The idea of the city of Brunswick building a conference center on the site of the old Oglethorpe Hotel in downtown Brunswick really worries me.
The argument for building the conference center is standard — a conference center will provide strong economic juice to downtown Brunswick by bringing in visitors who will spend money at downtown shops and restaurants and by employing local folks who will spend money at downtown shops and restaurants.
A good-looking conference center would also enhance the aesthetics of downtown, which would increase property values and attract even more locals and out-of-towners.
Aesthetics matter. The Brunswick Urban Redevelopment Agency’s plan is for the conference center to have the look and spirit of the old Oglethorpe Hotel. That’s a smart call.
But the downside risk of the conference center project is enormous.
The city has $3 million on hand to build the conference center. The conference center is estimated to cost $8.1 million. In addition, the Urban Redevelopment Agency recommends building a three-story parking deck for the conference center. That’s likely another $5 or $6 million.
Such projects routinely come in over budget. So figure about $15 million to build the conference center and parking facility.
The roughly $12 million shortfall is likely to be raised by issuing debt. $12 million is a lot of debt for a little city with many needs to throw at a single project.
The hope, of course, is that the conference center will generate so much economic juice downtown that the project more than pays for itself.
How realistic is that hope?
Research on the conference and convention center business doesn’t inspire confidence.
Urban development specialists have been promoting conference or convention centers as a means of reinvigorating downtowns for decades. More than 400 communities across the country now have a conference or convention center. Glynn voters first approved a special-purpose, local-option sales tax (SPLOST) for a conference center back in 2001, when conference centers were all the rage.
Unfortunately, conference and convention centers frequently fail to deliver. Actual conference attendance routinely falls well below estimated attendance — which means actual visitor spending routinely falls well below estimated spending — and the centers routinely lose money.
And conference and convention business is very sensitive to the business cycle.
To have any chance of even a modest return on investment, downtown Brunswick’s conference center needs an accompanying hotel. But hoteliers are showing little interest in building a hotel downtown.
That’s a gigantic red flag.
When entrepreneurs smell a profit opportunity, they pounce. None are pouncing on a hotel for downtown Brunswick.
The lack of interest suggests that hoteliers don’t think a conference center in downtown Brunswick will succeed.
Perhaps hoteliers are waiting for the conference center to be built before they pounce. Perhaps.
But what if the conference center is built and hoteliers still don’t pounce? Then what?
Then the city of Brunswick will be saddled with a lot of debt that it will only be able to pay off by forgoing many other much needed projects. Instead of spurring downtown development, the conference center could set development back for years.
The alternative to a conference center is not an empty lot. It’s a mixed use building, a residential and commercial combination.
Downtown residents spend more money downtown than conference attendees will, and residents won’t leave when the business cycle turns down.
And we have local entrepreneurs ready to pounce on just such a mixed-use building.
Residential and commercial space, financed and managed by local entrepreneurs, is a much wiser investment than a conference center.
Don Mathews is a professor in the School of Business and Public Management at College of Coastal Georgia and works with the college’s Reg Murphy Center for Economic and Policy Studies.