After having signed off on plans for a $16.7 million convention center that include a $2.2 million land purchase and a $2 million increase in overall costs, Harlingen officials have refused to tell taxpayers how much more they think it will cost to operate.
Although the city has agreed to stake taxpayer dollars for half of a $1 million pool to cover convention center losses, in partnership with developer BC Lynd Hospitality, of San Antonio, city officials have chosen to keep secret how likely those losses might be.
And, at least for now, the Texas Attorney General agrees with Harlingen. An assistant attorney general in March denied a request by a local newspaper, The Valley Morning Star, to see revenue projections and a projected operating budget that were given to city commissioners by Brandon Raney, chief executive officer for BC Lynd in February.
Commissioners have refused to acknowledge having received those projections, according to the Morning Star. However, when the paper made a formal request of the Attorney General to see the information under the Texas Public Information Act, Harlingen city attorneys Rebecca Hayward and Alan Ozuna denied the city had received an operating budget proposal, but appealed for secrecy.
“This would give the center’s market competitors, the vendors, and users a competitive advantage, resulting in higher costs to the operation of the center, and lower revenue from users,” the attorneys wrote. “Release of this preliminary analysis would reveal to potential users and vendors the extent to which the city projects that its center will compete with market alternatives.”
Local governments have been relying on a 2015 state Supreme Court ruling, commonly referred to as the “Boeing Exception,” for keeping public business secret when it can be established that there is some competitive advantage at risk.
“The Boeing exception has gutted taxpayers’ ability to monitor and control expenditures of public funds,” Bill Aleshire, an Austin attorney and one of the state’s foremost experts on the Public Information Act, told The Texas Monitor Monday afternoon.
“Unfortunately, as the last legislative session showed, the governor and Texas Legislature thinks that’s okay. Those of us who fight in court for transparency will continue to do so, but the only likely solution will come when there is a governor and legislature who believe that taxpayers should be able to see contracts paid with public funds.”
From the experience of officials in the larger market, Harlingen taxpayers are going to be hard pressed to determine where the competitive advantage is. There isn’t a lot of money to be made in the convention center business.
“Is it a financial bonanza?,” Mayor Tony Martinez said of the Brownsville Event Center. “I don’t think so. What you all will find out is they break even and every so often you make a little money.”
The city’s 17-year-old event center made $4,486 on revenues of $714,223 in 2015-2016, according to a story in The Brownsville Herald.
Last year the 26-year-old South Padre Convention Centre had expenditures of $1.7 million, and revenues of $2.1 million. Hotel occupancy taxes, however, made up $1.7 million of those revenues.
“It is doing, in my opinion, very well. It’s booked up quite a bit,” South Padre Island Mayor Dennis Stahl told The Herald. “Most convention centers don’t necessarily make a lot of money but they create hotel occupancy taxes and sales tax and other sources of income.”
The same cannot be said for the 11-year-old McAllen Convention Center, which lost $2.3 million in 2015-16, spending $4.7 million and bringing in $2.4 million.
And add to the alternatives in the market the $17 million event center the city of Mission opened in March.
Still, Harlingen city officials hailed the approval of its own convention center in July of 2016. “This is a big day for the city of Harlingen,” Mayor Chris Boswell said at the time. “It’s a new beginning.”
In a little over a year, the estimated cost of the project ballooned from $14.8 million to $16.7 million. The city cobbled together a package, $12.8 million in bond, tax increment financing, and hotel-motel tax funds balance, all but a small amount backed by taxpayers.
Of that financing total, $500,000 is the city’s half of the $1 million deficit buffer shared with BC Lynd for the first two years of operation. Lynd is also building a 150-room Hilton Garden Inn that will be part of the convention center, but operated separately.
While Boswell would like the convention center to turn a profit, he told the Morning Star taxpayers should think of it in the same way they think of a city-run soccer complex.
“We spend money to have amenities available for the community’s residents and visitors,” he said. “Every park and every municipal building costs money.”
Mark Lisheron can be reached at [email protected].