Harper: Replacing Bay Center Has Risks And Rewards

Dec 22, 2016

In this week’s Economic Report, Dr. Rick Harper discusses the movement to replace the Pensacola Bay Center with a new facility and how Florida and the U.S. job markets are faring after a long period of uninterrupted growth.

Credit Michael Spooneybarger/ CREO

The Pensacola Bay Center is reaching the end of its productive lifespan and with maintenance costs rising, a group of stakeholders led by Pensacola Sports and Visit Pensacola have begun looking at replacing the building with a new multiuse facility.

“It’s time to consider what comes next in downtown Pensacola or in another place,” Harper said. “Every community needs a good venue. Whether it’s for quality of life issues – could be the hockey games, could be the concerts – or it could be attracting more tourists and convention traffic from out of town.”

More visitors means more competition and could lead to lower prices at the airport, but Harper said that one issue is that convention centers rarely break even. The new proposal is for a convention center and an arena, making the space conducive to sports, but also to events like the annual Pensacon convention.

“We’ve got a great event that’s got local roots, and we’d hate to see it leave because they need space where they can have an integrated set of activities that includes not just a major display floor and arena, but also includes a number of breakout spaces that are larger than your average meeting room,” Harper said. “But they don’t have to be full-fledged conference style venues and so something like that would give us an additional dimension.”

It all comes down to benefit/cost analysis, Harper said.

“Could we keep it busy enough so that the revenues would offset the cost of building an expansive facility?” Harper said. “That’s an open question because every community wants that, and many communities have been willing to subsidize the construction and operation of those facilities to get the visitors in.”

Governor Rick Scott announced this week that Florida leads the nation in private sector job growth, but Harper said that the growth is also tied to strong population growth in the state.

“The population statistics say now that we are closer to 21 million population than we are to 20 million population in the state of Florida,” Harper said. “People continue to find Florida an attractive place to live, work and do business.”

Attracting those people to Florida is at the center of controversy at the moment, however, as three top executives from the state’s tourism office Visit Florida, which is funded by $100 million from the Legislature, recently resigned over how monies were spent to promote the state.

“The resignations came in the wake of a less than transparent contract with a major entertainer for promoting Florida beaches,” Harper said. “There’s the question of how much state money should go to fund tourism promotion. I personally think it’s a good idea because any one entity, even one as big as Disney or major operators in the state, can’t really afford to do the promotion that would bring people to the state overall.”

Nationally, job growth hasn’t been as strong as Florida, but it has continued to grow and Harper said that can’t continue forever.

“The national job market is now approaching full employment, and that means that it has to slow down. We can’t have all that many more 200,000 net job growth months because there’s just not enough slack capacity in the economy,” Harper said. “However, there’s a big problem about where that capacity is located. The mid-western states – the manufacturing heartland for decades of the United States – those days are gone and it’s not because we produce less manufactured stuff either in dollar value or in number of units, but because it takes fewer people because technology has gotten so much better.”

Harper said that that’s ultimately a good thing because you can make more stuff with fewer people, making the nation as a whole more productive. But it does come with its own set of problems.

“We haven’t quite solved the problem of how do you address the needs of people whose manufacturing livelihood is gone because they have been replaced by automation,” Harper said. “That’s the big thing we have to solve, but you’re right, the jobs economy is healthy and the economy is healthy overall.”

After eight-and-a-half years of uninterrupted growth, Harper said that President-elect Trump is inheriting a strong economy, but one that is due for a slowdown.

“That’s a long expansion – maybe getting a little long in the tooth,” Harper said.

Dr. Rick Harper serves as associate vice president for research and economic opportunity at the University of West Florida and oversees the University’s Center for Research and Economic Opportunity. He can be reached at rharper@uwf.com. CREO staff writer Mike Ensley contributed to this report. He can be reached at kensley@uwf.edu.

This article is part of a collaboration between WUWF and the UWF Center for Research and Economic Opportunity.