Convention Center moves toward privatized management

In a surprise move praised by leaders of the city's hospitality industry and labor unions, the Pennsylvania Convention Center Authority board has voted to investigate privatizing certain functions of the center.

In an 11-3 vote this week, the 15-member board authorized chairman Gregory J. Fox to draft a "request for qualifications," from companies that specialize in running convention centers.

In 20 years that the center has been open, it has been accused of wasteful spending and excessive costs for clients because of jurisdictional issues with labor unions, among other issues.

"This is huge," said John J. Dougherty, business manager of the 4,500-member International Brotherhood of Electrical Workers Local 98 and an outspoken critic of Convention Center management. "I've been pushing for this for over 20 years. An RFQ is not all the way there, but it's the first step toward being there."

Fox said that a letter would be sent out Aug. 29 to seek qualified companies. On Thursday, Fox read aloud the opening paragraph of a draft of that letter:

"The Pennsylvania Convention Center Authority is issuing this request for qualifications to seek details concerning a full range of possible operations, maintenance and support services. . . . The authority invites submittals from qualified firms that have proven experience in major-market convention and/or exhibition facilities' management."

Fox said the taxpayer-funded Convention Center, which completed a $786 million expansion in March 2011, needed to operate as efficiently as possible in an era of fierce competition in the convention industry. The board's vote comes less than 10 months before the June 30 expiration of a controversial 10-year customer-service agreement between the authority and the city's labor unions.

"I think we are making good progress at the Convention Center at various customer-service initiatives," Fox said. "We just got rid of the 8 percent management fee [on labor]. As part of that ongoing progress, we have the responsibility to seek information from the marketplace regarding best practices."

Fox said that he was not certain whether the board would ultimately approve privatizing the center's management, and that he was not focused on any one company.

"I stress this is a fact-finding mission," he said. "No conclusions have been reached about the path we may follow. . . . One of the purposes of the RFQ is to find out what firms are out there, what services they provide, and their qualifications."

Convention Center president and CEO Ahmeenah Young, who has had a frosty relationship with the unions, reportedly watched in silence Wednesday as the board voted in favor of the step toward privatization.

"I recognize that the board in the exercise of its obligations to taxpayers wants to review its options, and I am confident that an examination of the operation of the center will show what a great job our staff has done," she said in an e-mail Thursday. "The center's staff is and remains committed to offering the highest level of customer service and that is our fundamental mission."

Jim Gratton, president of the 87-member Greater Philadelphia Hotel Association and general manager of the Courtyard by Marriott Philadelphia Downtown, applauded the move.

"All options in regards to lowering labor costs and improving the customer experience should be considered," Gratton said. ". . . It should be noted that our competitors such as Chicago, San Francisco, Denver, Toronto, Miami, Pittsburgh, and Richmond are all privately managed."

Gratton said the city's hoteliers were "very encouraged by the dialogue that has taken place" with the authority's leadership and "we feel that we are moving in the right direction."

In early June, the hotel association touched off a firestorm, lashing out at the authority's board in a letter blaming high labor costs and less-than-courteous dealings with the unions at the Convention Center for driving away significant group business.

Labor leaders said they were once again getting the blame for a poorly managed Convention Center that has for decades ignored their concerns. At a June 20 meeting of the authority's board, the factions agreed to communicate better and point fingers less.

Dougherty, whose union installs electricity for Convention Center events, said a private management company "will do away with the incompetency, inefficiencies, the double billings, and the bureaucratic paralysis that have spent more than a decade holding up changes to make the building a smart building. Finally, they can bring in a professional.

"In the hospitality industry," he said, "there are three key things: to have someone who is respected in the industry, someone who understands the changes in the industry, and someone who is immune to local politics. We have not had anyone who has been able to do all three."

When asked about Young's management of the center, Dougherty said: "When you're a baseball manager of a team that has a brand-new stadium and a ton of talent and a few all-stars, and you still can't win, it's time to change the manager."

Fox, who became chairman of the Convention Center Authority's board in May 2011, said he brought the idea of private management to the attention of the board Monday and discussed it at length during a two-hour private session before Wednesday's public board meeting.

"It's been an idea kicked around the Convention Center for years, so it's not a new issue," he said. "It's been a thought of mine for the last several weeks. . . . We'll see what services are out there and what might be a good fit."

Said Jack Ferguson, head of the Philadelphia Convention and Visitors Bureau, which is charged with booking the Convention Center: "Whatever it takes to deliver a positive experience for our customers and their attendees, exhibitors, and stakeholders is what we are in favor of."

Members of the Convention Center Authority board are all political appointees. Three members - City Councilwoman Marian Tasco, Heather Steinmiller, and Ryan Boyer - voted against sending out the request for qualifications. David Woods was absent.

Before the start of Wednesday's meeting, Steinmiller e-mailed her board colleagues, encouraging them to postpone a vote on the RFQ.

She expressed concern about the effect that privatizing management might have on tax-exempt bonds for the Convention Center.