Boston Herald: New convention center math

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This article was published in the Boston Herald on June 9, 2014.

Author: Charles Chieppo

Rarely is state government’s dysfunction on display more than in the waning days of a legislative session. This time around, exhibit A is the rush to approve a $1.1 billion expansion of the Boston Convention and Exhibition Center (BCEC) despite enough red flags to fill the quarter-mile-long building.

Apparently the $620 million the Massachusetts Convention Center Authorityclaims the BCEC and the Hynes Convention Centers pumped into the local economy last year makes it easy to set aside doubts. But a closer look at how the MCCA arrives at that estimate makes you realize why there are no real numbers in the convention industry.

Convention centers are designed to attract people from outside the area who wouldn’t otherwise spend money here. But one thing the industry doesn’t want you do know is that about half of convention attendees — whether in Boston or elsewhere — are generally locals who’d be spending their dollars at a nearby mall if they weren’t eating in a Seaport District restaurant. It’s no accident that the number of hotel room nights generated by the BCEC and the Hynes is less than the number of people who attend events at the facilities; many of the attendees sleep in their own beds at night.

Yet when Pioneer Institute obtained a description of the methodology by which the MCCA derives its economic impact number, we discovered that it includes a “dollars saved” category and assumes “the in-state attendee would have attended the event regardless of location.” Believe it or not, the MCCA actually pretends that every local attendee at a BCEC or Hynes convention would still have gone if it were held in Las Vegas or Orlando, and the authority includes the savings as part of its “economic impact.”

Did that $620 million number just lose a zero?

The economic impact follies are just the latest in a line of troubling revelations about the expansion proposal. First came word that, contrary to MCCA claims, taxpayers would indeed pay a price for expansion. Receipts from taxes that flow into the Convention Center Fund and support the authority could revert to the commonwealth’s general fund once BCEC bonds are paid off in 2034. Expansion of the facility would keep that money flowing to the MCCA until about 2050, siphoning off at least $5 billion from state coffers.

Next we learned that the expansion bill doesn’t require the MCCA to go back to the Legislature if it wants to take more money from the Convention Center Fund. The waiver is akin to a blank check when it comes to the hefty public subsidy that will be needed for the 1,200 to 1,500 room headquarters hotel that is part of the expansion plan.

Finally we learned that the legislation exempts the project from state procurement and public disclosure laws. That means we might never find out how large a subsidy that new hotel will require.

Thankfully, as the Herald recently reported, Senate Bonding Committee Chair Brian Joyce (D-Milton) thinks the BCEC expansion question requires more thought and deliberation. Let’s hope this is one time when lawmakers won’t pass a bill to find out what’s in it.

Charles Chieppo is a senior fellow at Pioneer Institute, a Boston-based think tank.