SEA seeks help for center's bills - PittsburghLIVE.com The city-county authority had counted on the slots money to cover operating losses at the convention center, to pay off debt from its construction and to repay a 2004 loan taken out to cover earlier losses at the convention center. The state has allocated one slots-casino license for Pittsburgh, but such a facility is at least a year away from opening.
These guys are doing it all wrong. They are barking up the wrong tree with the wrong tune.
The time is right for the debt to go away. To get rid of the debt, get rid of its source. Then everyone wins.
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SEA seeks help for center's bills
By Glenn May
TRIBUNE-REVIEW
Friday, August 26, 2005
After coming up lemons on a $3.3 million gamble that slots-casino money would balance its 2005 budget for the David L. Lawrence Convention Center, the Sports & Exhibition Authority now hopes Gov. Ed Rendell will take an IOU to cover the agency's marker.
The city-county authority had counted on the slots money to cover operating losses at the convention center, to pay off debt from its construction and to repay a 2004 loan taken out to cover earlier losses at the convention center. The state has allocated one slots-casino license for Pittsburgh, but such a facility is at least a year away from opening.
The convention center's bills are here, now.
State Rep. Paul Costa, D-Wilkins, said he and state Sen. Sean Logan, D-Monroeville, who both sit on the SEA board, have asked Rendell to rescue the troubled agency.
"He and I have been trying to work with the governor's office to work out an arrangement -- maybe a zero-interest loan," Costa said.
The governor's office did not welcome the idea, but isn't turning its back completely.
"Obviously the commonwealth is not a bank, and it is not in a position to provide loans to county or city governments," said Rendell spokeswoman Kate Philips. "However, we are well aware of this issue and are confident that we will find a way to work with the city and county in the same cooperative spirit that we have to solve other fiscal challenges over the past two years."
Costa said he hopes to speak with Rendell this week.
Unless a solution is found, the SEA could invoke a 1978 agreement that requires the city and county to each pay 50 percent of the convention center's deficits. Board Chairman Mark Schneider said that is "clearly a last resort."
Cash is tight for both the city and the county, and leaders for both said they don't want to pay up.
The city of Pittsburgh was declared a "distressed municipality" by the state in 2003. It is operating under a state-approved financial-recovery plan, but its revenues were about $6 million short of budget projections for 2005 as of last month.
Allegheny County eked out a budget surplus of $140,000 in 2004 after finishing almost $30 million in the red in 2003.
City Councilman Doug Shields, of Squirrel Hill, said he expects the SEA to invoke the 1978 deal and seek the money from the county and city.
"It's not if, it's when," said Shields, chairman of City Council's finance committee.
He raised the possibility of letting the agency default on its debts rather than have the city and county try to find the cash.
"What if we say we can't pay, we won't pay?" said Shields.
County Chief Executive Dan Onorato is equally determined to avoid paying the convention center's debts.
"I can't let that happen because both the county and the city are in no position to pick that up," he said.
Through a spokesman, Onorato downplayed the problem as a short-term fix needed until casinos are opened.
"Gaming revenue will be available, and they are going to cover the costs for the SEA," said the spokesman, Kevin Evanto.
He said a state loan or a local bank loan are among possible solutions that Onorato is examining.
SEA Executive Director Mary Conturo said a private-bank loan is probably not an option.
"I don't have any kind of security I can pledge for that right now," she said.
The SEA took out a $20 million private loan in 2004 to pay bills that arose partly because another assumption built into its budget -- a hoped-for car-rental tax -- never materialized. The state has pledged future slots revenue to repay the principal on that loan.
Asked how the agency will get out of the mess, Conturo would say only that she is working with Onorato, Mayor Tom Murphy and "all the interested people."
"We need to find a solution, and I think we can do that," she said.
The SEA board voted Thursday to refinance $9 million in debt at a reduced interest rate -- a move that will cut about $400,000 from this year's debt. But that would still leave a $2.9 million deficit in the agency's 2005 budget.
Shields questioned the wisdom of building such a fancy and expensive convention center when big-name cities, such as Las Vegas and Boston, are competing for the same business. Many cities are offering big discounts on space, and the overall size of the convention business is shrinking -- making it harder for Pittsburgh's convention center to cut its losses, he said.
The SEA -- which also owns PNC Park, Heinz Field, Mellon Arena and the Benedum Center -- always has been open about the fact that convention centers require subsidies, said Schneider, the SEA board chairman. A permanent revenue source is needed so that agency staff can get back to making the David L. Lawrence Convention Center a success, he said.
Conturo said she is confident a solution will be found and ruled out closing the center.
"It's not really a viable option to close the convention center," she said. "We have commitments to people to hold events next year."
Glenn May can be reached at gmay@tribweb.com or 412-391-8650.
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