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With an economy in recession like this one, what city has the extra revenue to shell out hundreds of millions on developments like a convention center hotel or a performing arts center? Apparently, with the help of Public Private Partnerships (PPPs), time has shown that spending this kind of money in a recessionary economy has made the difference in the way cities are weathering the economy. And, along with the success stories of cities and increasingly popular PPPs, more and more cities and municipalities are making the decision to build these great services despite government budget deficits.
But how are city revenues really improving with large public developments? Statistics show that they are giving new reasons for taxpayers and businesses to come to their area, and when that happens, local businesses reap the benefits. And for those cities that cannot afford such a large investment due to government budget deficits, it is creative financial solutions like PPPs that are helping cities continue to have the capacity to build these great developments.
For example, the Durham, North Carolina Performing Arts Center opened in 2008, right in the middle of a bad economy with the help of public-private partnerships. Taxpayers were concerned that Durham was “digging itself in another hole” and that the development was a waste of money. However, despite businesses in several other cities struggling to stay afloat, the Center for the Performing Arts in Durham, NC not only sold out immediately, but also created more clients for surrounding businesses in downtown Durham. .
So now you might wonder how PPPs are financing these great developments when city revenues and budgets are at an all-time low. Well, this particular development utilized PPP through the use of taxable Certificates of Participation reimbursed by a portion of the City’s Hotel Occupancy Tax and facility naming fees, a contribution from Duke University, a operator loan and various other sources, including a grant from the Center Revitalization Fund. And with these funds, the Performing Arts Center earned $ 1.2 million in city revenue in just its first two years.
And the Durham Performing Arts Center isn’t the only major development helping your city be better than others. And although it was not funded by PPP, the Dallas Convention Center Hotel helped generate additional revenue from the city before it opened, creating a much larger number of meetings and conventions to book through 2017 and is projected to generate much larger amounts of revenue from the city than the city originally. expected.
But despite evidence of several major developments generating city revenue rather than causing the city to go further into debt, taxpayers remain skeptical and often reject developments like these due to lack of knowledge. They just see huge dollar signs and automatically think that city tax dollars will go to waste. The Dallas Convention Center hotel was nearly rejected in a May 2009 referendum, and is now expected to generate a large amount of city revenue that pleases taxpayers.
Hopefully, over time, cities and taxpayers will do their research and realize that well thought out development by an experienced public developer, funded publicly or both publicly and privately with methods like PPPs, is truly a great investment for a city and it can be a win-win for everyone.