convention center expansion

L.A. political leaders on Friday took what their own policy experts called a risky bet, agreeing to pour billions of dollars into the city’s aging Convention Center in the hope that it will breathe new life into a struggling downtown and the region’s economy.

In an 11-2 vote, the City Council approved a $2.6-billion expansion of the Los Angeles Convention Center, despite warnings from their own advisors that the project will draw taxpayer funds away from essential city services for decades.

The risks don’t stop there. If the Convention Center expansion experiences major construction delays, the project’s first phase may not be finished in time for the 2028 Olympic and Paralympic Games, when the facility is set to host judo, gymnastics and other competitions.

That, in turn, could leave the city vulnerable to financial penalties from the committee organizing the event, according to the city’s policy analysts.

Those warnings did not discourage Mayor Karen Bass and a majority of the council, who said Friday that the project will create thousands of jobs and boost tourism and business activity, making the city more competitive on the national stage.

“If we’re not here to believe in ourselves, who’s going to believe in us?” said Councilmember Adrin Nazarian, who represents part of the San Fernando Valley. “If we don’t invest in ourselves today, how are we going to be able to go and ask the major investors around the world to come in and invest in us?”

Councilmember Traci Park, who heads the council’s committee on tourism and trade, voiced “very serious concerns” about the city’s economic climate. Nevertheless, she too said the project is needed — in part because of the looming 2028 Games.

“This project will be transformative for downtown, and I truly believe the catalyst for future investment and redevelopment,” she said. “We need to bring our city back to life, and with world events looming, we don’t have time to wait.”

Foes of the project say it is too expensive for a city that, faced with a daunting budget crisis, eliminated 1,600 municipal jobs earlier this year, and has also slowed hiring at the Los Angeles Police Department.

On the eve of Friday’s vote, City Controller Kenneth Mejia came out against the project, saying on Instagram that it won’t generate positive income for the city budget until the late 2050s.

“Due to the city’s consistent budgetary and financial problems with no real solutions for long-term fiscal health … our office cannot recommend going forward with the current plan at this time,” he said.

The price tag for the Convention Center expansion has been a moving target over the last four weeks, increasing dramatically and then moving somewhat downward as the city’s budget analysts sought to assess the financial impact.

On Friday, City Administrative Officer Matt Szabo said the cost had been revised downward by nearly $100 million, which he largely attributed to lower borrowing costs, additional digital billboard revenue and a less expensive construction estimate from the Department of Water and Power.

The project is now expected to cost taxpayers an average of $89 million annually over 30 years, even with the additional parking fees, billboard income and increased tax revenue expected as part of the expansion, he said.

The financial hit will be the largest in the early years. From 2030 to 2046, the project is expected to pull at least $100 million annually away from the city’s general fund, which pays for police officers, firefighters, paramedics and other basic services, according to the newest figures.

Szabo, while addressing the council, called the decision on the expansion “the ultimate judgment call that only you can make.”

“Will it provide substantial economic benefits? Yes. Can we afford it? Yes, but not without future trade-offs,” he said. “We will be committing funds not just in 2030, but for 30 years after that to support this expansion.”

Earlier this week, opponents of the Convention Center expansion attempted to seek a much less expensive alternative focusing, in the short term, on repairs to the facility. The council declined to pursue that option, which was spearheaded by Councilmember Katy Yaroslavsky, the head of the council’s budget committee.

Yaroslavsky called the project unaffordable and unrealistic, saying it would lead to a reduction in city services.

“If you think city services are bad now — and I think all of us would agree that they suck — and you thought maybe one day we would have funding to restore service, I have bad news: It’s going to get worse,” she told her colleagues. “We aren’t going to be able to afford even the level of service we have right now.”

Yaroslavsky and Councilmember Nithya Raman cast the only opposing votes, saying the city is already under huge financial pressure, both at the local and the national levels. L.A. is already at risk of losing state and federal funding that support housing for the city’s neediest, Raman said.

