DALLAS - Phoenix has already won voter support for a $300 million revenue bond issue to build a convention center that business leaders say is vital to the city's future. But without approval from the Arizona Legislature for the other half of the funding, plans for the most expensive downtown project in the city's history could end up on the shelf.
To make the new convention center a reality, Phoenix needs $300 million from the state before it can even contemplate the bond issue, since the measure approved last year stipulated the city needed matching funds in order to build.
But winning approval of $300 million from a Legislature that must cut nearly that much from the current spending plan and about $1 billion from the fiscal 2004 budget will prove an uphill struggle, city officials admit.
To keep plans for the 940,000-square-foot convention center alive, Phoenix Mayor Skip Rimza has lobbied Arizona's incoming Democratic Governor-elect Janet Napolitano and legislative leaders.
Napolitano has not opposed state funding for the project but says she hopes Phoenix will keep the state's financial crisis in mind. Lawmakers have expressed conditional support for the project, which Rimza pitches as a job-creation effort.
Business leaders say the city needs the convention center to compete with Las Vegas, San Diego, and other major cities that boast much larger facilities. With the expansion, Phoenix would become the ninth-largest convention site in the nation, jumping from its current ranking as the 60th. The new complex would also accelerate the revival downtown and bring hundreds of millions of dollars in new revenue to the city and state, backers say.
"Standing pat for one decade would inflict a terrible wound to Arizona's exposed visitor industry," said William T. Smith, chairman of the Greater Phoenix Convention & Visitors Bureau.
Nonetheless, doubts about the national economy and a possible overcapacity of convention space will dog promoters when the Legislature convenes next month. Of 12 cities that have expanded their convention centers in the past decade, none have reached their attendance targets, according to the Arizona Republic.
Finance plans for the convention center do not require actual debt payments from the state until 2009, when the project is complete, Rimza points out. Initially, the state will pay $5 million in the first year, with debt service growing to nearly $29 million as the bonds near their 30-year final maturities.
While the city believes revenues from the project would pay for the debt service, taxpayers would be required to cover the difference if projections fall short. Phoenix would service the debt from its Civic Plaza Fund, which earns about $35 million a year in taxes from hotels, restaurants, and other sources.
Arizona receives about $23.5 million a year in tax revenues from Civic Plaza business, including the convention center. The city projects that figure could increase to $47 million.