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May 30, 2014

Boston Convention Center Expansion Gains Support, Generates Controversy

This week, a $1.1 billion plan to expand the Boston Convention and Exhibition Center received endorsements from the Massachusetts House of Representatives. According to the Boston Globe, the expansion would increase the size of the convention center by 60 percent. 

New exhibit space, ballrooms, and meeting rooms are currently planned for the south of the existing hall, and the Massachusetts Convention Center Authority expects that the expansion will generate an additional $184 million per year in economic activity through spending on restaurants, hotel rooms, and other tourism and entertainment activities.

The MCCA has also claimed that several "top hotel companies" have joined a separate competition to build a 1,000-room headquarters hotel next to the South Boston facility. Hilton, Hyatt, Marriott, MGM Resorts, Omni, and Starwood have all reportedly expressed interest.
The bid is expected to make the Hub a top five U.S. convention market. 

The Boston Herald says that under the current plan, the project will be financed with revenue from existing hospitality industry charges,­ primarily a 4.25 percent tax on Boston and Cambridge hotel rooms. 

RELATED: Plan to Expand Boston Convention & Exhibition Center Unveiled 

House members approved the initiative with a 130-19 vote. The BCEC expansion bill now goes to the Senate, where Senate President Therese Murray has expressed support. House Speaker Robert DeLeo told the paper the expansion would benefit Boston and even Massachusetts as a whole.

The Downside

But the initiative has also generated concern and controversy, with some suggesting that expanding before the area has sufficient hotel capacity may be putting the cart before the horse. The Herald quoted Massachusetts Tax­payers Foundation president Michael Widmer as noting the lack of hotel rooms around the BCEC, and suggesting that Boston was "behind many cities" in terms of accommodation capacity.

The Herald also ran an op/ed piece that criticized the use of bonds to fund the project, noting that the use would divert revenue away from the state’s general fund. Likewise, the story expressed skepticism that the city would attract the same kinds of convention numbers year-round that other cities like Las Vegas see. 

While acknowledging that the current plan would not involve raising taxes or fees on local taxpayers "yet," the op/ed piece notes that Bostonians will be on the hook to pay a developer for a planned headquarters hotel by the BCEC. 

The Globe notes that under the expansion proposal, the state could be making debt payments on the facility until 2060. Charles Chieppo, a senior fellow at the Pioneer Institute, has said the project will cost the state an additional $5 billion during that extended period.

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