The Convention Center Expansion was a House of Cards

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house of cards

In a piece by Jack Encarnacao in the Boston Herald, Richard Rogers, executive secretary-treasurer of the Greater Boston Labor Council claimed that opponents of the South Boston Convention Center expansion were “ideological.”  He called out Pioneer for putting ideology “ahead of the best interests of our regional and state economy.”

As I noted in the piece, Mr. Rogers is doing his job, seeking to advance the interests of his members.  But his are partial interests–and advancing the interests of the GBLC in this case harms the interest of hundreds of thousands of fellow Massachusetts residents.

The fact is that the South Boston Convention Center expansion has always been a vanity project with no economic and financial data to back it up.  In the current building boom, with billions of dollars being invested by the private market in the City of Boston, much of the activity in the Seaport district, there is very little economic bump we could expect from a convention center expansion.  In fact, it is quite the reverse.  Other uses (and projects) will likely generate a lot more activity than the handful of shows that the expansion might–emphasis on might–help generate.  The arguments for the expansion have been a house of cards that were simply waiting for someone to check the numbers.  Here are a few really basic facts to consider:

  • The national market has a glut of convention center space.  For well over a decade, national convention center attendance has remained stagnant or fallen, even as convention center exhibit hall space around the country has ballooned by over 35 percent.
  • Undergirding the MCCA’s financing plan are exaggerated economic benefits to the region and revenue projections.  The proposal assumed hotel tax receipts will increase over the next 30 years at an average annual rate three times greater than the historical rate of growth in the statewide hotel tax. That means the commonwealth will likely have to pick up the difference—and it could be significant.  It might be worth remembering that the original BCEC was premised on almost 800,000 room nights annually and that this past year the BCEC could only muster 265,000 room nights.  Pioneer’s analyses in the 1990s, which led to our opposition to the project, concluded that the BCEC would ultimately generate around 350,000 room nights annually.  Hard to call the BCEC a success as it is — and there is no reason to believe the MCCA’s projections.
  • This is one more example of the state focusing mega-investments in Boston while ignoring the rest of the state.  The finance plan gives the MCCA access to all receipts from the statewide room occupancy tax if they are needed to prop up the expansion bonds.  That would negatively impact the general fund, funds for the Springfield and Worcester convention centers, and the tourism fund.
  • The project consumes revenues that could be available for more important priorities.  By extending the date by which the original BCEC bonds have to be retired from 2034 to approximately 2050, tax revenues that would have become available for other priorities with huge economic impacts, such as transportation investments will instead support BCEC expansion.

There are additional arguments against the expansion, but it is likely worth underscoring the third bullet above.  The unemployment levels in Fall River, Holyoke,  Lawrence, and New Bedford are all extremely high, in some cases still above 10 percent.  Wouldn’t it be a bit wiser for the state to focus more of its economic development energy behind a strategy that is looking at complementing private investment in those areas?  Or perhaps to think about redirecting some of the BCEC’s considerable revenue streams toward solving the crisis at the MBTA, which affects the entire region?

Note to BCEC supporters: State government is supposed to represent the entire commonwealth, not just its capital city.

Follow me on twitter at @jimstergios, visit Pioneer’s website, or check out our education posts at the Rock The Schoolhouse blog.