With Convention Centers Its Tit For Tat

March 2, 2007
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GRAND RAPIDS — If Cobo Center becomes a tax-free zone, then so should DeVos Place.

At least that's the opinion offered by Kent County Administrator and Controller Daryl Delabbio in response to a request made by Wayne County Executive Robert Ficano in his recent state of the county address. And it would be difficult to find someone in the local hospitality industry that would disagree with Delabbio's reply.

In his speech, Ficano called on state lawmakers and Gov. Jennifer Granholm to waive the 6 percent sales tax on purchases made at Detroit's convention facility. He said having a tax-free zone would be a strong incentive to lure consumer shows to Cobo, especially when the center is competing with out-of-town and out-of-state venues.

"The no-tax zone would give Cobo a marketing tool to attract other conventions that wanted to buy and sell their products or services," said Ficano in his address.

"This will definitely give us an advantage over Chicago, even Las Vegas and other major convention areas," he added.

But it could create a disadvantage for Grand Rapids, unless

DeVos Place
would get the same consideration. The city's new convention center is competing with larger markets than the old GrandCenter did, and dropping the sales tax at Cobo could make that competition even tougher.

Big ticket items such as boats and cars would become thousands of dollars cheaper to buy, while smaller ticket items such as televisions would become hundreds of dollars less. A buyer could save $3,000 on a car priced at $50,000 and $240 on a $4,000 high-definition television, if purchased on a no-tax basis.

If

DeVos Place
became a tax-free facility, merchants throughout the region and possibly the Midwest would commit to shows in the building. Of course, the downside is that local sellers not involved with the shows would probably see their sales decline.

But a couple of things about Ficano's request struck Delabbio. First, he said the state would have to give up a "considerable amount of revenue" to establish the zone at Cobo. Second, he noted Granholm supports the Cobo expansion plan Ficano presented earlier.

"That bothers me a lot," he said, "because it will take money out of my pocket."

Ficano wants to expand Cobo by 270,000 square feet and wants to pay for it by having lawmakers extend the hotel and liquor tax that is collected from counties past its expiration year of 2015. The Cobo work would cost $968 million, and Ficano wants the tax extended to the year 2050 to help pay for the expansion.

KentCounty would lose about $3 million in revenue each year from the liquor tax if the state extends the time period. The county gives half of that tax to Network 180, a nonprofit that offers treatment for substance abuse.

"I think it would be a big mistake," said Delabbio. "We are currently watching, as part of our legislative priorities, the Ficano plan as it relates to Cobo Hall."

Consumer shows at the convention center are expected to take in $208,450 this fiscal year and account for a third of the building's total event income by year's end on June 30.

Delabbio said a tax-free zone would be a good incentive to draw more of those shows to the convention center. More shows mean more revenue for the building and for hotels and motels in the county. More lodging guests result in more revenue for the lodging excise tax, which the county uses to make the bond payments for the construction of

DeVos Place
 

So if Cobo gets that designation, Delabbio thought lawmakers and Granholm should give it to

DeVos Place
, too.

"I think that they should," he said, "but I'm not sure that they would."   

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