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Panel backs $2b convention center expansion

Plan still needs city, state action

SUPPORT FOR EXPANSION “Boston has so much more potential as a convention and meeting city,” said James Rooney. SUPPORT FOR EXPANSION
“Boston has so much more potential as a convention and meeting city,” said James Rooney.
By Casey Ross
Globe Staff / June 22, 2011

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A state panel yesterday recommended a $2 billion expansion of the Boston Convention & Exhibition Center that would nearly double the size of the Seaport District complex but require tax increases and public subsidies to finance it.

The panel’s sign-off is the first step toward official approval of the expansion, which still needs backing from the City of Boston and the Massachusetts Convention Center Authority and approval of the Legislature.

The endorsed project includes an addition that would house a second exhibit hall, new meeting rooms and multipurpose space, and an adjacent hotel with up to 1,200 rooms.

Supporters say the expansion is needed to compete for the nation’s largest meetings and events that are already bypassing Boston, while other cities are expanding their facilities.

The existing $800 million convention center, opened in 2004, was funded by hotel taxes and an array of fees on taxis, rental cars, and tour buses. While the center makes enough money to pay off its loans, the expansion would probably require increases in those taxes and fees, or other measures to raise revenue.

Separately, the so-called headquarters hotel would require up to $200 million in public subsidies, officials have said.

After an 18-month review, nearly all 27 members of the panel yesterday voted in favor of the expansion.

The group, known as the Convention Partnership, also recommended that the Convention Center Authority spend about $4 million to determine optimal locations for additional parking and other facilities required to support the project.

“Boston has so much more potential as a convention and meeting city,’’ said James Rooney, executive director of the Convention Center Authority and cochairman of the partnership. “The project speaks to Boston’s role in a 21st-century knowledge-based economy. The ability to hold these major assemblies in key industries is a big part of that broader picture.’’

The panel, whose work is now complete, was made up of local officials and business people appointed by city and state leaders.

Three panelists declined to support the expansion, saying they were not persuaded the project would be the best use of the state’s limited economic development money.

“I’m yet to be persuaded that the benefits of this project merit the large public expenditures that would be required,’’ said panelist Michael Widmer, head of the Massachusetts Taxpayers Foundation.

The other two dissenters are state Senator Sonia Chang-Diaz and Sam Tyler, who heads the Boston Municipal Research Bureau.

The partnership did not recommend specific funding sources, but put forward options including:

■ An increase in the statewide hotel tax.

■ Borrowing against future tax revenues generated by the expansion.

■ Devoting a larger share of existing hotel tax and other tourism revenues to the Convention Center Authority.

■ Increasing taxes on taxis, rental cars, and other tourist services in the Boston area.

The debate now shifts to City Hall and the State House, where the Patrick and Menino administrations must work with lawmakers to decide whether to move forward with the expansion.

Alex Zaroulis, an aide to Governor Deval Patrick, yesterday offered measured support:

“We are looking forward to reviewing the [partnership’s] findings and recommendations and . . . to working with them and the Legislature to develop a sustainable strategy that is supported by the hospitality industry and won’t burden Massachusetts taxpayers.’’

In a brief statement, Senate President Therese Murray said: “We all support bringing more business and tourism to Massachusetts. I look forward to studying the report.’’

Peter Meade, development chief for Boston Mayor Thomas M. Menino, said he supports the project as a “very important economic engine for the city that provides thousands of jobs.’’

A spokesman for House Speaker Robert A. DeLeo said, “The speaker looks forward to hearing more about this proposal in detail.’’

The partnership’s recommendations were contained in a 36-page report that found the convention center is at a competitive disadvantage because it lacks enough hotel rooms, exhibit space, and ballrooms to accommodate the largest meetings. For example, the Boston hall has 1,700 hotel rooms within a half-mile, while facilities in other cities have between 6,000 and 19,000 rooms. Moreover, its exhibit hall is half the size of those in New Orleans, Chicago, Orlando, and other top-tier convention cities.

The recommendations call for state leaders to take “immediate steps’’ to increase the number of hotel rooms in the waterfront area, including the development of a second headquarters hotel, expansion of the Westin Hotel, and construction of midpriced hotels. It also recommended construction of a second large ballroom on the property and a new exhibit hall of up to 350,000 square feet.

The precise location and design of the facilities would be determined later, although the panel has zeroed in on adjacent sites to the south and east of the Boston hall.

The partnership’s backing comes despite critics’ concerns that a larger facility would not produce the promised economic benefits, at a time when the nation’s convention business is struggling and 21 other cities are expanding their facilities.

“This is a group where the majority of members would have put their stamp on whatever expansion got put forward,’’ said Charles Chieppo, a critic of the project who runs a Massachusetts public policy firm. “But we’re also at an economic time now where [state leaders] are going to be more careful about just saying yes to this, so we really don’t know how much of a done deal it is.’’

The number of visitors to the John B. Hynes Veterans Memorial Convention Center in the Back Bay and the South Boston center fell to 645,000 last year, down 26 percent from 870,000 in 2008.

Managers of the Convention Center Authority are predicting a strong recovery in coming years that they say will justify the expansion costs. The authority released a report last week that said a larger center could pump $222 million a year into the local economy, attract up to 26 new events annually, and create or support 7,300 construction jobs.

Casey Ross can be reached at cross@globe.com.