“What I fear is that we’re going to have a beautiful new Convention Center surrounded by far more homelessness than we have today, which will drive away tourists, which will prevent people from coming here and holding their events here,” Raman said.

Friday’s vote was the culmination of a start-and-stop process that has played out at City Hall for more than a decade. Council members have repeatedly looked at upgrading the Convention Center, planning at one point for a new high-rise hotel attached to the facility.

Officials said the expansion project would add an estimated 325,000 square feet to the Convention Center, connecting the facility’s South Hall — whose curving green exterior faces the 10 and 110 Freeway interchange — with the West Hall, which is now an extremely faded blue.

To accomplish that goal, a new wing will be built directly over Pico Boulevard, a task that makes the project “extraordinarily complicated and extraordinarily costly,” Szabo said.

Southern California’s construction trade unions made clear that the Convention Center was their top priority, pressing council members at public meetings and behind the scenes to support it. The project is expected to create about 13,000 construction jobs, plus 2,150 permanent jobs.

Sydney Berrard, a retired member of Sheet Metal Workers’ Local Union No. 105, directed his testimony to Park — who had been undecided on the project for several weeks — telling her she needed to stand with her district’s construction workers.

“The only reason I was able to raise my family, buy a home and retire with security in your district is because of major projects like this,” he said.

Business and local community groups also backed the project, saying it will help a downtown that has struggled to recover since the height of the pandemic. By increasing the amount of contiguous meeting space, L.A. will be able to attract national events, accommodating tens of thousands of visitors at a single convention, they said.

“This is a model that can work,” said Nella McOsker, president and chief executive of the Central City Assn., a downtown-based business group.

Councilmember Bob Blumenfield, who missed Friday’s meeting because of an out-of-state trip planned several months ago, said he remains worried that the project won’t be finished in time for the 2028 Games.

“If that happens, not only is that a shame and embarrassing for the city of L.A. … but the financial risk of that is tremendous,” he said.

Earlier this week, Blumenfield joined Yaroslavsky and Councilmember Eunisses Hernandez in recommending the less expensive alternative plan. On Friday, Hernandez shifted her position to support the expansion.

Hernandez said she too is frustrated with the quality of city services, and will work on finding additional funding to pay for them.

“I know that we will find new money. And it will be OPM — other people’s money,” she said. “Because we can’t keep funding this on the backs of our constituents.”

Because of the tight timeline, construction is expected to begin almost right away, with crews starting demolition work next month.

Ernesto Medrano, executive secretary of the Los Angeles/Orange Counties Building and Construction Trades Council, said the project will be an investment in L.A.’s workers.

“Our members are ready to don their hard hats, their work boots, their tool belts and start moving dirt,” said Medrano, who began his career loading and unloading trucks at the Convention Center.

For the last year, Los Angeles political leaders have searched for a way to upgrade the downtown Convention Center without also delivering cuts to core services.

The city’s budget team pushed for the facility to be emblazoned with digital billboards, which would produce tens of millions in ad revenue. A city-hired consultant came up with several cost-cutting measures, including the elimination of a public plaza originally planned as part of the expansion.

Despite those efforts, the project has only lost ground. On Tuesday, City Council members were informed the price tag has gone up yet again, reaching $2.7 billion — an increase of $483 million from six months ago.

Some at City Hall are growing nervous that the project’s first phase won’t be finished in time for the 2028 Olympic Games, jeopardizing the Convention Center’s status as one of the main venues. Beyond that, city officials have begun worrying publicly that Gov. Gavin Newsom might not support a state bill permitting the installation of two digital billboards that would face the busy 10 and 110 Freeway interchange.

Those two signs — hotly opposed by groups such as Scenic America — are expected to produce the vast majority of the project’s advertising income, according to the city’s budget team.

If state and federal support for the signs fails to materialize, the city’s general fund budget would have to provide an average of $111 million each year through 2058 to cover the cost of the Convention Center expansion, City Administrative Officer Matt Szabo said.

The earliest years would be the most expensive. In 2031, for example, an estimated $167 million in taxpayer funds would go toward the Convention Center’s debt and operations — even after the revenue from the project is factored in, Szabo told the council’s economic development committee on Tuesday.

