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Vendor Fees: The other side of funding the Pueblo Convention Center

While half-cent sales tax money has been allocated to expand the Pueblo Convention Center to add 35,000 square-feet of space and, hopefully, more visitors, jobs and money into the local economy, it’s a different pot of sales tax funds – vendor fees – that keep the lights on and the building running.

In 1993, voters passed a measure to fund the construction of the convention center and pay for its operating deficit through vendor fees, a 3.3 percent portion of the total amount of sales tax collected from local businesses. Its original purpose was to be given back to merchants for the effort it took to collect taxes.

Today, that deficit at the convention center amounts to around $400,000 each year, and is only a small portion of the vendor fees that the Pueblo Urban Renewal Authority budgets each year.

Vendor fees serve two main functions. First, it covers the debt services on the convention center, which is expected to be paid off by 2019, and Memorial Hall bonds. Nearly all of the vendor fees goes toward the debt service, which is about $1.1 million of the $1.72 million that is collected annually.

That money also includes major projects and renovations. Most recently, the $14 million Memorial Hall renovation was made possible through vendor fees. Voters had the option of funding the expansion through vendor fees in 2007, but voted it down.

The remaining money, $664,393, is used to make up the convention center’s deficit and PURA’s asset management fee — PURA owns the convention center and charges a fee to manage it.

“Brian Hoffman (the convention center’s general manager) has been really aggressive about increasing sales and cutting costs.” – John Batey, PURA executive director

It takes around $400,000 to operate and maintain the convention center each year.

“There is not ot a lot of wiggle room for a growing (operation cost),” said PURA Executive Director John Batey. “We’d have to close down the facilities (if the cost exceeded the budget).”

Closing the facilities could mean closing down the convention center for a certain number of days throughout the year or cutting back on jobs at the convention center, Batey said.

It costs more money to run a bigger facility, but city officials are hopeful that a bigger space also means more events, more money and less of a deficit.

Batey said he doesn’t see possible closures as a major issue for the expansion, especially with the projections of the expansion.

“It is projected that in the first year of operation, the expanded convention center will generate revenue of $1.25 million and incur approximately $1.7 million in operating expenses, leaving a deficit of $406,000,” according to Hunden Strategic Partners, a Chicago-based analytical firm that studied the impact of the expansion in 2010.

By 2017 Hunden expects convention center revenue to be $1.9 million with $2 million in expenses, lessening the deficit as long as the facility meets the number of expected events and attendees.

In the past, the convention center has not been meeting its projected attendance. In 2013, the center brought in 6,748 less people than they budgeted.

Hunden noted in its report that from 2005 to 2009 the number of events at the convention center decreased but revenue increased.

“Brian Hoffman (the convention center’s general manager) has been really aggressive about increasing sales and cutting costs,” Batey said.

With a bigger space it’s expected the number events will increase, too. Hunden expects the convention center to attract 676 events by the fifth year after completion. In 2013, the convention center attracted 462, less than it originally projected.

Most of the events Hunden said the bigger facility would attract would still be “ dominated by ballroom and meeting room events, however, a number of large, high-impact events are projected, including 31 conferences, conventions and tradeshows, 15 consumer shows and 17 sporting or entertainment events using the exhibit hall annually.”

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Written by Kara Mason

Kara Mason is PULP's news editor. She is also the Society of Professional Journalists Colorado Pro Chapter president. Kara freelances for other regional publications, covering government, politics and the environment.

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