This is a longer version of a letter to the editor, by Schaumburg resident Barry Newman, that originally appeared in the Daily Herald on March 1st, 2010.

There is greater truth to the unintended meaning of the front page headline in the 2/17 Daily Herald: “Convention center had a great fall”. The story is based on Marriott’s upwardly revised 2010 business plan for the convention center/hotel, which I heard about at the Village Board’s 2/16 Committee of the Whole meeting.

The revised plan predicts that the convention center/hotel will contribute $2.6 million this year to its 2010 $11.4 million debt service expense. Another $5.9 million comes from various taxes that we pay and/or collect. Because of the convention center/hotel’s deficit, we have to use about $3 million from fast-dwindling reserves to make ends meet.

This isn’t the way it was supposed to be – certainly not what the Village Board cheerleaders for the convention center/hotel wanted to believe it would be. The $225 million facility went forward in 2004 based upon Village Board acceptance of the feasibility study/financial projections made by consultant HVS, which remains the facility’s asset manager.

The 2004 HVS study projected that in 2010, the convention center/hotel would contribute about $7 million to the $11.4 million interest due. Village Board President Al Larson publicly believed HVS’s study underestimated the convention center/hotel’s potential, stating in the now-defunct Schaumburg Review on 6/17/04: “If I were to rate the study on a scale of 1 to 10, with 10 being the most optimistic and 1 being the most conservative, I’d give it a 3.”

Conversely, I was quite skeptical about the HVS projections and concerned about the risk to Schaumburg taxpayers. On 6/25/04, I presented to the Village Board the views of renowned convention center analyst Professor Heywood Sanders. Based on HVS projection performances on older convention center projects, Professor Sanders thought the actual revenue would be closer to 50% of what HVS projected, with accompanying dire warnings unheeded by the Village Board.

The reality is that Marriott’s upwardly revised projections for 2010 are only 37% of what was projected to occur. Now that gives truth to the headline: “Convention Center had a great fall”.

It is now left to Schaumburg taxpayers to pick up the pieces. What do we do, besides pay higher and higher taxes to cover convention center/hotel losses?

It has been suggested that we sell it now, while interest rates are low. But, interest in buying the facility is likely also low, given the economic climate and the limited (if non-existent) market for privately-held convention centers. Rightly or wrongly, it’s our asset and our best interests are to maximize its value, if only to minimize our eventual property tax bailout.

The time is ripe for a top-to-bottom review of the convention center/hotel by a probing Village Board or independent citizen committee. Revenue enhancers and operational efficiencies should be brainstormed within the community. When we have done all we can to make it as attractive an asset as possible, all options should be on the table for civic discussion and Village Board action.

Barry Newman
Schaumburg, IL

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