Entertaining new revenue

Southeast Missouri State University officials are touting a new in-house, economic-benefit study in an effort to resell the city of Cape Girardeau and its taxpayers on the merits of the River Campus arts school project -- the subject of two failed lawsuits -- in an effort to get the four-year-old project rolling again.

The university is trumpeting the $37 million project as a key development effort that will spark economic growth and boost tax revenue for financially strapped Cape Girardeau city and county governments.

The university wants to turn a former Catholic seminary overlooking the Mississippi River into a school for the visual and performing arts.

Don Dickerson, president of the board of regents, said a weak economy and lagging sales tax revenue make it even more important to proceed. Funding for the project is expected to come from the state, the city and from private dollars raised by the school.

Four-page letter

Dickerson lobbied for the project in a four-page letter last week to Cape Girardeau Mayor Jay Knudtson but didn't ask the council to commit city tax dollars yet.

In his letter, Dickerson cited a new study by Southeast that paints a rosy picture of the economic benefits.

But Cape Girardeau motel owner and project opponent Jim Drury said the River Campus won't pay huge economic dividends. He filed two unsuccessful lawsuits to stop the project and has vowed to continue court action.

Drury said theatrical shows and a university museum on the River Campus won't draw large audiences. Drury said most area residents aren't interested in the arts.

"We like mud wrestling, rodeos and demolition derbies," he said.

The River Campus wouldn't draw from a wide region. "It would just be locals because they have bigger and better stuff in St. Louis," he said.

But Dickerson insists the River Campus makes economic sense.

The study by three economists at the university concludes that construction alone would generate 263 jobs for the first two years of building and 132 jobs in the final year.

The construction would result in an estimated $23.1 million in direct and indirect personal income and $620,000 in added city, county and state sales tax revenue, including $230,000 for the city and county governments combined, the study said.

The study also says:

The River Campus would boost Southeast's enrollment by 500 to 600 students, creating 125 to 150 new jobs in the Cape Girardeau area -- including about 35 teaching jobs at the university -- and generating $5 million to $6 million in added personal income in the area.

The River Campus museum and shows and concerts at the performance hall are expected to draw over 87,000 people a year. They would spend an estimated $900,000 a year in Cape Girardeau, resulting in $687,000 in added personal income and the creation of 34 service-industry jobs.

Economics professor Bruce Domazlicky said the 34 jobs would be primarily in low-paying restaurant and gas-station jobs.

The estimated benefit from the construction work itself is probably the soundest part of the study, said Domazlicky, who made the calculations with the help of Gerald McDougall, dean of the Harrison College of Business, and Pauline Fox, a Southeast vice president and former economics professor.

Domazlicky said the calculations are based on a computer model of the Cape Girardeau economy that plugs in a variety of economic factors. "It's what almost everybody uses around the nation for doing this kind of study," he said.

He insisted the computer model provides an objective analysis.

Questioning numbers

Knudtson, Cape Girardeau's mayor, welcomed the study but said the numbers could be questioned.

Knudtson, a banker, said the economic-benefit projections may be inflated. He bases that assumption on his banking experience in dealing with business projections. "So go ahead and cut those economic projections in half and you still have a good project," the mayor said.

"I'm not necessarily a huge proponent of the arts. But if you stand back and look at this, this is a good business decision," he said.

The project would help develop the area on the city's south side near the new Mississippi River bridge that will serve as a gateway to the community, the mayor said.

"The city gets the increased tourism, the increased economic development, the increased sales tax receipts," he said.

Even with the new study, Knudtson said the university must continue to educate the public and even the city council about the much-debated project that's still on the drawing board.

The city council has four new members on it since April, including Knudtson, who said the project was the most talked-about issue among voters when he campaigned for mayor.

City voters in November 1998 extended the motel and restaurant taxes and raised the motel tax to fund the city's $8.9 million share of the $37 million project. But a companion bond issue failed to win a super majority needed for passage, prompting Drury to go to court.

He ended up filing his lawsuits over what he views as an illegal attempt by the city and university to get around the failed bond issue. The university wants to issue bonds through a state authority and have those bonds retired by the city tax money.

The Missouri Supreme Court in February upheld the legality of two Cape Girardeau city ordinances dealing with city tax funding for the project. Last month, a circuit judge dismissed Drury's second lawsuit against the city in which he charged the city council ignored a Dec. 31 funding deadline and extended an agreement with the university in violation of the state's tax-limiting Hancock Amendment.

Waiting to commit

Knudtson said that, even with the new study, the city council won't commit the city's share of funding until the university guarantees that the school and state funding are in place.

The guarantee is required as part of a binding agreement between the city and the university, he said.

Dickerson said $16.5 million in state funding that's been promised to the project can't be used to pay for general operations at the university.

Burdened with state funding cuts for general operations, the university must continue to reduce costs and can't use River Campus dollars to make up the difference, he said.

Likewise, the city's motel-restaurant tax money must be used for tourism-related expenses, he said.

Knudtson echoed that view, saying the city can't tap into that fund to boost funding for general city operations.

If the River Campus isn't built, the earmarked state money will go to other projects in Missouri, he said.

mbliss@semissourian.com

335-6611, extension 123

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