NO NONSENSE Baltimore can't wait any longer to expand its Convention Center, says Bob Hillman. Can he convince state legislators, who are in a budget-cutting mood?


For two hours of a House appropriations subcommittee hearing Feb. 13, Robert S. Hillman is undeniably the polished chairman of the Baltimore Convention Center Authority. He's stepped into the hearing spotlight to justify a $100,000 operating budget -- small change. He anticipates little friction.

The legislators have a different agenda. With a swift shift in emphasis, they put his entire project -- a projected $150 million-dollar Convention Center expansion -- on trial.

Mr. Hillman smoothly takes the defensive.

Every "Yes, Mr. Chairman," and "No, Madame delegate" politely punctuates Mr. Hillman's responses as he deftly fields the delegates' apprehensive queries, deflects their negative responses and respectfully defends the authority's recommendation that Charm City's Convention Center is in need of expansion ASAP -- as soon as possible. And, yes, the state assumes all risk.

When he's finished and out of the hot seat, a waste-no-words Hillman corners legislative budget analyst Richard S. Madaleno Jr. outside the hearing room. Only half-joking, he demands, "What were you trying to do, shove it up my a--?"

Meet the two Bob Hillmans.

This isn't a case of split or dueling personalities. Actually, both sides of Mr. Hillman are crucial to the matter at hand.

As Gov. William Donald Schaefer's personal choice to head up a group planning the Convention Center expansion, Mr. Hillman, a Harvard-educated attorney, certainly must rely on his savvy negotiating skills. But that alone won't cut it. Mr. Hillman must also lend to the authority his brash, no-nonsense style of attacking an issue.

Having sized up the situation, his authority aggressively backed up its conclusions. After all, money talks -- a $150 million dialogue may not be exactly what the legislature is ready to hear, especially in these days of recession and budget deficits.

The Baltimore Convention Center should, in fact, be doubled in size, the authority asserted in its report to the General Assembly in December. Festival Hall, a modular addition built six years ago as a temporary expansion, should be taken apart and replaced with a new wing of the center, the authority said.

By expanding, the Convention Center would, once again, be large enough to attract most conventions, the authority said.

That increase to 305,000 square feet of exhibition space, 87,000 square feet of meeting room and 40,000 square feet of special event rooms would make the center more competitive with cities such as Philadelphia, Charlotte, N.C., and Pittsburgh, all of which are building mega-meeting halls.

Even with 11 successful years to its credit, the Baltimore Convention Center has begun to fall behind its peers, the authority contends. When it first opened, the center's 115,000 square feet in exhibition space and 40,000 square feet in meeting rooms were sufficient for the needs of 85 percent of the associations, trade groups and other users of convention facilities. That ratio has slumped to 60 percent, the authority says.

The Convention Center doesn't offer enough room for exhibits, according to the Optical Society of America and the INDA-Association of the Non-Woven Fabrics Industry. Both groups, which have held conventions in Baltimore and liked the city, have scratched the city off their list for future meetings.

Another warning sign: Projected attendance already has begun to slump. Convention reservations, which are made years in advance, indicate that attendance could fall from 255,650 in 1992 to 191,000 in 1993.

To get the expansion project under way, the authority is requesting $2 million from the state for the initial engineering and architectural design. The start-up cash will pay for approximately one-third of the total design work, the authority says, and will help pin down the final price tag of the entire expansion.

Mr. Hillman is no newcomer to the convention business. Nearly ** two decades ago, he headed up the campaign that resulted in the birth of the Convention Center. Then, too, he took over the post at the request of then-Mayor Schaefer after completing a stint as labor commissioner for the city.

Mr. Hillman also is no stranger to the tourism and entertainment business. He organized the first City Fairs in the early '70s and in 1976, "Operation Sail," the festival honoring the historic tall ships.

Yet, these days, Mr. Hillman and his six-man authority may look more like masters of bad timing. With the General Assembly aggressively slicing expenses to offset a $500 million deficit for fiscal 1991 and a $115 million shortfall for the following year in the state budget and a regional epidemic of economic malaise, the authority has the audacity to suggest the state commit to what would be one of the Maryland's largest capital projects ever.

