Schaumburg foresees bleak year for convention center

Schaumburg officials are finding no shortage of bad financial news lately, and the 2010 budget for the Renaissance Hotel and Convention Center is no exception.

Due largely to the same sluggish economy that the village says is necessitating its first property tax, the convention center is expected to see in 2010 a $14.5 million loss and a drop in reserves from $8 million to $4.4 million.

Nevertheless, village officials are trusting in economists' prediction of a limited recovery in 2011 rather than expecting to have to endure two such extremely dire years in a row.

The problems expected to continue through 2010 were already experienced in 2009, however, with the hotel and convention center experiencing an operating deficit of $5.7 million, far exceeding the budgeted deficit of $1.9 million.

"It's been a very tough year for the hospitality industry as a whole," Schaumburg Finance Director Doug Ellsworth said.

Mayor Al Larson said he's disappointed by the effect of the economy but pleased the convention center and hotel are still doing better than average in the current market.

This also has been a year in which diminishing sales tax revenues have created a deficit in the village general fund that officials believe can only be bridged by levying a $23.7 million property tax for next year.

Officials have defended the convention center and hotel from critics by pointing out that its finances have been kept rigidly separated from the village's general fund.

But Village Manager Ken Fritz said that if the hotel's own revenue sources and reserves ever proved inadequate to pay off the annual $11.4 million construction debt, other revenue sources would have to be found - possibly even by borrowing from other funds.

However, Fritz explained why economic recovery is considered inevitable, and why it seems so probable for 2011 despite the length of the recession so far.

While recessions are characterized by people deferring spending, he said, consumers can put off buying for only so long before there's pent-up demand for products and services they've been avoiding.

In the meantime, all the convention center's reserves that will be dipped into in 2010 were created from its own revenue sources, which include its own operations as well as hotel, telecommunications and entertainment taxes.

Next year, hotel operations are expected to cover only $1.9 million of the $11.4 million construction debt, far less than the $7 million projected by the original finance plan.

The operating deficit next year is actually forecast at only $4.6 million, but it's the expected depreciation expenses that bring the total deficit up to $14.5 million.