Monday, March 1, 1999

Hawaii Convention Center

Auditor: Convention
estimates unrealistic

The report proposes keeping
the center authority alive

By Russ Lynch


Original estimates of revenues that the $350 million Hawaii Convention Center would bring to the state have proved to be unrealistic, according to a new report from the state auditor, Marion Higa.

That's one reason some see the center as a waste of public money, the report said. An even more important reason, however, is that the specific purpose of the convention center was never stated in detail in the legislation that created it or in its development and operating rules, said the report issued today.

"Prior projections of bookings and revenues were overly optimistic and have led the public and the Legislature to expect more from the convention center than it can provide," the report said.

Questions need to be answered, such as whether the center should be open to local events, Higa said. If its purpose really is to generate tax spending in Hawaii by conventioneers from outside the state, regardless of whether the center itself operates at a loss, that needs to be made clear in legislation and operating rules, Higa said.

Meanwhile, the report commends the Convention Center Authority for the way it has carried out the job it was given. Higa proposes that authority should not go out of business, which is supposed to happen on June 30 under existing law, until all the issues about what the center is supposed to do and produce are resolved.

The 1995 environmental impact statement that persuaded Gov. Ben Cayetano to sign the design-build contract estimated that in its sixth year the center would attract about 52 events, the equivalent of one a week, for an annual total of 322,400-390,000 attendees.

Now the Hawaii Visitors & Convention Bureau has estimated that no more than 30-35 events, with a total of 150,000-175,000 attendees, could be held in one year, Higa said.

After the convention center authority questioned that estimate, saying the center was designed to hold several events simultaneously, Higa softened her report to say the capacity question needs examining. She acknowledged that such questions are being addressed by independent auditors working with the convention center authority.

Capacity is not a problem now, since bookings for the 1999-00 fiscal year, targeted to produce 25 events, are running at only 12 events so far.

The center itself is expected to operate at a deficit of about $4 million in each of the next two fiscal years.

That's because rent and exhibit fees of $8 million to $9 million will be more than wiped out by expenses of $12 million to $13 million a year.

Convention center supporters say the center was never expected to operate at a profit. Its purpose throughout has been to attract conventions that will bring in visitors from out of state, particularly at slack times, say the Hawaii Visitors & Convention Bureau and other supporters.

The tax revenues from their spending should more than compensate for the operating deficit at the center and what the state spends in payments on the development loans, the theory goes.

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