"I am opposed to it," Sen. Charles H. Smelser, D-Carroll, who chairs the Capital Budget Committee. "It is taking $2 million of general funds at a time when we are trying to balance a budget that is coming up short of revenues."

With that initial appropriation, the General Assembly would, in effect, be putting a stamp of approval on the $150 million expansion, argues Delegate Howard P. Rawlings, D-Baltimore.

And with state money obligated to huge investments such as the new baseball stadium at Camden Yards and the light-rail system -- both of which have run over budget -- some legislators are hesitant to back yet another expensive venture.

"We've been burned before," Mr. Rawlings said at the Feb. 13 House subcommittee hearing.

Mr. Hillman knows full well this project is no small venture. His hook to reel in legislative support during these shaky economic times is simple. "This is not a plan to spend state money. It's a plan to earn money for the state," he said at the legislative hearing.

Created by the Baltimore Convention Center Authority Act during last year's legislative term, the authority began its work by looking at the center as "a pure and simple investment for the state, city and surrounding areas," Mr. Hillman says. To begin that process, he and his colleagues went back to the very creation of the Convention Center in 1976 when a combination of state and Baltimore City funds paid for the center's construction.

The original structure cost $52 million to build, $17 million of which was contributed by Baltimore through federal grants, loans and other sources. The remaining $35 million was raised by selling state-backed general obligation bonds, the proceeds of which were then lent to the project.

The city provided the land, owned the new building and was bound by law to pay the state the difference should tax revenues not cover the principal and interest payments to bondholders.

The center quickly became an anchor for the city's rejuvenation. In a wave of hotel construction, the number of downtown hotel rooms more than quadrupled to 13,000 during the 11 years since the center opened. The hotels, which depend in large part on convention traffic to fill those rooms, now view the expansion as a means of reducing vacancy rates estimated at 40 percent. Last year, the center brought to the state nearly 700,000 tourists, traffic many downtown hotels depend on heavily for their own financial health.

"The Convention Center and the spirit of a new Baltimore created what is here today," Sheraton Inner Harbor General Manager Michael Whipple says of the revitalized Inner Harbor and the tourism it attracts. The expansion must occur, he says, "if Baltimore is going to stay in the tourism business and continue to grow."

About $240 million is spent by visitors to Baltimore during the convention season, according to Economics Research Associates, the consultant hired by the authority to evaluate the impact of conventions.

Tourist attractions count on the flow of visiting conventioneers, says Kathy Cloyd, senior director of marketing and visitors services at the National Aquarium. "We do see a lot of convention people who, if they get here early or have a little spare time, visit the Aquarium in their off hours," she says.

The flow of visitors into the city is the key to the Convention Center's role as an economic stimulus. Serving as a community "loss leader," rental rates at convention centers around the nation are kept purposefully low to lure conventions to town. Baltimore is no exception.

"The general concept is that conventions bring in new dollars to a community, so you want to make sure that you don't price yourself out of a market that's generating business to the hotels, restaurants, whatever," says Peggy Daidakis, who as executive director of the Convention Center manages its day-to-day operations. The Baltimore Convention Center ended 1990 $2.5 million in the red.

Cities rationalize that once a convention rolls into town, the money spent on food, lodging, entertainment and the taxes spun off these activities far outweigh the cost of running and maintaining a center. During the past 11 years, Baltimore Convention Center activity has spun off $58.5 million in state taxes alone. And, despite the operational losses, the city has never had to cover a shortfall.

"The initial investment in the Convention Center has paid off already," says J. Randall Evans, secretary of the Maryland Department of Economic and Employment Development. With five years remaining before the original bonds come due, the state has more than covered its principal and interest liability. All additional taxes collected until the notes come due can be viewed as profit returned to the state's general fund to pay other bills. Last year, the state collected profits of $6.5 million; the city more than $3 million.

The center's success has thrust Baltimore into the midst of the highly competitive convention industry. It's big business, with an estimated $30 billion collected annually in convention center rentals, hotels, airfares -- every aspect of getting to, staying in and enjoying a convention city. Like Baltimore, many of the nation's leading cities have built meeting halls to reap additional dollars for the local treasury without further burdening local taxpayers.

