Hard at Play

Placer Valley looks to sports and lifestyle tourism

Back Longreads May 1, 2009 By Christine Calvin

Work has stopped on a 40,000-square-foot conference center planned for Roseville. The city-funded project was supposed to serve as a springboard from which Placer Valley would dive into branding itself as a premier business and sports tourism destination. Now, city planners are in a holding pattern, waiting for timing, funding and manpower to realign, so the region can move forward with its plan to compete in California’s massive tourism market, which, in 2007, accounted for $96.7 billion in consumer spending.

Over the past few years, the city of Roseville managed to save $20 million to build a conference center off Highway 65, west of the Galleria at Roseville. But spending that money has been tough. Kobra Properties was Roseville’s partner for the job, but according to the city, it’s missed deadlines and, therefore, isn’t complying with the contract. Progress on the center has stopped as the real estate developer filed for Chapter 11 bankruptcy reorganization late last year.

According to Dean Runyan Associates, a Portland-based research firm, Placer County has an opportunity to generate tourism income with continued strategic product development, infrastructure maintenance and enhanced regional partnerships. But Placer Valley won’t reach that point maintaining the status quo. The region is what Dean Runyan Associates calls a “destination in progress.” The county has to spend money — a lot of it — to make money as the success of tourism in the valley is reliant on the development of a tournament-level sporting complex and a small yet multifunctional conference center.

Placer County has experienced moderate success in the travel, tourism and recreation business in the past five years, particularly as it relates to wineries, gaming and snow recreation. But the valley can offer few comparable amenities. That’s why the cities have turned their focus to lifestyle tourism — tourism tied to the otherwise generic activities of life, including travel for business and athletic events.

In late March, Sacramento-based Total Body Fitness hosted the XTERRA Real Mountain Bike Triathlon, XTERRA Chanoko Half Marathon Trail Run and the Super Sprint Mountain Bike Triathlon at Folsom Lake. The events drew roughly 400 athletes, nearly 70 percent of whom came from out of state, Southern California or regional communities far enough away to warrant an overnight stay, according to organizer Mark Shaw, Total Body Fitness principal.

“All the hotels generate business when sports teams come here. We love it when they come because they go out to dinner or they order pizza, they shop and they buy our gas to go home. We want to give them a good experience, so they come back,” says Debi Collen, sales manager for the Holiday Inn Express in Roseville, noting that events such as Amateur Softball Association of America tournaments fill hundreds of rooms, and NASCAR events at Roseville’s All American Speedway can fill nearly every room in town.

“As a region, we have shown that we can very successfully host large events, so I think it’s a natural next step to add facilities.”

— Karen Garner, economic development analyst, city of Roseville

“The challenge is that we export tourism, which causes a net drain of disposable dollars,” says Greg Van Dusen, CEO of Placer Valley Tourism, the local travel authority for Roseville, Rocklin and Lincoln. “We need to balance the deficit.” In 2007, the residents of households located in Lincoln, Rocklin and Roseville spent more than $450 million on travel outside the county, according to the Runyan report, but just $227 million in Placer Valley.

Total travel spending in Placer County as a whole for that year was $789 million, according to the Office of Economic Development.

“As a region, we have shown that we can very successfully host large events, so I think it’s a natural next step to add facilities,” says Karen Garner, a county economic development analyst. “We have all the right ingredients, but to build it is the biggest hurdle. We would like to get the conference center open through a public-private partnership. But I don’t think we have a particular timeline. If we can find [the right partner] in the next one to 18 months, that would be great, but we are willing to wait to get that right project.”

Across the country, other small cities have begun building suburban conference centers. Eight were built in the past year in places such as Overland Park, Kan. (population 169,000), and Murfreesboro, Tenn. (population 100,000). They range between 35,000 and 90,000 square feet, and they’re all in affluent, suburban communities within one hour of a major airport.

“If we don’t build a conference center and/or a sports center, we will be looking at much flatter tourism growth over the next few years, which is potentially dangerous because of the hotel supply growth,” says Van Dusen, noting that increasing hotel rooms without increasing demand and tourism infrastructure is problematic. Greater market saturation results in lower daily room rates, which further impacts transient occupancy tax revenue.

Placer Valley currently has 22 hotels totaling 2,265 rooms. That number is expected to increase by 83 percent to 3,662 rooms by 2011, but demand isn’t necessarily following suit. In the past year, 425 rooms were added to the market. But between 2007 and 2008, transient occupancy tax revenue fell in Roseville from $1.93 million to $1.87 million.

“Leading up to the holidays, the hotel occupancy rates were fine — 60 to high-70 percent,” Garner says. “But now we have new hotels coming on at a time when businesses are cutting back on travel.”

