Anchorage Daily News

The proponents of Anchorage's $111 million convention center, which just opened in the heart of downtown, are crowing.

During a recent celebration in the center's lobby, the project's leaders ticked off the ways their critics were wrong.

The new Dena'ina Civic and Convention Center is a success story, they said, opening on time and on budget.

And as city officials promised, no local property taxes are paying for it.

For most of the past decade, the expensive project had been controversial, mainly because Anchorage taxpayers worried they would have to foot the bill. Voters rejected the proposal in 2002 but then changed their minds and approved it three years later.

Now that the traffic-snarling construction at the center and an adjacent parking garage is finished, the block-sized building with concrete walls and soaring windows is finally in plain view. It is an attractive addition to downtown, out-of-town visitors and nearby small business owners say.

"It's well-built," said Ted Falgout, a Louisiana seaport director who spent several days at the center last week. He flew to Anchorage for the center's first big conference, which brought 600 port officials to town.

"It's beautiful," said Karin Johnson, owner of the Dark Horse Coffee Shop, who stares at it every day. The center is directly across the street.

But for all of its positive points, the Dena'ina Convention Center is not a worry-free zone.

In its first full year, the center will likely lose a lot more money than voters were told.

And the prospects for attracting enough big, new events to Anchorage to help whittle away future losses are uncertain.

A BIGGER LOSS

At 215,000 square feet, the new center is twice as big as the Egan Center, which will remain open two blocks away.

Having a spacious, attractive building was the main appeal for the project's backers. Anchorage can now host more conventions at the same time, and much bigger ones.

To pay for the building, voters agreed to raise the city's hotel-room tax to 12 percent from 8 percent, with the additional money paying for construction debt and operating losses of the Dena'ina and Egan.

Before the center was approved, the project's planners projected that the two centers would operate at an annual $1 million loss, which hotel taxes would cover.

But the current projection is $1.47 million in losses for 2009, just $130,000 shy of the $1.6 million cap on annual subsidies to the two centers.

Most convention centers, including the ones in Anchorage, operate at a loss. But some experts think that problem is getting worse due to a glut of new convention centers around the country, the troubled economy and rising energy costs.

"Centers like Dena'ina face a very competitive buyers' market. ... Their capacity to generate revenue is limited," said Heyward Sanders, an urban studies professor at the University of Texas-San Antonio who wrote a report for the Brookings Institute on the subject several years ago. Sanders recently has observed operating losses double at a few convention centers in the Lower 48, he said.

But Anchorage officials believe the losses attributable to the new center will shrink after next year.

Julie Saupe said she thinks the two centers' annual losses can be lowered to $500,000 to $750,000 in a few years. Saupe is chief executive of the Anchorage Convention & Visitors Bureau, which runs the Dena'ina and Egan centers.

"In my mind, the first year will be the biggest deficit," she said.

The size of the deficit is a critical number to Saupe. If the losses exceed $1.6 million, her visitors bureau will have to pay the difference from its share of the city's hotel-room tax.

That means the bureau's marketing money, used to promote the city to visitors, could be eroded.

"It's a built-in incentive for us to do our job," Saupe said.

WILL THEY COME?

Seven out-of-state conventions between 2009 and 2012 have been booked so far at the new center, at least one next year.

The project's backers said three years ago that it would take a while for Dena'ina to ramp up but that they eventually wanted to lure five to 10 conventions per year too big or too high-end for the Egan Center.

Saupe said that goal hasn't changed but it will take some time to get to that level.

At least several of the upcoming conventions are too big for Egan. And some smaller ones would not have come to Anchorage without the new center because Egan was not an attractive venue for them, city officials said.

By the new center's fifth year, it would attract 40,000 more people than could be hosted at Egan, a 2001 report predicted.

So how is the center doing so far?

It is booked for 71,640 guests next year. That number will likely grow significantly in the coming months, city officials said.

