By Michael Norton
STATE HOUSE NEWS SERVICE
STATE HOUSE -- House Speaker Robert DeLeo earlier this month called the $1.1 billion expansion of the Boston Convention and Exhibition Center "vital to our economic future," and financing legislation to make the project a reality is beginning to make progress on Beacon Hill.
Rep. Nick Collins of South Boston filed the bill (H 3952) last October and the State Administration Committee approved it in March after a four-month review. Now the House Bonding Committee, chaired by New Bedford Democrat Rep. Antonio Cabral, is scheduled to hold a hearing on the bill April 10.
During a speech to the Greater Boston Chamber of Commerce this month where he grabbed headlines for outlining minimum wage and unemployment insurance system reforms, DeLeo also said an expanded convention center could enable the city to capture larger events like BIO International and be a "greater international competitor."
"The convention center and our base of hotel rooms need to expand," DeLeo said. "I support the legislation that would authorize and fund that convention center. I believe it is the kind of measured but creative thinking that can keep our state growing."
The $850 million spent to launch the BCEC, DeLeo said, has resulted in a $5.3 billion return on investment.
Legislation facilitating the $1.1 billion expansion encountered no opposition at a hearing last year, with proponents saying the larger facility will not require higher taxes or fees and will deliver an economic punch and create 4,700 construction jobs and 2,100 permanent jobs.
Massachusetts Convention Center Authority Executive Director James Rooney said Boston since 2000 has seen the largest growth in convention market share of any U.S. city, underscoring the need to expand.
The bill relies on existing hospitality industry charges - Boston-area taxes and fees on hotel rooms, sales and meals taxes, trolley tour levies, and a $10 rental car surcharge - to finance the expansion and leverage private hotel development valued at $700 million.
In a March 11 Pioneer Institute policy brief, Charles Chieppo made the argument that about $5 billion will not reach the state's General Fund in the coming years because proceeds from existing taxes used to pay off convention center bonds will be used to cover the expansion costs.
"The convention center expansion funding plan threatens to cannibalize funding for desperately needed transportation improvements and capital projects across the state," Chieppo wrote in a three-page brief.
The expansion funding plan, according to Chieppo, former policy director in the Executive Office of Administration and Finance, is "akin to pushing out the date for fully funding public pension liabilities. The current cost doesn't change, but by paying for much longer, the overall cost is staggering. So much for expansion that 'pays for itself.'"
Asked about the criticism Monday during a Tourism Fund Commission meeting, Rooney said called the brief an "essay more than an analysis" and said the premise of the brief assumes that no subsidies should be provided for the convention business. "Essentially we would close our doors," he said, and convention-related jobs and spending would dry up without subsidies.
The expansion would add 1.5 acres of outdoor space, Rooney told the commission, and increase the square footage of the facility from 516,000 to 851,000, including the addition of a second ballroom. As he did last November, Rooney warned of a potential rise in interest rates that could affect project costs.
"From our perspective, timing is of the essence," he said.
Rooney said statewide hotel tax receipts would backstop the expansion debt, an arrangement he said would result in "low risk."
During a discussion about ways to boost tourism, Rooney emphasized that convention-goers make their plans before arriving so efforts to influence their choices should occur before they depart on their trips. Surfacing the blending of business and leisure travel, or "bleisure," Rooney added, "It's kind of a behavioral thing that's going on." International visitors, Rooney said, stay longer and spend significantly more during their travels.