The Massachusetts Convention Center Authority on Wednesday filed legislation for a massive expansion of its South Boston exhibit hall, saying the $1 billion project is necessary to make Boston a top US destination for meetings and trade shows.
If approved, the project would increase the meeting and exhibit space at the Boston Convention & Exhibition Center by 60 percent. The existing building, which opened in 2004, is already the largest of its kind in New England.
The authority’s executive director, James Rooney, said expanding the center itself could be funded without any new taxes or fees. But he said public subsidies will certainly be needed for a separate project the authority is pursuing — an adjacent hotel complex with up to 1,500 rooms.
Rooney has long argued that the two projects are necessary to help Boston compete for the nation’s biggest trade shows.
“We are losing 14 to 17 major conventions a year just because we don’t have the space to accommodate them,” he said. “There is a lot of money being spent on meetings and conventions in this country. Boston has already done well in this business, and it can do more.”
Even with its successes,the facility posted a $65 million operating loss in the last fiscal year.
While the project has been under discussion for several years, the filing of the legislation now signals the director believes it stands a good chance of approval — especially since Rooney has been meeting with legislators and other officials for months. The fact that Rooney is not asking lawmakers to authorize additional taxes or other subsidies is likely to enhance its chance of passage.
The filing will kick off a series of public hearings about the expansion. The proposal calls for construction of a 1.3 million-square-foot addition to the rear of the facility, which would include new exhibit and meeting space as well as a second ballroom. A spokesman for House Speaker Robert DeLeo declined to comment on the proposal Wednesday night. Governor Deval Patrick’s spokeswoman also withheld comment, saying the administration has not reviewed the legislation.
Rooney said he is hoping to win legislative approval for just the convention hall expansion by the end of this year. Construction could begin as soon as 2015, with the new exhibit space to open in 2017.
The South Boston hall has succeeded in attracting an array of new conventions to Boston, generating billions of dollars in spending on meals, hotel rooms, and other services. But even with its success, the facility posted a $30 million operating loss in fiscal year 2012, according to the most recent financial statement posted on its web site.
Rooney said a fund created to support the convention center with taxes on hotel rooms and other tourism activity generates enough money to cover losses at the existing building and pay for its expansion.In 2012, the taxes on hotel rooms, rental cars, and other services in Boston and Cambridge produced more than $99 million in revenues for the state, up from $55 million in 2005, the convention center’s first full year of operations, the authority said.
When he first started advocating an expansion in 2009, Rooney warned the state might have to raise those taxes or find additional revenue to finance the effort. But he said the growth of the fund in recent years has convinced him otherwise.
“We’ve spent a lot of time looking at our revenue projections and everyone is satisfied now that we have a cohesive financing plan [for the expansion] that doesn’t require any additional fees or taxes,” Rooney said.
One business leader involved in vetting the project said funding it without new taxes removes a major political obstacle.
“That is certainly a promising element of the proposal,” said Michael Widmer of the business-backed Massachusetts Taxpayers Foundation. “But one needs to look through it to understand the assumptions they are basing that on.”
Funding for the expansion could weaken if the economy declines or tourism activity is disrupted, as happened following the 9/11 attacks. But Rooney asserted the expansion could proceed even if such an event occurred.
The convention center authority is also pushing a separate effort to build new hotel rooms around the center.
A developer is currently building hundreds of new rooms nearby on land that the authority purchased last year, and officials will soon solicit proposals for a larger hotel complex with up to 1,500 rooms.
Rooney has said repeatedly that a lack of hotel rooms in the area is a major disadvantage because organizers of large events are forced to spend hundreds of thousands of dollars to transport attendees from hotels elsewhere in the city. The South Boston hall has about 1,700 rooms within a half-mile. By contrast, competing facilities in New Orleans, Chicago, and other cities have more than 7,500 rooms within that radius.
But the effort to build a 1,500-room hotel complex could require tens of millions of dollars in public assistance such as tax breaks or direct subsidies. That’s because private developers and lenders have been unwilling to take the risk on such a project without public support.
Rooney said he won’t know how much assistance is needed until the state receives proposals for the complex.
“Tax deferrals and other arrangements are used to help these projects get across the finish line,” he said. “We expect some of those tools will be used here. We just don’t know which ones or how much.”
Correction: Because an editing error, a prior version of the story inaccurately reported the amount of an operating loss recorded by the Boston Convention & Exhibition Center.