The economy is not great. Detroit is struggling and sitting very close to its own fiscal cliff. When this is the case it is noteworthy when a business, especially a business dependent on other businesses like a convention center, does well and comes in under budget and over expectations.
Cobo Center finished its 2012 fiscal year with net income of $2.4 million after originally budgeting for a $500,000 loss, says the Detroit Regional Convention Facility Authority (DRCFA). Total operating expenses for 2012 were $14 million – $2.4 million below the budget and $3.1 million lower than the previous year.
Pretty impressive, huh!
Cobo managed to do this even though it has been under construction since 2010 and that won’t end until December 2014 and its operating subsidy from the state of Michigan declined by $2 million. In addition, there was no income from Cobo Arena, which was closed all year and is being converted into a new ballroom and meeting space in connection with a $299 million capital improvement project.
As it turns out the construction was a plus. News of the expansion has drawn attention to the Motor City and caused more groups to book Cobo … not just this year … but it has also added many new shows to its schedule for next year.
Why else helped Cobo do so well? Last year’s mild winter meant lower utility costs. In fact, Cobo’s biggest savings came from utility costs, which were $1.7 million under budget and nearly $2 million lower than the year before.
“Energy-saving capital improvements, real-time monitoring of electricity and steam usage, the mild winter and the closing of Cobo Arena were the main reasons for the lower utility expenses,” said CEO Patrick Bero.
The Authority wants to be sure energy costs continue stay as low as possible so as Cobo is being renovated it’s also becoming greener. Here’s how:
- The glass-enclosed concourse on the main level and the third floor corridor glass ceiling provide enough natural light during daytime hours to minimize main hallway daytime lighting throughout the Center.
- Induction lighting should cut electric usage for lighting by an expected 40%.
- Air conditioning is created by pumping grey water from the Detroit River through chillers that send the cool water to various air handlers, providing cooling to zoned areas in the Center. This system uses considerably less electricity than conventional air conditioning units.
- Main hall lighting and heat/cool settings are computer programmed and managed.
- Paper, aluminum can and plastic bottle recycling containers are placed in all office areas and high traffic meeting areas.
- Escalators are being replaced with energy efficient Kone EcoMod units and will run based on occupancy and event needs.
- All in-house contractors participate in Center recycling and Green initiatives.
- The housekeeping staff uses products that are environmentally safe and non-toxic.
- All pallets are recycled to a local area vendor.
- Centerplate, the exclusive food and beverage contractor, collects prepared food that has not been served for pick up by Forgotten Harvest, which delivers the food to pantries, soup kitchens and shelters throughout Southeastern Michigan.
Large conventions also contributed to Cobo’s financials in fiscal 2012. The North American International Auto Show alone brought 735,370 people to Cobo last year and pumped an estimated $350 million into the local economy.
Other big conventions at Cobo last year included the National Baptist Congress, the National Veterans Small Business Congress and Expo, the American Federation of Teachers convention and the Acrobatics and Gymnastics National Championship and the Veterans Job Fair made the hall seem more inclusive. The latter surely gave its fair share of good press by helping veterans find jobs.
Yes, surely these all helped Cobo financials, but without a doubt the aid of the Detroit Regional Convention Facility Authority cannot be underestimated. Founded in 2009 by the passing of Public Act No. 63 by the Michigan Legislature, it assumed control of Cobo with the goal of giving structure, governing, and expanding the center. Issues ranging from management to construction, from contracts to finance, are addressed by the group.
The Authority took control from being solely in the hands of the City of Detroit to a 5-member council representing Detroit, the State of Michigan, and Wayne, Oakland and Macomb counties. The group clearly represents all the groups affected by Cobo and is also a large leap in cooperation and collaboration. The groups represented on the board have historically had issues with each other, but the success of the Authority is a shining example for Southeastern Michigan.
“The DRCFA is a model for other regional authorities,” says Oakland County Executive Brooks Patterson. “We fought hard and held out for the authority’s current structure, which protects taxpayers in each county including Oakland.”
“The authority continues to make great strides in improving the operations of Cobo,” said Bero. “As operating subsidies from state taxpayers decline, we’re increasing overall operating revenue from vendor sales and rental space and being more economical with expenses.”
So, as Patterson says, “If you haven’t been to Cobo lately, you should go. When the renovations are complete, I expect it will be one of the top convention facilities in the nation.”
Come on and see.