Business

Shirley Leung

A real turf war is brewing in Southie

BOSTON, MA - 5/30/2014: The Boston Convention and Exhibition Center is the largest exhibition center in the Northeast United States, with some 516,000 square feet of contiguous exhibition space may be allowed to get BIGGER AERIAL (David L Ryan/Globe Staff Photo) SECTION: BUSINESS TOPIC

David L Ryan/Globe Staff/file 2014

The Boston Convention and Exhibition Center.

If you want to rile up Boston Mayor Marty Walsh, ask him about the expansion of the convention center in South Boston.

It’s bad enough that Governor Charlie Baker put the brakes on the $1 billion build-out, which the mayor wanted. Now the state is talking up an alternative that Walsh deems worse: developing the remaining land for something other than exhibition space.

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“If it’s not used for a convention center, then we are going to have a dialogue about does that land revert back to the city,” Walsh told me.

A dialogue? Sounds to me like the mayor is ready to rumble. And I think he’s got a legit beef.

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Here’s why: Much of the 60 acres the Boston Convention & Exhibition Center sits on was assembled and purchased by the city in the late ’90s. Boston paid about $181 million of the $252 million bill, while the state kicked in the rest.

The city led the painstaking process that involved eminent domain and negotiations with dozens of property owners of office buildings, warehouses, parking lots, loading docks, and junk yards. The late Boston mayor Tom Menino thought a new convention center would be worth the trouble. The Hynes in the Back Bay was too small for big-name conventions. A massive new facility could turn Boston into a top-tier meeting destination, while spurring development on the nascent South Boston Waterfront.

A deal for a new center was laid out in the state law: The city would be responsible for much of the land acquisition, while the state would pick up the tab on the building itself. The total project cost was over $800 million.

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In handing over the land to the state, Boston would forever give up property tax revenue on those parcels. And unlike the state, the city does not receive a stream of dedicated tax revenue related to convention center activities. The city benefits only indirectly, from visitor spending such as hotel stays and restaurant meals.

But if the state is going to renege on its end of the bargain, Walsh thinks the city should oversee development of what has now become prime real estate, and be the beneficiary. The land in question — roughly 20 acres — sits behind the convention center and is primarily used for parking.

“The intention for the land was to build a convention center. It was not to be developed” for something else, Walsh said. “If anyone is going to develop the land, the city can develop it, and we can get the tax revenue from that land.”

The mayor is fired up after the board of the convention center authority decided last week to hire a firm to design a master plan process for the undeveloped land. Walsh said he has spoken to executive director David Gibbons and believes the authority is getting ahead of itself.

“They may want to rethink putting that out without having another conversation with us,” said Walsh.

Gibbons wouldn’t get on the phone to respond to the mayor, but his spokesman sent over this statement: “We are undertaking this study to achieve long-term success for the BCEC and all stakeholders: the state, the city and South Boston neighborhood, our customers, and the taxpayers.”

Last week Gibbons said options would likely differ from the previous planned expansion, focusing more on building meeting and ballroom space and less on exhibit hall space.

The mayor is fired up over the state’s potential plans for the unused land.

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That doesn’t sound outrageous, but what concerns other local politicians, including state Representative Nick Collins and Senator Linda Dorcena Forry, is that the state may do a partial expansion then sell off excess land to the highest bidder for retail or housing.

It will likely be another year before the convention center authority makes a final decision.

The plan all along was to build the convention center in phases. The first phase opened in 2004, and a decade later, Beacon Hill passed legislation to authorize a 1.2 million-square-foot expansion. But in 2015, shortly after Baker took office, he refused to sign off on selling bonds, citing concerns the project’s economic impact had been overstated and its debt payments could drain state coffers.

The original 1997 state law does not appear to account for a scenario in which the site would be used for something other than a convention center, but in separate agreements with the state, the city maintained regulatory control over the land designated as expansion space.

For Jim Rooney — who was Menino’s chief of staff when the site was being assembled — the idea that former city property would be used for something other than exhibition space does not sit well with him either.

“It’s treading on dangerous territory to use the eminent domain process for a public purpose and say, ‘Never mind we’re going to make money off this land,’ ” said Rooney, who would later leave City Hall to oversee the construction of the new center and then run the convention center authority.

We all see where this is headed. Bring on the lawyers to figure out who’s entitled to what.

Sam Tyler, who runs the Boston Municipal Research Bureau, a fiscal watchdog group, told me it may be difficult for Walsh to take back the land. But Tyler thinks “there ought to be some compensation” for the city and suggests it seek a cut of the rental car assessment or sightseeing fee the state collects as part of the convention center law. Boston, Tyler added, could even enter into a so-called PILOT agreement in which the state offers payment in lieu of taxes.

So what should happen here?

A lot of political capital was spent to build the convention center. It doesn’t seem right that the convention authority alone — controlled by an administration that seems to be leaning against expansion — should decide the fate of the spare land.

Rather a high-level bipartisan group of stakeholders from the neighborhood to the hospitality industry should be convened to study the options.

Let’s hope a decision can be made thoughtfully, one that will withstand the test of time rather than satisfy a short-term budget crunch.

Shirley Leung is a Globe columnist. She can be reached at shirley.leung@globe.com. Follow her on Twitter @leung.
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