Corporate Welfare 101

Philadelphia Inquirer story on how the Lancaster Convention Center project has spun out of control – with dramatic cost increases (from an initial $30 million to over $100 million), how taxpayers have become increasingly responsible for the tab, and how a government authority stepped in to develop the hotel portion of the plan, so that investors wouldn’t have to pay property taxes.

And as for the economic development benefits of the project – well there really aren’t any of those either.

“I’ve been here for 20 years. Artists have been revitalizing the city all along,” said convention center critic April Koppenhaver, owner and founder of Mulberry Arts Studios.

“Altoona has a convention center; it sits empty. Scranton has a convention center. Now Lancaster?” she said. “Why does one state need all these convention centers? If you find one successful convention center, I’ll be surprised.”

Indeed, convention centers do not make money. “They lose money typically,” said Arthur Morris, Lancaster Convention Center Authority chairman and mayor in the 1980s.

While there isn’t as much analysis of the economic impact convention centers as sports stadiums, the general findings are pretty much the same – they do not have broader economic benefits for a community/region that justify their cost to taxpayers (i.e. they don’t “pay for themselves”).

In terms of improving the economic climate for other local businesses, convention centers (like sports stadiums) represent more of a shift in resources from one area to another, rather than a net growth.