"It's clean money because we come in, spend the money and leave. You don't have to build schools, increase your sewers or build bigger waterworks for us," said Roy Evans, executive vice president of the Professional Convention Management Association, a Birmingham, Ala.-based group of meeting planners.

That money isn't confined to the city limits. Hotel tax collections, for example, have grown dramatically in neighboring counties since the center opened in 1979. Anne Arundel County has seen a 435 percent increase with $2.9 million in hotel taxes collected last year. Similarly, Baltimore County's revenues shot up 440 percent to more than $4 million, the authority reports.

These numbers speak directly to Mr. Hillman's revenue-earning rationale for the expansion. The tax revenues alone illustrate the center's track record of profitability and helped convince the authority that expansion is a viable means of promoting a stronger state economy and funneling fresh cash into state coffers.

"In the long run, there are just so many tax dollars you can get out of the people who live here," Mr. Hillman says. "We gotta develop new facets to the economy. The Convention Center is one we hit on that works."

The meeting industry has evolved steadily since the Baltimore Convention Center was built. Conventions are growing in popularity and size, as the nation's trade and professional associations devote thousands of square feet of exhibit space to showcase the latest technology and work practices of their respective industries, says Mr. Evans of the meeting planners association.

"The current facility doesn't meet the needs of this market," says Robert Keller, president of the Greater Baltimore Committee. "There's no such thing as treading water, you're either swimming or sinking. We need to swim in this," he insists.

The GBC is a strong lobbying force for the expansion, writing letters of support and meeting face-to-face with legislators.

Mr. Hillman organized three fact-finding trips, inviting legislators to travel to Chicago, Denver and Orlando, Fla., to speak firsthand with convention center officials in those cities. After tagging along on each daylong "intensive cram course on convention centers," Sen. Thomas P. O'Reilly says he was impressed by the need to upgrade Baltimore's meeting hall.

"Baltimore City is the jewel of the state. If we forget that, we as a state are going to be in trouble," says the Prince George's County Democrat and deputy majority leader. "This is just another step that prudence says we should be taking on behalf (( of the city and the state."

This time around, with more than three times the cash on the line, the authority is recommending that the state shoulder the full liability. After all, the state was the major benefactor from the creation of the Convention Center, Mr. Hillman asserts. He cites an estimated $240 million of convention-related dollars collected around the state as the cold, hard evidence. And with the dramatic decrease in federal funding Baltimore receives, "The city ain't got the money to guarantee it" this time, he states bluntly.

Baltimore will no longer control the center under the authority's proposal. The city will lease the building to the state for $1 a year. The authority has suggested its name be changed to reflect the state control, but that at least three of the governor's four appointees to the authority be Baltimore residents.

True to form, Mr. Hillman's organization seems to have covered all the bases.

"I've always found the facts and information [the authority] supplied us with have been right on the nose," observes Delegate Hattie N. Harrison, D-Baltimore, who supports the expansion.

The expansion is an idea that must stand on its own, Delegate Harrison says. It's no secret that Mr. Hillman and Governor Schaefer have been tight for the past 15 years. Mr. Hillman chaired the fund-raising drives for Mr. Schaefer's last three campaigns. At Mr. Hillman's office, a wall of memorabilia features snapshots, posters and other mementos picked up over the years, including a mock resolution proclaiming "Bob and Sandy Hillman Day," in appreciation for the couple Ms. Daidakis described as "Mr. and Mrs. Baltimore."

But winning legislative approval will be no easy task. There's always the argument that the expansion be put on hold, as Sen. William H. Amoss suggests.

"I don't want to sound like I'm against Baltimore City, but there are other priorities that are much more important," the Harford Democrat says.

But time's a-wasting, say Mr. Hillman and his allies.

"Even if all goes well, the soonest we could get into the building would be late '94, early '95," Mr. Chappell says. With many groups choosing sites now for 1995's convention season, Mr. Chappell says his office has already turned away potential bookings since he cannot guarantee the space they need.

"I don't think it makes sense to wait 'til business really stinks" before deciding to act, Mr. Hillman says, adding, "I think we're a year late."

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