“Since we last met in this room on this matter, the costs have increased dramatically,” Szabo said. “The serious [construction] schedule risks remain. And revenue that the project relies upon — will rely upon — is in jeopardy.”

For some on the council, the latest bad news is proving to be too much.

Councilmember Katy Yaroslavsky, who heads the council’s powerful budget committee, told The Times she believes an overhaul of the Convention Center is key to making downtown “stronger, more economically vibrant.” But with the city already struggling to pay for police officers, street repairs and other basic services, the current plan is “just too expensive,” she said.

“Without the signage revenue, the risk to the City’s budget is massive and unaffordable,” Yaroslavsky said in a statement.

Newsom spokesman Izzy Gardon declined to discuss the digital billboard bill, saying the governor’s office “does not typically comment on pending legislation.” State Assemblymember Mark González (D-Los Angeles), who represents part of downtown, said he is “engaging productively” with the Newsom administration on the bill.

“I’m confident we’ll find a path forward,” he said.

Council members must decide by Sept. 15 whether to move ahead with the project, Szabo said. Even some of the council’s downtown boosters sound nervous about their next step.

What “I hear some of my colleagues saying is, ‘Do we want a very beautiful Convention Center but a bankrupt city?’” said Councilmember Ysabel Jurado, who represents the vast majority of downtown.

Business groups have rallied around the expansion, saying it will finally allow L.A. to compete for large conventions, while also injecting new life into a downtown still reeling from the aftereffects of the COVID-19 pandemic.

The project has also amassed broad support from organized labor, especially the region’s construction trade unions, which say it would create thousands of jobs.

“With over 800 members out of work, we need a project like this,” said Zachary Solomon, business representative for the International Brotherhood of Electrical Workers Local 11. “The cost of this project will only continue to increase, so we need this project now.”

Many of the groups backing the Convention Center expansion have played a role in electing council members. Still, if the council presses ahead with the project, it will do so in the face of major warning signs.

The city’s top policy analysts have cautioned that any major construction delay could cause organizers of the 2028 Olympic and Paralympic Games to pull the Convention Center, which is scheduled to host judo, wrestling, fencing and other competitions, off its list of venues.

“It would be really bad to pay such a premium on such a project and [have] it not be ready in time to host the Olympics,” said Chief Legislative Analyst Sharon Tso, who advises the council.

Stuart Marks, senior vice president of Plenary Americas, the development company spearheading the Convention Center project, told council members he is “highly confident” the work will be done on time, saying there is flexibility in the schedule — and major penalties if the developer fails to perform.

Marks, whose company has partnered with Anschutz Entertainment Group on the Convention Center, said the companies tasked with construction have an established history, having worked on projects such as Staples Center — now Crypto.com Arena — and the expanded Moscone Center in San Francisco.

“Their reputations are on the line. Our reputations are on the line. Nobody’s saying there’s no risks. But there are contingencies … mitigation strategies, security packages and contractual regimes that equally meet that risk,” he said.

The proposed timeline calls for APCLA, also known as AEG Plenary Conventions Los Angeles — the joint venture that would oversee the expansion — to start construction later this year, pause that work during the Games and then finish once the event is over.

Under the proposal, a new wing would connect the Convention Center’s landmark green South Hall with the blue West Hall.

Much of the increase in the construction price has been attributed to the city’s Department of Water and Power, which recently issued higher cost estimates for the relocation of utilities under Pico Boulevard and the installation of several miles of cable and conduit.

DWP officials have already warned that they lack the staffing to carry out the project and would need to hire outside labor. They also indicated that work on the Convention Center is likely to result in delays to other projects — including construction of a new rail line in San Fernando Valley — because staff would have to be diverted, according to Szabo’s memo.

Tso has echoed many of Szabo’s concerns, saying in a separate report that the project would have an “acute negative impact” on the general fund budget, which pays for police, paramedic responses and other basic services.

Times staff writer Laura J. Nelson contributed to this report.