TOT collected in Roseville, Rocklin and Lincoln is low and goes directly into the general fund, which leaves a gap in the funding needed to bolster tourism. The tax is 6 percent in Roseville — a number Van Dusen calls “the all-world low” — 8 percent in Rocklin and 10 percent in Lincoln, compared to a state average and Sacramento tax of 12 percent.

In the late 1990s, Sacramento increased its 10 percent TOT to 12 percent, one percent of which went to pay for a construction bond to expand the convention center. The remaining percent is split between the visitors’ bureau and local arts associations. According to Mike Testa, vice president of communications for the Sacramento Convention & Visitors Bureau, there have been periodic discussions about increasing the rate again, though nothing is changing at the moment.

“The city tried, several years ago, to change [ours], and it didn’t get passed,” Garner says. “And it’s difficult, especially right now. It’s a tax of visitors, so it’s not a tax that the people who actually live here pay, but Placer hears the word tax and it’s an automatic ‘no.’”

Meanwhile, cities such as Chattanooga, Tenn., Cincinnati and San Antonio all have TOTs near 17 percent. In Orlando, Fla., funds accrued from a 12.5 percent tourism development tax on hotel rooms goes toward the creation and upkeep of tourism-generating facilities such as the performing arts center and convention center.

“We’ve been in discussions with the city and with business owners for the past year about whether to raise the taxes,” Van Dusen says. “Higher taxes don’t necessarily repel [visitors], so why not? Because partnerships have been formed between municipalities and tourism industries to stimulate additional incoming revenue and visitors, it’s an upward spiral. We want that.”

The cities agree and are trying to figure out a way to increase assessments tied to the TOT. As a business improvement district, Placer Valley Tourism is funded by an assessment of $1.50 for each room night purchased in Roseville and $1 for room nights in Rocklin and Lincoln. The assessments add up to “slightly less than enough,” or $600,000 annually, according to Van Dusen.

“If we don’t build a conference center and/or a sports center, we will be looking â?¨at much flatter tourism growth over the next few years.”

— Greg Van Dusen, CEO, Placer Valley Tourism

“We would increase the assessment in lieu of the TOT because the TOT goes to the general fund while an assessment would be a revenue split between the cities and local tourism entities,” says Van Dusen, who notes that the current popular thought would be to add a percentage value to the current flat assessment.

The city of Roseville and Placer Valley Tourism are looking largely toward organized sporting events to fill all those hotel rooms, but Dean Runyan & Associates cautions that attention must be paid to the type and caliber of such events in order to make them profitable. Families, particularly if they’re not traveling a long way, aren’t necessarily spending a lot of money at sporting events. But if there is an overnight component, then it is a money-maker.

“They have to stay at a hotel, they’re eating out, they’re filling up their car and they’re going to the mall or the Fountains or the movie theaters,” Garner says. “They come, they spend money and they leave. Really, other than wear and tear on our fields and some staff time, they are bringing in more money than we are having to spend.”

According to Jeff Dubchansky, assistant director of Roseville’s parks and recreation department, it costs between $17,000 and $20,000 to maintain a single sports field per year, plus field recovery time. “For every hour of rugby, you need two hours of recovery time, and it’s the same for football and soccer,” he says.

With the market, Placer Valley’s current tourism position and the existing venues, Dean Runyan concluded that expanded sports tourism infrastructure can grow the market, but that’s about as specific as the study gets. What level of expansion is needed, what kind of sports the region caters to and other such details might warrant further study.

“It’s a much larger project in terms of land, but for heaven’s sakes, the city of Ripon has a 12-field soccer complex,” Van Dusen says. “We need an eight- to 12-field softball complex; we need an eight- to 12-field soccer complex. In other cities where they’ve built big clusters of fields, they’ve tended not to look at them as revenue generation tools; we would be looking at retail and restaurants. These would be top-quality facilities.”

Such facilities are in the city’s purview — sort of.  Most public recreation departments aren’t accustomed to planning for facilities of this size, which require nicer restrooms, greater concession operations and potentially huge parking capabilities.

“Lancaster has 34 soccer fields, but they have 2,400 parking places,” says Dubchansky. “It’s hard for us to set aside 1,000 parking spaces in one of our parks. It takes a different thought process for us in the park and [recreation] business. Plus, many Mondays through Fridays, those lots sit empty, and that’s a difficult thing for a public entity to envision.”

At this point, no money has been set aside for new sports complexes, but the wheels of consideration are turning.

“We don’t have an ocean; we don’t have Disneyland. And I think we all understand that, and we’re not trying to be something that we’re not,” Garner says. “And it’s tricky, but I think there are opportunities to expand.”

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