This week’s “Daily Journal” guest columnist is Dr. Michael Sanera, Research Director and Local Government Analyst for the John Locke Foundation.
Some people look at the oak tree shimmer wall outside the new Raleigh Convention Center and see a sign of success — a final flourish for a $1 billion renovation of the once dismal downtown cityscape. But the much acclaimed success story comes with some bitter truths.
As Clint Atkins and I show in our September John Locke Foundation Regional Brief, the RCC’s “success” is based on offering RCC users room rental discounts averaging 60 percent for a total of $2.3 million. Wake County and Raleigh taxpayers are not only paying for those deep discounts, they are paying subsidies to organizations to use the facility, nearly $330,000 the first year alone. That is not the end of the bad news for taxpayers. City officials have rigged the books so that no one will be able to track the size of inevitable losses in the future.
First, the city budget consolidates the accounts for the RCC and the Progress Energy Center for the Performing Arts. Thus, revenues and expenses are commingled — making it impossible to separate the losses of the RCC from the losses of the Progress Energy Center.
Second, all food served in the RCC is provided by Centerplate Inc., a private company. The city shares Centerplate’s food service profit, but unfortunately for the public, the city signed a contract with Centerplate that gives city officials the only access to the books. There is no way that the public, news media, or any independent party can verify the city’s share of the profit for a particular convention or meeting. For example, RCC has given free rooms worth $5,000 to Rex Hospital for its Christmas gala. It is impossible for an independent party to see if the city’s portion of the profit from the food will make up for the loss of $5,000 for the rooms.
Third, the city manages its departments by establishing performance indicators that provide measurements of progress toward goals. Performance indicators for the RCC are meaningless. For example, the RCC reports on the number of “conventions and trade shows” and the number “convention and trade show attendees.” These indicators are meaningless because there is no definition of the terms. RCC officials are free to report almost any meeting as a convention due to the lack of a definition.
Furthermore, why use meaningless indicators when activities of the RCC are easily quantifiable? Why not report the amount of revenues received compared to the expenses, including the repayment of the bonds? Why not measure RCC utilization by comparing the number of square feet rented to the total square feet available? These performance indicators tell members of the public whether their tax money is producing results or if they have been hoodwinked into supporting a money pit.
Finally, the RCC and the Greater Raleigh Convention and Visitors Bureau have established a taxpayer-supported fund to subsidize organizations when they use the RCC — in other words, to bribe organizations to use the RCC. Currently the criteria used by staff to recommend subsidies are unclear. The process is clear. RCC and GRCVB staffs make recommendations to the city and county managers, who can approve subsidies up to $100,000. The Raleigh City Council and the Wake County Commission must approve subsidies over that amount.
Consider this sweetheart deal. N.C. State University was awarded a $96,000 subsidy to use the RCC for a conference for N.C. Community College officials. Thus Wake County taxpayers are subsidizing a conference to be attended by university and community college officials who will have their expenses reimbursed by state and county taxpayers. It’s a great deal, unless of course you are a taxpayer footing the bill.
The history of the RCC is yet to be written. Unfortunately, taxpayers will not be part of that history. As the years go by, taxpayers will continue to pay the bills for an unaccountable operation because city and county officials have chosen to hide the financial realities from the public.