Metro Councilman Duane Dominy’s bill to preserve the Metro-owned Tennessee State Fairgrounds is set for consideration on the second of three votes later this month. If history is an indicator, he’ll bolster his case by pointing to the figure “$50 million to $60 million.”
That’s the economic impact Dominy and others claim the much-disputed fairgrounds property off Nolensville Pike and Wedgewood Avenue generates for the city on an annual basis. The figure is an estimate from an internal report produced by the fairgrounds’ staff. Vacate the 117-acre property as proposed by Mayor Karl Dean, the logic goes, and jeopardize millions of dollars in spending for Nashville’s economy.
But the origin of the figure is somewhat suspect. Fairgrounds administrative employees did not reach $50 million to $60 million by commissioning a statistician or economist to directly study Metro’s fairgrounds. Instead, the fair staff members applied a calculus commonly used in economic studies and then gauged the fairgrounds numbers by looking at reports of other fairgrounds with comparable facilities and attendance figures.
In other words, they ballparked it.
“The fair board, to my knowledge, has never retained an economist to do an analysis of the economic impact of the events at the fairgrounds,” James Weaver, chairman of the Board of Fair Commissioners, told The City Paper. He added that economic impact studies tend to be expensive.
“Would I be surprised if the number were that high in actuality? Yeah, I would be a little surprised. That’s a fairly significant number,” Weaver said. “Anybody that’s throwing that number around does so at their peril, because that number was not a professionally derived number. That was somebody on staff sitting down with a cocktail napkin [and] seeing what they could come up with.”
No economic study
Economic impact generally refers to the amount of spending that occurs in a defined area as a result of an existing or planned facility, venue or event. Prior to the council’s January vote to approve financing for a new convention center, Dean frequently trumpeted a study conducted by HVS Consulting that said
Music City Center would generate $139.4 million in annual spending by 2017.
The $50 million to $60 million figure can be found in a three-page document compiled in March 2009 by fairgrounds staff members that cites Minnesota-based Markin Consulting, which conducted a “highest, best use” study on the fairgrounds in 2008 but did nothing to determine economic impact.
“A vital portion missing from the Markin report is our current economic impact with NO additional improvements of not only the 10-day fair, but the 270 events held at the site,” the report says, with underlined and capitalized words its authors presumably wanted to stress. “The economic impact of the 10-day fair is understated at best … or has never been calculated.”
The paper produced by the fairgrounds goes on to discuss criteria, which includes comparative analyses of economic impact studies that looked at facilities with similar demographics, attendance figures and types of events. It cites the Evergreen State Fairgrounds in Monroe, Wash., which has an annual economic impact of $23 million, and the Lane Event Center in Eugene, Ore., which had a $33 million effect in 2006 ($45.4 million in today’s dollars). Neither of those studies factored in the value of monthly flea markets; therefore, the Nashville report points to comparable monthly flea markets that generate spending that ranges between $15 million and $23 million.
A sizable percentage of a venue’s economic impact often comes from the number of hotel room nights people book because of it. In total, the expo center and state fair produce 28,952 annual room nights, according to the document.
The fair staffers also used a measurement tool commonly employed in economic impact studies. It multiplies the number of fairgrounds visitors — here, they say, it’s 1 million — by a spending figure.
“In our preliminary study, evaluating comparable combined event centers and fairs, we currently generate an estimated economic impact of $50 [million] to $60 million ANNUALLY,” the report concludes.
Tennessee State Fair Executive Director Buck Dozier said staff members used a formula similar to the one employed by the Nashville Area Chamber of Commerce.
“Based upon the matrix they used, yes, I’m going to say I have confidence in it,” Dozier said. “In fact, at one time I thought maybe we were too low, but probably not. I’m going to stand by it at this point based upon what they told me they used, and what I know they used.”
The chamber itself has never conducted an economic impact study of the existing fairgrounds. But it is in the process of looking at the redevelopment potential of the site, which chamber leaders have said is ripe for corporate relocations.
Would the dollars stay anyway?
Dominy, who will know his fate as the Republican hopeful in the state House’s District 59 race on Tuesday night, said he’s been told the figure was derived using the same formula that produced the convention center’s estimated effect.
“Economic impact is something that we desire in the city of Nashville,” Dominy said, adding that the city spends $7.5 million per year on the Nashville Predators to bring in 600,000 to Bridgestone Arena each year, while the fairgrounds “had a million patrons come across that property without a tax dollar.”
(This is misleading: The fairgrounds has a reserve fund that, because of eight consistent years of losses, is nearly depleted. Next year, if the status quo is maintained, Metro would spend money from its general fund for fair operations.)
But Councilman Walter Hunt said he’s questioned the fairgrounds’ figure from the beginning.
“First of all, I never realized how they came up with that number,” Hunt said. “I did not see the hotel nights that they projected in anybody’s presentation. In other words, I have not seen any support for the numbers that they threw out. … It could be on the high side, it could be on the low side, or it could
Still, other council members say the methodology is no different from what outfits like the Nashville Convention & Visitors Bureau use to make projections.
Councilwoman Emily Evans, who said she’s skeptical of economic impact studies in general, said the numbers used to calculate the fairgrounds’ effect fall in line with those used to measure the $133 million annual impact of the existing Nashville Convention Center.
“It just doesn’t seem to be that far off the mark to me,” Evans said.
Megan Barry, the council’s Budget and Finance Committee chair, also said she’s comfortable with the approach.
“We oftentimes look at other cities and look at their data for a benchmark,” Barry said.
Dean’s plan is to relocate expo center events to Hickory Hollow Mall in Antioch. Meanwhile, a group called the Tennessee State Fair Association is looking for property inside Davidson County to hold an annual state fair in the future. If both plans fall into place, the fair’s economic impact would remain inside Davidson County’s borders — regardless of the amount.