LA Council Committee Postpones Decision on Convention Center Expansion Project

A Los Angeles City Council committee Tuesday postponed a vote on whether to move forward with plans to expand the Convention Center and issue bonds to pay for the project.

The powerful five-member Budget and Finance Committee convened in a special session Tuesday to discuss the project, which has risen in costs despite efforts to reduce the scope of work. Top city analysts said the project cost is $2.7 billion, an increase of $483 million from a March estimate.

“I want LA to be a premier destination for conferences and events. The benefits are real, but the trade offs and costs, and uncertainties, are also real, and every general fund dollar that we commit to this project for 30 years is a dollar that we are not going to be spending on hiring police officers, fixing sidewalks or keeping our street lights on,” said Councilwoman Katy Yaroslavsky, who chairs the committee.

Committee members heard from City Administrative Officer Matt Szabo, who warned them about the potential risks if they decide to commit to the expansion. Yaroslavsky requested to continue the matter to next week’s meeting, when Chief Legislative Analyst Sharon Tso and representatives of the Department of Water and Power are set to testify.

Yaroslavsky emphasized that the committee’s goal is to “suss out” information and be able to make a clear recommendation to the full City Council.

City officials are seeking to modernize the Convention Center for the 2028 Summer Olympics, as well as a way to revitalize the downtown area.

The Convention Center is set to be the site for fencing, taekwondo, judo, wrestling and table tennis for the 2028 Olympics and wheelchair fencing, taekwondo, judo, boccia and table tennis for the 2028 Paralympics.

Construction for the project would be conducted in a so-called phase delivery with completion slated for 2029. Work would be paused during the Olympics and Paralympics.

The project consists of 190,000 square feet of additional exhibit hall space, nearly 40,000 square feet of meeting room space and nearly 100,000 square feet for a multi-service room, which Szabo noted would add more than 13,000 construction jobs during the expansion.

The plans also included the renovation of Gilbert Lindsay Plaza, but that was dropped to lower the project’s cost.

Szabo recognized the city will receive substantial benefits from the project, such as boosting tourism and spending, as well as bringing in an estimated $652 million to the general fund in tax revenue.

“So no question, stand alone, this project will benefit the city of Los Angeles, not just downtown Los Angeles, but we see it as a city wide infusion of jobs and spending,” Szabo said.

However, with a deadline looming later this month, the City Council must soon make a decision whether to proceed or terminate the project, which has a tight schedule to be completed in time for the Olympics.

Szabo warned of “serious risk” that exist with the construction timeline, warning of potential delays during construction, among other challenges.

“Missing the Olympic readiness deadline could result in serious financial ramifications for the city, including losing the Olympic and Paralympic events currently planned to be held at the Convention Center and adjacent facilities in 2028,” according to a joint report from the CLA and CAO.

Of the $2.7 billion, city officials reported $82 million would support pre-construction costs (of which $54 million has been allocated), $35 million for a development fee, and $566 million for city-retained costs, and the design and construction would cost $2,035 billion.

The increase can be attributed to tariffs, cost of materials, and what some committee members described as “self-inflicted” costs. The Department of Water and Power has estimated an increase to its conduit and cabling work associated with the project, and for the relocation of utility vaults.

To pay for the project, the city would issue bonds that would be paid off over 30 years.

Szabo noted they expect to pay an average of $111 million annually through 2058 to pay for the expansion, though the initial years will be more expensive.

The expansion project is expected to generate $30 million annually once it is completed, and later $45 million in 2033, followed by an average annual of $60 million, which could help offset the debt service.

Another challenge the council is grappling with is a reduction in revenue generated from digital signs. The project calls for new digital signs facing the interchange of the Santa Monica (10) and Harbor (110) freeways.

The project assumed $61 million average annually from signage revenue, but current estimates assume a reduction of $34 million.

Mayor Karen Bass’ office has led efforts to advance state legislation that would allow the city to construct the full signage program.

“Currently that legislation was amended,” Szabo said. “It was amended on Friday that puts us in a situation where we cannot assume any revenue at all from the freeway-facing signs.”

“But as of today, as the legislation is currently drafted, it would make it difficult, it not impossible, to realize that revenue and it puts the finances of this project in serious jeopardy.”