Hotel's red ink rules out subsidy

UNTIL Portsmouth starts turning a profit on the Renaissance Portsmouth Hotel and Waterfront Conference Center, city officials have no business contemplating investing public dollars in a similar venture.

Since the Renaissance opened in 2001, it's helped elevate Portsmouth as a destination for conferences, provided residents with a place to gather in their own city rather than elsewhere in Hampton Roads, and enhanced downtown revitalization efforts.

But, as The Pilot's Jen McCaffery reported this past week, the city still isn't close to breaking even on its investment. According to city figures, the project generated $1.3 million in tax revenues in 2007 - but is costing the city $2.5 million a year in debt service.

The gap isn't an indication that the public-private partnership, which brought 250 hotel rooms and a 250,000-square-foot conference center to the city, was a bad idea.

But the gap should be reason enough to make the City Council and the city's taxpayers leery of underwriting similar ventures, at least for the foreseeable future.

In December, state Sen. Louise Lucas asked the city for $13.5 million in tax breaks and cash to help fund a proposed $65 million conference center and hotel at Victory Crossing.

Lucas has rounded up at least 600 investors in the project, including recently elected City Council member Charles Whitehurst and the husband of Vice Mayor Marlene Randall.

But that support - at the grassroots level and at City Hall - doesn't trump the bad timing.

In addition to the Renaissance, the city is subsidizing other projects, with little or no return.

The Virginia Sports Hall of Fame is drawing $900,000 a year in subsidies. The budget recently approved by the council includes $7 million in debt service for the planned redevelopment of the Holiday Inn site downtown.

There's cause to hope that the Renaissance and other city-subsidized projects will, in time, coalesce and help Portsmouth dramatically improve its financial fortunes.

But that hope is likely to grow more distant - or be ruined entirely - if the city pours millions of tax dollars in a hotel and conference center similar to one that is still short of breaking even.