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Rewards of hosting political convention wrapped in risks for Pittsburgh

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Saturday, May 10, 2014, 12:01 a.m.
 

Johnny Bitter would close his burrito shop and head to the beach if another political convention landed in downtown Charlotte.

Bitter, owner of Johnny Burrito, a downtown lunch counter, said the 2012 Democratic National Convention was a big winner for businesses such as hotels and restaurants catering to the convention trade, but a bust for mom-and-pop shops.

“You either made a lot of money, or you lost a lot of money,” he said. “All of my business basically dried up. Little mom-and-pops like us lost out, and there were a lot of us.”

Democrats invited Pittsburgh and 14 other cities to apply for their presidential nominating convention in 2016, and the city's political leaders say they are lining up potential corporate sponsors to back the city's bid, which is due by June.

“We've been having discussions with the corporate community on this,” said Allegheny County Executive Rich Fitzgerald, who declined to name the corporations. “They've been pretty productive discussions so far.”

Pittsburgh Mayor Bill Peduto, who was in Germany through Friday, has said the event must generate more than national recognition for Pittsburgh to get his support. It would have to benefit residents and businesses, he said.

Opinions vary on whether that's possible.

Organizers say mega-events pump millions of dollars into urban economies, but critics disagree, saying formulas for calculating financial impact are flawed.

Victor A. Matheson, professor of economics at College of the Holy Cross in Worcester, Mass., said conventions bring headaches but little else to host cities.

Matheson, who has studied the economics of quadrennial political conventions from 1972 through 2004, said organizers apply complex formulas to measure economic impact. What they don't factor, he said, is how much business is lost during the four or five days a convention is in town.

“These folks are pretty good at adding and multiplying, but they're not very good at subtracting,” he said. “We couldn't identify any positive economic boost from these events.”

Studies commissioned by Charlotte and Tampa, which hosted the 2012 Republican National Convention, conflict.

The Democratic convention drew 35,000 visitors to Charlotte and generated $163.6 million in business sales, according to Charlotte's report.

The Republican convention brought 50,000 visitors and $214 million to the Tampa region, according to the Tampa Bay Host Committee.

“I can say just on common sense alone that if you bring in tens of thousands of people who are using all the transportation, eating at all the restaurants and staying in all the hotel rooms, there is an economic impact,” said Republican National Committee spokesman Sean Spicer. “To argue there is no economic impact is not accurate.”

Ken Jones, a Tampa lawyer who chaired the host committee, said late August, when the convention happened, is Tampa's slow season.

“We can demonstrate with our receipts that a lot of money was spent that wouldn't have otherwise been spent,” Jones said.

Pittsburgh likely would have a budget of about $130 million for the event in 2016, based on cost estimates and what the federal government has contributed toward security costs at political conventions.

U.S. Rep. Mike Doyle, D-Forest Hills, estimated the host committee for Pittsburgh would have to raise about $60 million in donations. The rest would come from taxpayers.

Congress in 2012 supplied up to $50 million for security, plus $18.2 million that comes from taxpayers who agree to give $3 from tax returns by checking a box labeled “Presidential Election Campaign.”

Tampa reported it contributed about $676,000 in city funds.

Congress recently voted to eliminate the $3 tax form contribution to political campaigns, which means conventions starting in 2016 would have to cut back or raise more money. Party officials say they are working to restore the funding.

Another possible complication for Pittsburgh is whether Democrats will accept corporate contributions. They did not when they started fundraising for the 2012 convention, but eventually had to rely on a $10 million loan from Duke Energy, based in Charlotte. Duke later forgave the loan.

Party officials said they have not decided whether to tap corporate contributions in 2016.

Peduto Chief of Staff Kevin Acklin said cash-strapped Pittsburgh cannot afford to pay for a convention. Officials are talking with executives to gauge financial support from the private sector.

“We'd love to land this for Pittsburgh,” he said. “We think it would be good for the city. The question is whether or not we have the capacity right now to raise the money, and that's what we're looking at.”

Bob Bauder is a Trib Total Media staff writer. Reach him at 412-765-2312 or bbauder@tribweb.com. Staff writer Tom Fontaine contributed to this report.

 

 

 
 


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