The Convention Center Saga Continues

Hi, it’s me again.  And I’m writing about the Convention Center AGAIN. Last time, I cautioned that while other cities race to the finish line to secure an economic victory, we consistently struggle into our starting blocks. 

That was six months ago. This was supposed to be a sprint to the finish line.  But a few City officials have decided to place hurdles in front of progress, instead of clearing the way.  

For two years, we’ve been meeting with councilmembers, showing up at City Hall, and advocating for the expansion and modernization of the Convention Center. A coalition of labor, residents, business organizations, hospitality leaders, and small business owners have shown up at committee meetings advocating for a project with no public opposition.  Convention Center expansion has the mayor’s support. And but for one objection, this project has had near unanimous approval from 14 City Council Members.   

But the Mayor, the City Council, and all of us have been played!  Every step of the way the city’s Chief Administrative Officer and Chief Legislative Analyst have simply run out the clock – hoping to delay the project until it is no longer feasible.  They’ve sharpened their pencil when it comes to costs and worked their erasers to a nub when considering revenue.

Detroit sold the naming rights of their convention center for $2 million.  The naming rights for SoFi, Crypto, and Intuit have sold for $25-$35 million annually.  Considering market value, this is between $5 million to $30 million annually that the CAO and CLA have not highlighted as a revenue stream for the Los Angeles Convention Center.  Instead, the Department of Public Works is responsible for hundreds of millions in increased costs and bloat in the project that have been added since the CAO and CLA were asked to find cost savings!  

If you don’t want a project to move forward, then you take your time weighing the project down with new expenses instead of exploring new revenues. These same officials now have the audacity to emphasize the risk – cautioning council and community that there could be severe penalties if the project they’ve delayed misses Olympic deadlines. It should be galling considering the narrowing window to complete the project is a direct result of their own actions, but instead they hide their culpability, without getting asked about the ongoing costs of maintaining an aging asset, and the risk of doing nothing to enhance the facility. 

Even considering the heavily weighted analysis of the CAO and CLA, the annual debt service to expand and modernize the Convention Center is equal to just 1% of the city’s general fund.  Yet DTLA accounts for an estimated 24% of the hotel tax, 23% of sales tax, 7% of property tax, and an estimated 20% of business taxes.  DTLA is less than 2% of the land in Los Angeles, but we account for nearly 10% of the $8 Billion general fund. It’s less than 15% of DTLA’s annual contribution to the general fund that we’re asking to have reinvested back into Downtown – on a project that has significant city-wide benefits. To be clear, the absence of a significant investment in downtown also has city-wide consequences.  

If tax collections and property values continue to fall below pre-pandemic levels, the hit to the city’s general fund would exceed the expense of the Convention Center; the future recoverability of downtown will be far more expensive than just the direct investment in this one facility if businesses continue to close due to lack of consistent foot traffic.    

We have to demand our City Council and Mayor hold government officials at all levels accountable.  Whether it’s the departments failing to repair streetlights, or worse, the C-Suite bureaucrats who believe they have the muscle to impose their will in spite of clear public and political support to the contrary.  Without ever having to face a voter, business leader, or union organizer - these are the folks allowed to dictate the terms of the most important investments in our community.  Yet, it will be Mayor Bass and Councilmember Jurado that we expect to come up with a new course of action if we fail to take this one.  Career bureaucrats are never asked to have a vision for the future or have the obligation to deliver on it; they seemingly exist in protected perpetuity. 

The council will act once again next week on the expansion of the Convention Center.  We issued our first call to action nearly two years ago and believe next week’s votes will be the last – either to move forward with this much needed investment or do nothing at all. We ask the community to demand that they reinvest dollars generated in DTLA back into our community.  We’ll share details and reminders so that the community’s voice can be heard as soon as the meeting is scheduled. 

While cities like Dallas, Austin, Vancouver, Denver, San Francisco and Atlanta have spent the last two years making significant investments in their downtowns – either in preparation for events like the World Cup, or in anticipation of those investments returning tenfold in quality of place and tax collections, we’ve debated ourselves into a stupor. Unfortunately, in our hubris we either don’t think we have competition, or we think we can surpass them whenever we bother to get around to it.  No matter what happens next week, this has to change.  Our CAO, CLA, and elected officials need to clearly understand that if we’re not fast, we’re last.