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Picking Up the Check

Caterers are wondering why they should help bear the financial burden of the $100 million Performing Arts Center.

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With an easy confidence, his forehead beading with sweat, Harry Moseley moves quickly through the foyer of the Richmond Renaissance Center, originally built as a Masonic Temple in 1887. It's a hot July afternoon and the air conditioning is shut off to conserve electricity. Wearing a golf shirt, khakis and Birkenstocks, Moseley opens the door to the grand ballroom: The Holland chandeliers and Palladian windows reflect a grand array of light, bouncing off the polished hardwood floors. Once potential clients are here, the sell is easy. Getting them here is the real work. “I'm kind of out here on an island, so to speak,” Moseley says.

He has some company. Located in the 100 block of West Broad Street, Moseley's conference center and catering business is a stone's throw from the new convention center and the planned Performing Arts Center between Sixth and Seventh streets. Indeed, he appreciates the revitalization of Broad. But he fears a proposal to increase the city's meals tax from 5 percent to 6 percent will only give potential customers another reason to take their business elsewhere.

As City Council contemplates a series of meals-tax proposals — all of which are being billed as ‘user taxes' — and the battle heats up between downtown restaurateurs who are for and against the tax, Moseley represents a business segment that's been pushed to the sidelines in the debate. The Renaissance Center won't directly benefit from the Performing Arts Center, but under the meals-tax proposals he'll foot the bill to pay for it.

“We just need to see more benefit for the tax,” he says. Some Richmond restaurants may benefit from traffic generated by the new 650-seat theater, Moseley says, but he doesn't see how it helps his business. All it does, he says, is generate bad publicity. Before the meals-tax debate, many people were unaware the city has a prepared-meals tax while the counties don't.

“I was not aware that Chesterfield and Henrico didn't have a tax,” says Councilman G. Manoli Loupassi, whose family has been in the restaurant business for more than 40 years. He found out during the recent debate.

That's precisely Moseley's point.

“We need to be very, very careful about the message we're sending,” Moseley says. “People don't need a lot of excuses for not doing business here.”

Moseley's dilemma is at the heart of ongoing debate: Who should bear the financial burden of the $100 million Performing Arts Center?

The Virginia Performing Arts Foundation, whose officials acknowledge it has been faced with fund-raising difficulties, has run into a wall of sorts. The foundation says major philanthropic and corporate donors are ready in wait to support the center — at least one donor has agreed to put down $1 million as soon as the meals tax passes — but the donors first want to see an infusion of government funds. The foundation already has received $14 million in commitments.

Plans for the Performing Arts Center first took shape in 1998 as part of a process called MAPS, an acronym for Metropolitan Area Projects Strategies, which attempted to identify potential public projects and then stage a regionwide public debate. MAPS, made up largely of civic boosters, would package the best projects and lobby the General Assembly to pass legislation that would allow for a referendum requesting a 1 percent sales-tax increase to fund the projects.

MAPS, however, couldn't gather any political momentum and it dissipated. And the public debate never took place.

Earlier this year, the General Assembly denied the arts foundation a $30 million funding request largely because of the state budget crunch. The arts foundation was forced to seek alternatives to jump-start the regional project. So they turned to the city.

In the fall of 2002, the arts group had already tested the hospitality waters. In an open meeting with about 45 hotel and motel operators, the arts group presented a proposal for increasing the transient occupancy tax, or lodging tax, which taxes patrons of hotels specifically. But hotel and motel operators balked, especially because they were still struggling in the aftermath of Sept. 11.

“What they asked us to do was to find other people who stood to benefit a lot from this project and see if they would help,” recalls Brad Armstrong, president and CEO of the arts foundation. “It was recommended to us that the restaurants in the city would stand to gain tremendously.”

In March 2003, the arts group started talking to local restaurant owners. After a few “positive” conversations, Armstrong set up a meeting at the Richmond Convention Center on May 1. About 50 restaurant and food-service operators were invited to attend. About 30 showed up.

“As I recall, there were more positives than negatives,” Armstrong says. The arts group, along with supporting City Council members, pushed ahead.

While he anticipated some opposition, Armstrong says he didn't expect the type of uprising organized by the Virginia Hospitality & Travel Association, opposition which culminated early last week into a PR battle. “What I didn't anticipate was the level to which the opposition would stoop to misleading and misrepresenting the truth,” Armstrong says, pointing to a newspaper ad the hospitality association ran in local media (including Style) suggesting the 1 percent increase would result in Richmond having “the highest meals tax in America.” (Even at 6 percent, five cities in Virginia would have a higher rate than Richmond's, Armstrong says.)

The city is on Armstrong's side. The arts complex is a major component in Richmond's plans to revive East Broad, after all. And a group of restaurant owners have formed to support the tax — the Coalition of Hospitality & Entertainment for an Exciting Richmond, or CHEER. The tax would generate $2.7 million annually to pay debt service on the project for the next 20 years, and if it passed this year, the complex could conceivably meet its 2007 completion date.

But caterers such as Moseley and the Virginia Hospitality & Travel Association forced the debate into a more public realm, sidetracking the plan at least temporarily. The result was the first organized public outcry over the Performing Arts Center. “The people that dine at Krispy Kreme, are they users of the Performing Arts Center? No,” argues Richard McDonnell, director of government relations for the hospitality association. “As for a user tax, I think that's just ludicrous.”

Caterers are in a similar boat. With the economy still reeling from recession, war and terrorist attacks, corporate catering jobs have shrunk. Companies searching to trim fat waste no time putting catered events under the knife, they say.

“Everybody has slowed back,” says Bobby Butsavage, owner of Cateraide Inc., located at Second and Canal streets. “It's been a struggle since Sept. 11. And [supporters of the tax] are like putting icing on the cake.”

Butsavage says the tax increase also makes it more difficult to compete with caterers in Chesterfield and Henrico counties. Since the tax is assessed where food is prepared, he's often at an immediate disadvantage considering some 25 percent of his catering jobs are outside of Richmond.

“When we do a job, we're 6 percent higher when everything else is apples for apples,” he says. “I think it's horrible.”

The opposition has caught the attention of City Council, which is now entertaining proposals that would increase the meals tax by one-third, one-half and three-quarters of a percent, with ticket surcharge once the center opens. Loupassi favors raising the tax by one-half percent and a 50 cents ticket surcharge.

“There will be a lot less opposition,” he says of the alternative. “We need to do it in a way that has the least impact on our citizens.”

Moseley, operator of The Renaissance Center, says a meals tax increase isn't necessarily a deal-breaker with potential clients. He's managed to replace a loss in corporate business with more weddings and fund-raising events — he'll book 40 events this year compared to 43 in 2002. Moseley says the arts foundation simply hasn't made a convincing argument that the tax is worth the burden. S

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