we have plenty of needs, and every city does, we think we can make a case that this is a priority.”