Boston’s largest convention center will lose tens of millions of dollars in business in coming years unless the state authorizes a $1.1 billion expansion of the facility, Massachusetts convention chief James Rooney told lawmakers Thursday.
But the expansion proposal faced questions from legislators and others who raised concerns that the financial benefits of the plan would not justify the cost. Some also questioned whether Boston should get so much funding when other communities are in danger of losing money for cultural and tourism activities.
“Where I am, 110 miles from the State House, no one wants to keep footing the bill for construction in Boston,” said state Representative Nicholas Boldyga, a Republican from Southwick. “They come here very infrequently, and they’re upset because they can’t even get $10,000 a year for their cultural council budgets.”
Rooney and lawmakers have proposed a 1.3-million-square-foot addition to the Boston Convention & Exhibition Center that would include 335,000 square feet of exhibit space as well as new meeting rooms and ballrooms. They say the project would attract large trade shows and meetings that now bypass the facility because it is not big enough to accommodate them.
“We have tried to craft a financing mechanism that allows monies collected in Cambridge and Boston to pay for this,” said Rooney. He noted no tax increases would be required by the legislation that proposes the expansion. Nearly all the funding would come from existing fees levied on hotel and tourism activities in Cambridge and Boston. If those funds fall short, statewide hotel tax revenue would be used to make up the shortfall.
Rooney appeared before the legislature’s Committee on Bonding, Capital Expenditures and State Assets, which will make a recommendation on the bill to the House and Senate. It is unclear when the measure will come up for a final vote, but the legislative session ends in July.
Rooney said the expansion would place Boston among the top five convention destinations nationwide, generating $184 million more in annual economic benefits for the state and $12 million in additional taxes each year.
“The creation of the BCEC was a wise investment by the Massachusetts Legislature,” Rooney said. “And we have an opportunity to do more -- more in terms of job creation, more in terms of attracting additional major conferences and meetings, more in terms of tourism activities.”
Some critics of the expansion say it would take money away from other priorities by extending the length of time the state would need to pay off debt for the facility. Without the expansion, they say, tax revenue now raised for the convention center fund could be used to cover other expenses by 2034. Under the expansion proposal, the state could be paying off debt on the facility until 2060.
“The cost of that would be approximately $5 billion to the Commonwealth,” said Charles Chieppo, a senior fellow at the Pioneer Institute, a nonpartisan research organization.
Rooney said that expansion of the South Boston hall has always been contemplated and, in any case, taxes that go into the convention center fund will be needed to operate the facility beyond 2034.
In addition to the expansion, Rooney also wants to construct thousands of additional rooms around the convention center, which suffers from a lack of available rooms nearby. There are 1,700 rooms within walking distance of the facility, compared with 8,000 or more in New Orleans and other cities that compete with Boston.
Currently, 500 new hotel rooms are under construction across from the Boston Convention & Exhibition Center. But Rooney wants to build a larger headquarters hotel that would add another 1,200 to 1,500 rooms. The state’s convention center authority is awaiting responses from developers interested in building that hotel.
Rooney has acknowledged that construction of the headquarters hotel will almost certainly require government financial assistance because private developers have been unwilling to accept the risk of funding those projects. But he said such assistance come in the form of tax forgiveness or discounted leases, as opposed to direct subsidies.
“There are ways to structure this that don’t require me or the state or the city to put up cash,” he said.