But it includes many local events that previously were hosted in other buildings, such as the Egan and Performing Arts centers.

The visitors bureau did not provide an estimate of the guest traffic next year due solely to the opening of the Dena'ina center.

"That's the big question mark," Sanders said of attracting lots of new conventions.

"You are going to have to compete against a lot of other centers in a buyers' market," he said.

STAYING ON BUDGET

The convention center cost hit the budget target, although its price tag changed before construction began.

In 2005, Anchorage voters approved a hotel-tax increase to pay for what city officials described as a $93 million convention center.

But later in the year as construction plans firmed up, the center's price tag was pegged at $103 million. The square footage increased but other amenities, including sidewalk improvements, were dropped.

In 2006, the construction project's backers, the nonprofit corporation CIVIC Ventures Inc., raised $111 million from selling bonds to pay for the center. The project was still budgeted at $103 million but CIVIC Ventures said extra money would be available for enhancements.

When it opened last month, the center was still on that budget. The extra money raised from the bond sale was used to restore some of the amenities that had been trimmed before -- such as furniture and heated sidewalks.

Also, the opening time -- September -- didn't change.

"It's an extremely good start for the building and hopefully a good omen," Saupe said.

TAX REVENUE SOARS

A key to paying for the center is the hotel-room tax, some of which is used to repay the construction debt. So far, the city is raking in more money than it budgeted.

The project's financing plan conservatively projected that revenue from the hotel-room tax would rise 1 percent per year.

Instead, tax revenue has risen 6 percent annually so far, said Sharon Weddleton, the city's chief fiscal officer.

That isn't just helping pay down the debt. Once the yearly bond payments are covered, the extra tax revenue can be tapped to pay for operating expenses and improvements at Egan and Dena'ina.

MIXED BLESSINGS

Thanks to the new center's massive floor space, Bill Webb, who operates the city's biggest holiday arts and crafts shows, will not have to turn away any artists for the first time in 15 years.

"We had 50 to 60 vendors last year that couldn't get in. This year, I've got plenty of room (for everyone)," Webb said.

He's moving the show to the Dena'ina center because the new building is better suited to host a large craft show than its usual venues and it can accommodate a bigger crowd too.

The catch is, because of the new center's more expensive rates -- leasing the exhibit hall all day costs roughly $12,000 -- it might take a while for the shows to be as profitable as they were at Egan or the Performing Arts Center, he said.

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Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.

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Inside the Dena'ina Civic and Convention Center

Total cost: $111 million

Size: 215,000 square feet

Largest single event capacity: 5,000 people

Largest number of meals that can be served: 3,300

Ballroom: 25,000 square feet

Exhibit Hall: 50,000 square feet

Meeting rooms: six, each between 1,700 and 5,252 square feet

Amount required to be spent on art: $800,000

Biggest event booked so far: USA Canada Lions Leadership Forum in 2011, with 3,200 delegates.

Name origin: The Dena'ina people were the original inhabitants of the Cook Inlet region, arriving at the end of the last Ice Age. There are fewer than 50 Dena'ina language speakers left.

Public open house

When: Saturday, Oct. 18, from 10 a.m. to 8 p.m. and Sunday, Oct. 19, from 10 a.m. to 5 p.m.

Location: The Dena'ina Civic and Convention Center

Ribbon cutting and Athabaskan blessing: Saturday, 11 a.m.

What else: A street fair, children's activities, fashion shows and other events.

Conventions scheduled

National conventions scheduled for Dena'ina include:

2009: National Association of Postmasters of the United States: 1,500 delegates.

2010: National Defense Transportation Association: 1,200 delegates.

2011: USA Canada Lions Leadership Forum, 3,200 delegates.

2011: IEE Systems, Man and Cybernetics Conference, 800 delegates.

2012: American Astronomical Society: 1,100 delegates.

2012: Academy of Certified Hazardous Materials Managers, 800 delegates.

2014: International Epidemiological Association World Congress, 2,000 delegates.

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