While the City Council this week approved documents aimed at guiding the possible expansion and modernization of the L.A. Convention Center, city leaders Thursday were still weighing the finances and timing of what is expected to be a multibillion-dollar effort.
On Wednesday, council members voted 14-0 to approve what is known as the Convention Center Expansion and Modernization Project, consisting of entitlements and a sign district that would serve as a guide for future development. Councilman Curren Price was absent during the vote.
The documents represent the first guide for renovation of the building in 30 years.
However, actual plans to expand and modernize the Convention Center remain in limbo, as council members await answers on the financial impacts of the project before they ultimately decide whether to move forward with the project ahead of the 2028 Olympic Games or after the events.
“Any decision that impacts one of our city’s most important economic assets must be done with great care and deliberation,” Councilwoman Traci Park said in a statement Thursday. “I look forward to continuing this conversation with urgency in the new year.”
Park, who chairs the council’s Trade, Travel and Tourism Committee, led a discussion earlier this week as part of a special meeting on the issues the multibillion-dollar project would present.
The committee recommended approving $1 million to conduct a cost analysis, including risk exposure and cost-sharing of a traditional city delivery method and Public-Private Partnership financing model. In addition, council members requested a report on potential funding sources for debt service payments.
Those reports are expected to be discussed by the council’s Budget, Finance and Innovation Committee sometime in the new year before being considered by the full council.
According to a joint report from the Chief Legislative Analyst and City Administrative Officer, the city has been working with Anschutz Entertainment Group and Plenary Group since 2018 for the possible expansion of the Convention Center.
The city had evaluated a public-private partnership, committing to making both short-term “progress payments” and then long-term “availability payments” to AEG Plenary Conventions Los Angeles, which would have provided private operations and maintenance of the center’s campus.
Under the public-private approach, the city would retain the financial risks of achieving the long-term projected revenues from the project and other uncertainties.
Due to the COVID-19 pandemic, however, the agreement did not move forward and the expansion plan was delayed.
Earlier this year, AEG Plenary Conventions Los Angeles presented the city with an updated public-private financial plan for the expansion program, suggesting the group could do the work at a lower cost.
But city officials questioned whether the level of cost reduction can be achieved without impacting the project or placing the city at greater risk. According to the city report, the project — under any delivery method — would place a major obligation on the city for about 30 years.
The CLA and CAO presented four options to address the Convention Center’s expansion and improvement:
— Continue negotiations with APCLA, finalize an agreement, and begin construction immediately at a cost estimated at $6.5 billion;
— End negotiations with APCLA, begin a city delivery model, and begin construction immediately at a cost estimated at $4.8 billion;
— End negotiations with APCLA, begin a city delivery model, and begin construction after the 2028 Olympic Games at a cost to be determined; or
— End negotiations with APCLA, terminate the expansion project, develop a Limited Improvements Project that would identify key capital improvements and limit expansion at a cost to be determined.
According to Park’s office, while there are some events planned at the Convention Center for the 2028 Olympics, the expansion could wait until after the event. Her office noted there is support for the expansion and modernization project, but not a consensus on the approach.
City Planners have said the national convention business is highly competitive, especially in California, where San Francisco, Anaheim and San Diego also provide facilities that directly compete with L.A. for business.
The Los Angeles City Tourism Department and the CAO have previously reported a need to expand the number of hotel rooms near the Convention Center.
CTD also reported the lack of space and rooms has cost the city at least $4.9 billion in revenue generated from conventions. Another report, the 2020 Tourism Master Plan, estimated that the city lost 2.6 million room nights between 2014 and 2017 because the Convention Center is too small or could not accommodate larger meetings, conventions and exhibitions.
Ernesto Medrano, executive secretary at the Los Angeles/Orange Counties Building and Construction Trades Council, Maria Salinas, president/CEO of the L.A. Area Chamber of Commerce, recently expressed their support for the expansion of the center, calling it a “crucial move” for the city.
In joint statement published in the Daily News, they called for “immediate action,” demanding urgent decision-making to avoid losing a chance that may not come again. They urged the city to complete the expansion by 2027, with construction beginning no later than late 2024.
“Waiting four more years would not only escalate the costs, but would also strip the city of over $100 million in annual tax revenue and also deprive our local small businesses of a staggering $10 billion in sales,” Medrano and Salinas wrote.
According to the Department of City Planning, the expansion plan would feature a 700,000-square-foot New Hall building, connecting the existing South and West Halls over Pico Boulevard.
The New Hall building would include 193,000 square feet of new exhibit hall space; 60,000 square feet of new meeting rooms; an atrium entrance and lobby along Pico Boulevard; and a 98,000-square-foot rooftop multi-purpose hall and a 10,000-square-foot outdoor event space with a view of Downtown Los Angeles.
On Wednesday, the council also signed off on an Arena Sign District — a new signage program, according to city planners. It establishes standards and a “uniform experience” among the center, L.A. Live and adjacent regional tourism, hotel and entertainment destinations.
Plans for the L.A. Convention have been years in the making, city planners said. Since 2013, the city of Los Angeles has been exploring opportunities to improve the Convention Center.