The state Legislature has paved the way for the Massachusetts Convention Center Authority to begin the first phase of a $2 billion expansion plan by authorizing construction of up to seven hotels around the Boston Convention & Exhibition Center in the Seaport District.
The new hotels can have a maximum of 2,700 rooms, including a 1,200-room headquarters hotel that convention center authorities have acknowledged may need to be subsidized by up to $200 million in public funds. The Legislature did not include any funding for the hotel developments, but is allowing the convention authority to spend some of the tax money it receives for prep work, such as clearing land and building parking lots, that is necessary for the new hotels.
The legislation, included in the state budget passed in July, largely removes the prohibition on hotels being built south of Summer Street near the convention center, a restriction that was put in place in 1997 to ensure that new hotel development did not have an adverse effect on South Boston. But in public meetings earlier this year in South Boston and Fort Point, residents said they would welcome new hotels, said Senator Jack Hart, who introduced the legislation.
“It’s a direct result of what the neighborhood wanted,” Hart said.
But critics hit on the process Hart and other supporters used to approve the hotel development; by attaching it to the state budget, itself a lengthy document, they said the authorization was not considered on its own in separate legislation, where it could be debated publicly.
“It’s just some insider deal in the dark of night that leaves all of us shaking our heads trying to put the pieces together,” said Charles Chieppo, a former convention authority board member. “If this is the beginning of the expansion deal unfolding, then that’s very troubling, because in my view there’s just not the data, there’s just not the evidence there that it should happen.”
Chieppo and others have expressed concerns that a larger convention center would not produce the predicted economic benefits, at a time when many other cities are expanding their facilities while the convention business is struggling.
The authority is planning to spend $33 million to buy a 5.5-acre vacant lot on D Street, across the street from the Boston Convention & Exhibition Center, where it will seek development of hundreds of new hotel rooms, likely in the mid-price range. The current headquarters hotel for the exhibition hall, the 800-room Westin Boston Waterfront, already has city approval for a 320-room expansion.
Officials have also acknowledged the authority may need additional public funds to build that headquarters hotel, because its tax receipts aren’t enough to support projects of this size. That would need to be approved by the Legislature.
The legislation does not address the larger portion of the authority’s $2 billion expansion plan, which includes doubling the exhibition and meeting space at the South Boston hall. Last year, a special panel recommended the state move forward on the project, but it did not specify how the expansion would be funded and how much public money it would require.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, said state and convention officials need to document where the funds for the expansion will come from before moving on to the next step.
“With limited resources, we need to make a decision collectively about where those limited resources go,” Widmer said. “If we’re doing these kinds of authorizations in outside sections of the budget, greenlights on hotels, then it’s certainly time to be front and center on financing options so taxpayers get some idea of how they are going to pay for this.”
Even if the larger expansion doesn’t go through, convention officials have said the Seaport area still needs at least 2,300 more hotel rooms to keep up with demand. Currently, Boston has 1,700 hotel rooms within a half-mile of the convention center, far fewer than at many similarly sized convention centers.
“Adding some additional hotel rooms around the BCEC has always been our stated priority,” said James Rooney, executive director of the authority. “We believe we have demonstrated the need for expansion and hope to bring that proposal to the Legislature next year.”
Overall, the Boston hotel market is operating at capacity, in terms of occupancy, which suggests the city needs more hotel rooms, said Matthew Arrants of Pinnacle Advisory Group, a hotel consultancy. But he also acknowledged that big headquarters hotels often require public funding.
“It’s kind of a catch-22 situation,” Arrants said. “The convention center needs to have a lot of hotel rooms, and a strong headquarters hotel and in many cases more than one headquarters hotel, in order for it to reach its peak performance, to reach its capabilities, as it were. But headquarters hotels are very expensive to build because they require a lot of meeting space.”