THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, October 18, 1995 TAG: 9510180364
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
DATELINE: NORFOLK LENGTH: Long : 142 lines
Every year, the city pours millions into the Chrysler Museum, Scope, the Harrison Opera House, Nauticus and the other attractions and cultural resources that make downtown, downtown.
And every year, Norfolk collects millions in taxes from skyscrapers on Main Street, restaurants around Granby Street, and hotels, theaters and other facilities along this crook in the Elizabeth River.
So what's the bottom line? Does the city break even on that chunk of land stretching from roughly the Opera House to Waterside, the land that citizens know as downtown?
Yes, according to an analysis of downtown operating subsidies, loan payments, taxes and rental fees.
In fact, downtown Norfolk contributes $7.4 million more in taxes and other revenues than it consumes in direct subsidies, the calculations show.
That's after factoring in the $1 million-a-year subsidy the city has decided to pay to Nauticus, an expense that has deeply angered citizens and set off discussions about whether downtown carries its weight.
No accounting exercise can answer the question of where Norfolk would be today if it had spent money more on neighborhoods in decades past, or on different projects downtown.
But an examination of the balance sheet shows that tax revenue from downtown has tripled in the past 15 years to $15.4 million annually - a growth rate about double that of the rest of the city.
The bulk of this is generated by the office buildings, from Dominion Tower on Waterside Drive to the NationsBank and Norfolk Southern buildings on Main Street.
This financial district alone - with most of downtown's more than 3 million square feet of office space - contributes more than $8 million in real estate, business, license, utility, personal property and other taxes.
Waterside, the festival marketplace, generated almost $2 million in taxes, even though it requires a $500,000 annual operating subsidy.
Patrons of the Wells Theatre, the opera house, Scope and Chrysler Hall paid more than $1.3 million annually in admission taxes, which helped offset the city's contributions to their operation.
Rental fees, soft-drink sales and other revenues from Scope, Chrysler Hall and other downtown attractions contribute about $2 million to city coffers.
Most of the $10 million the city spends directly on downtown goes to subsidize cultural institutions.
City officials, who have long defended their downtown spending, say these amenities - from the Picasso paintings in the Chrysler Museum to the green lawn of Town Point Park - are an investment that pays a hefty return.
Cultural institutions, city leaders say, help retain and draw additional bank buildings, restaurants and hotels that keep the tax base healthy. And, officials say, they help the city toward its goal of being the cultural center of Hampton Roads.
Looking at overall income figures for downtown cannot determine the fiscal health of any one project, or say whether the city's choices for downtown spending were always the best.
Waterside, which the city gives about $500,000 a year, competes with other tax-paying businesses that don't need subsidies. The parking garage the city built for Nauticus took the place of an historic office building on which taxes were paid. Scope draws fewer major concerts than neighboring Hampton Coliseum.
Cost figures for downtown also do not break out downtown's portion of the $465 million Norfolk spent on fire, police, road repair and other standard city services. The city will spend, for example, almost $38 million to put police in every part of the city, including downtown.
But downtown, excluding the residential area of Freemason, adds almost nothing to the city's largest expense, the $182 million Norfolk annually spends on schools.
These figures also do not reflect the $93 million to $105 million in loans and direct spending scheduled for the proposed MacArthur Center mall to be built next year.
Most of this spending will not come directly from taxpayer pockets - unless the mall fails. Then the city could wind up paying off loans for parking garages and other expenses because expected funding sources did not materialize.
The accounting of downtown costs also does not include projects that have already been paid off, expenses that go to the city as a whole, or projects using federal tax dollars rather than local ones.
For example, the city opted to pay $17 million in cash for the new Waterside Convention Center in 1992. If the city had borrowed the money, it would be paying about $1.35 million in average annual loan payments.
The city spends $3 million annually on the Virginia Waterfront campaign. This advertising campaign promotes such attractions as Nauticus, but is focused primarily on promoting Virginia Beach, Norfolk and Williamsburg as a region.
The city spends close to $1 million annually on the Development Department, much of whose resources go into downtown projects, such as the MacArthur Center.
The $10 million in spending that can be attributed directly to downtown was determined by toting up what the city pays in operating subsidies, administrative expenses and interest fees for its projects and services.
To help them break even, Norfolk spends $1.75 million every year on Chrysler Hall, and $373,000 on the MacArthur Memorial. Scope and Chrysler Hall, which are owned by the city, have a hefty $3.1 million operating budget this year, although about half that is offset by rental fees and other revenues.
It cost Norfolk $758,000 this year for Festevents, which puts on the food festivals, concerts and other parties at Town Point Park, as well as the annual festival in Ocean View.
The city spends $1.1 million on the Community Promotions Corporation, which books conventions and tour groups and spreads information on the city, including other sections of Norfolk.
The city has saved some money on loan payments because many downtown projects were either built with federal funds or through arrangements that did not involve current tax dollars.
Harbor Park, for example, pays its own bills, thanks to a deal between the city and the owners of the Tides that applies tax dollars generated by the stadium to pay off the construction loans.
Scope and Chrysler Hall were built largely with federal urban renewal money and are completely paid off. Most of Waterside was also built with federal money.
The city is still paying construction loans on Nauticus, the Harrison Opera House and the Wells Theatre.
And in September, the city decided to spend $1 million annually to supplement loan payments to Nauticus. It is scheduled to pay $667,000 for construction loans on the Opera House, and $233,000 for the Wells Theatre. ILLUSTRATION: Color photos
HOW DOWNTOWN NORFOLK PAYS FOR ITSELF
RICHARD L. DUNSTON/The Virginian-Pilot
Loan payments on various attractions cost the city $1.9 million
yearly, including $1 million for Nauticus.
File photo
The Norfolk Waterside Marriott and other hotels generate $1 million
a year in lodging taxes.
RICHARD L. DUNSTON
/The Virginian-Pilot
The city pays $3.1 million in operating expenses for Scope and
Chrysler Hall.
File photo
The financial district, which borders Waterside Drive, generates
about $8 million in real estate and other taxes.
by CNB