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With expansion shelved, convention business at risk

The state Convention Center Authority has several convention contracts that depend on an expansion of its flagship facility. Matthew J. Lee/Globe Staff/File 2012/Globe Staff

The Institute of Food Technologists was the first to go: The trade group dropped plans to bring its massive convention and its 20,000-plus attendees to Boston in 2019 almost immediately after Governor Charlie Baker halted the Boston Convention & Exhibition Center expansion.

It might not be the last. Baker’s decision to shelve $1 billion in bonds for the expansion endangers another 17 big events with contracts to come here over a decade, the Massachusetts Convention Center Authority says, as well as at least 23 more events that were under consideration. Some of the groups have already started looking elsewhere.

The 18 events booked for the expanded convention center, the authority says, were projected to deliver $33 million in taxes and have an economic impact of nearly $500 million. But each contract has a clause that allows the group to walk away if the convention center project or an affiliated hotel across the street will not be finished in time.

“We were looking forward to that expansion so we could come to Boston,” said Karen Malone, a vice president with the Healthcare Information and Management Systems Society. “We’ve never been in the Northeast. There is no other venue [there] that can accommodate our size. That’s the beauty of what they were proposing in Boston.”

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Malone said the health IT group will probably take its 2021 annual convention someplace else, to a place big enough for its nearly 44,000 attendees.

Baker’s decision removes all hope of the expansion being completed by mid-2019, as projected. His aides worry that the extra debt could drain money destined for the state’s general fund, and that the expansion-related business could fall far short of proponents’ expectations.

Also up in the air: the 1,200-room hotel proposed for the other side of Summer Street. The Massachusetts Port Authority said that it is now reconsidering its plans, and might pursue a hotel half that size.

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Baker’s move late last month was not unexpected by political observers. But it took many in the convention industry by surprise. They viewed Boston as a fresh new entrant in the big-events sweepstakes — a welcome addition, given the city’s rich history, renowned health care industry, and numerous airline connections to overseas locations.

The pool of booked events that could be affected by the canceled expansion represents a fraction of the 25 to 30 big gatherings hosted by the convention center each year. The extra 335,000 square feet of exhibit space that would be built, a 65 percent increase in size, could make the sprawling South Boston center the biggest East Coast events facility north of Atlanta.

“This is as robust a book of business as exists in the industry,” said James Rooney, the departing convention center director. “To just forgo the business opportunities that are knocking on our door is a curious decision to me.”

Kelly Fox, vice president of meetings at the Institute of Food Technologists, said her group dropped its plan to come to Boston in 2019 because there is simply not enough space in Boston without the expansion.

Officials at the Convention Center Authority thought they had a big victory when they landed the Biotechnology Industry Organization’s annual convention, one of the most coveted events in the industry, for five years between 2020 and 2030. But all of those contracts have walkaway clauses. That does not mean BIO will definitely cancel: The group has already agreed to come in 2018, using other space in the city in addition to the convention center, although multiple locations generally are not desirable.

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Kirsten Olean, meetings director at the American Society for Microbiology, said her group will take a similar patchwork approach in Boston after deciding late in the planning to combine two of its events for a new annual meeting in 2016.

But as she schedules subsequent conferences, Olean said, her group probably will not consider coming back to Boston without a single-building option.

“Convention center expansions in general are always controversial and fraught with politics,” Olean said. “But usually there’s not a stop at this point. We were almost to the finish line.”

Getting everything under one roof is also critical for Kent Allaway, at the Produce Marketing Association. He said he had hoped to add Boston in 2020 to the four-city rotation of his 23,000-attendee event.

“Now you’re back to the drawing board,” Allaway said. “I can’t tell you for sure if you put shovels in the ground today, we would have a contract. But I’m very limited for where I can go, and Boston would be a good option if [the expansion] were to materialize.”

The Convention Center Authority says existing tourism taxes and fees that flow into the convention center’s main fund should cover the extra $40 million to $60 million in annual debt payments needed to pay off the new bonds.

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But if there is not enough money, revenue from statewide hotel taxes would make up the difference. Much of that revenue would otherwise go to the state’s general fund.

That is partly why Baker is concerned about the project’s funding. The governor just replaced seven of the 13 members of the Convention Center Authority’s board and asked them to revisit the expansion idea. The reconstituted board meets for the first time on Friday.

“The governor’s pause will allow the new board to review the proposed $1.1 billion expansion to justify the responsible use of taxpayer money,” Kristen Lepore, Baker’s secretary of administration and finance, said in an e-mail.

To convention center critics, the threat of losing business does not outweigh the risk to taxpayers if the project moves ahead.

Heywood Sanders, a public administration professor at the University of Texas San Antonio, known for his skepticism of convention center projects, said the one or two events per year that are signed for the expanded Boston center represent a small fraction of the 25 to 30 big conferences that take place there every year.

He also pointed to the slowdown in booked-room nights at the existing convention center as a sign of dwindling demand: Hotel occupancy associated with the complex has fallen 20 percent from 2011 to 2014. (Convention center officials say much of this can be attributed to the rise of online bookings done outside of official channels.)

Charlie Chieppo, who has fought the convention center expansion for years as a senior fellow with the conservative Pioneer Institute, said it is common for event planners to complain when a construction project gets shelved.

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The more space on the market, he said, the more negotiating power the trade shows have to get the best deals for their members.

“The more the market is overbuilt,” Chieppo said, “the less they have to pay for these shows.”

Signed expansion contracts
Projected economic impact of conventions booked for an expanded Boston convention center
Signed expansion contracts Year Attendance Economic impact
IFT Annual Meeting + Food Expo 2019 25,000 $32,945,293
Society for Worldwide Interbank Financial Telecommunications 2020 8,000 $18,692,399
American College of Gastroenterology 2020 5,500 $11,354,199
BIO International 2021 15,500 $31,404,996
American Heart Association 2021 20,000 $39,497,110
American Psychiatric Association 2022 15,000 $28,398,139
American Association of Pharmaceutical Scientists 2022 9,500 $13,751,515
American College of Chest Physicians 2022 6,000 $11,724,374
BIO International 2023 15,500 $32,354,212
American Physical Therapy Association 2024 12,000 $15,442,526
ASIS International Annual Seminar and Exhibits 2024 25,000 $35,771,270
International Association of Chiefs of Police Annual Conference 2024 16,000 $26,923,052
BIO International 2025 15,500 $33,332,118
American Society for Radiation Oncology 2026 13,000 $30,372,158
American College of Gastroenterology 2026 5,500 $11,528,220
BIO International 2027 15,500 $34,339,581
ASIS International 2028 25,000 $37,966,322
BIO International 2029 15,500 $35,377,495
TOTAL 263,000 $481,174,978
SOURCE: Massachusetts Convention Center Authority
Bennie DiNardo/Globe Staff

Jon Chesto can be reached
at jon.chesto@globe.com. Follow him on Twitter @jonchesto.