Fans of a proposal for a new sports and entertainment arena in downtown Kalamazoo say it’ll be a boon for the area.
Catalyst Development Company of Kalamazoo said the new facility will bring 200 events to downtown Kalamazoo each year, when it presented the proposal to the Kalamazoo County Commission last week. The developer said it will add 700 new jobs and bring $54 million annually to the local economy.
Bill Kern is skeptical. The Western Michigan University emeritus professor of economics said that while private funding makes the project much more attractive than previous proposals, studies find event centers aren’t the windfalls people expect. The Superbowl provides an example.
“Around Superbowl time you get these studies of the tremendous magnitude of benefits that hosting the Superbowl is going to bring. But when you look at the actual benefits in communities, it's been estimated that it's probably more along the magnitude of a tenth of what was forecast.”
Kern said that’s because of the “substitution effect.” It holds that if people spend more at a new venue, they’ll spend less at places they go now, like the theatre.
Kern called the benefits Catalyst Development described only a prediction of what might happen. He said economists prefer to look at the net benefits from similar, completed projects. Based on those studies, Kern said success will depend on attracting people who wouldn’t normally come to the county to spend money.
“But if it's people in town are spending money they otherwise would have spent on other things, then there's no net economic benefit from that,” Kern said.
Kern also warned that taxpayers could still end up covering some of the costs.
“You know, what's the tax treatment going to be? How is the title to that land going to be transferred? What price is that? I don't want to insinuate there is some thing shady happening here, but these are common things that have happened," he said.
Kalamazoo County Commission Chair John Taylor said his board is committed to not using public money for the proposed event center. The 2020 Regional Event Center Financing Act allows the county to raise the accommodation tax for an event center, but Taylor said the board has no plans to do that now or in the future. And it won’t sell the land on which the arena would sit for less than market value.
But Taylor noted he can’t control the plans of future boards. Commissioners run every two years.
If the proposal is approved, the event center is expected to host K-Wings Hockey and the minor league basketball team, the Kalamazoo Galaxy. It’s likely to be the new home for WMU hockey and basketball as well.
