How The Democratic Convention Will Boost Philadelphia's Economy

What is the real economic impact of national party conventions? For every Presidential election cycle cities woo the Republican National Committee and the Democratic National Committee to bring their quadrennial confabs (and dollars) to town. But do the promises hold true?

We will find out when the 2016 Democratic National Convention (DNC) rolls into Philadelphia next month. This convention promises to be an even larger revenue producer since the Republican National Convention in 2000, with an economic multiplier effect five times greater - and providing a much larger economic punch than last September's historic visit by Pope Francis.

The City of Philadelphia and DNC officials estimate an influx of $350 million for the area, but that figure is exaggerated - it will be lowered after the fact, just as Charlotte's and Denver's estimates were wildly off target. City officials always try to sell the economic impact package to their taxpaying constituents and the local business community with larger estimated numbers than actual numbers.

This year, the DNC should boost the gross regional product in the Delaware Valley by at least $130 million from the lead-up to the convention to after it ends on July 28. Both retail and wholesale merchandise, hospitality, food and liquor, lodging, transportation will all benefit, but not at the projected levels given by the DNC committee or the City. What will be more difficult to measure is the positive long term economic impact years after the DNC has left the City, and the presumed enhancement of Philadelphia's reputation and image.

Next month 30,000 delegates and Democrats will be joined by at least 15,000 media and over 17,000 volunteers to assist in the proceedings. And this year's DNC will total over 60,000 people on a daily basis for the last week in July at the Wells Fargo Center and downtown Philadelphia. 40% of the volunteers will come from outside the city using the infrastructure and transportation networks, or staying overnight in the city. And more than 15,000 hotel rooms are booked from 2 to 5 nights in over 90 hotels.

Conventions or conferences usually held at the Philadelphia Convention Center have up to 5,000 attendees. This year's DNC will total over 60,000 people on a daily basis for the last week in July at the Wells Fargo Center and downtown Philadelphia. This short term positive economic boost will also be powered by the 2,500 vendors that will provide every detail from catering to hospitality to dry cleaning services over the four days of the convention.

The drawbacks? Well, there will be approximately $40 million in expense for the City, but that will be defrayed by the Convention committee's raising $85 million to be the host city.

The City of Philadelphia will be able to generate an increase in revenue due to the number of taxes levied on individuals and businesses. The City sales tax, currently at 2%, along with the Commonwealth's 6% sales tax will generate at least $10 million. The sales tax rate is much lower compared to the hotel occupancy tax (8.5%), liquor tax (10%) and parking tax of 22.5%.

So this is Philadelphia's chance to show the nation the City's assets from Reading Terminal Market to the Art Museum to the National Constitution Center. Let's see if the steps to ensure these events have economic value and are an economic generator really pay off. Residents, commuters and businesses will be watching and asking if event is safe, well managed and properly managed financially, or if it under-delivered.