Yaroslavsky

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.

A $2.7-billion plan to expand the Los Angeles Convention Center is in jeopardy after a narrowly divided City Council committee opted on Tuesday to recommend a much smaller package of repairs instead.

Amid mounting concerns that the expansion could siphon money away from basic city services, the Budget and Finance Committee voted 3 to 2 to begin work on a less expensive package of upgrades that would be completed in time for the 2028 Olympic Games.

Councilmember Katy Yaroslavsky said the expansion proposal — which would add an estimated 325,000 square feet to the facility, spanning both sides of Pico Boulevard — is too risky for the city, both in terms of the tight construction timeline and the overall cost.

“The risks to the city’s finances are too great — and risks us having to cut our city workforce to offset the costs of this project for years to come,” said Yaroslavsky, who heads the committee.

Yaroslavsky proposed the less expensive alternative plan, drawing “yes” votes from Councilmembers Bob Blumenfield and Eunisses Hernandez. Councilmembers Tim McOsker and Heather Hutt voted against the proposal, saying it was a sudden and huge departure from the original expansion plan.

“I’m not comfortable voting on these recommendations today,” Hutt said. “The substantive changes have not been circulated to the committee members, staff and public — and the public hasn’t been able to give public comment on these last-minute changes that are very significant.”

Both proposals — the expansion and the less expensive package of repairs and upgrades — are set to go before the full City Council on Friday.

Council members have spent the last year trying to find a way to expand the size of the Convention Center, doubling the amount of contiguous meeting space, without also creating an excessive burden on an already stretched city budget. They have received increasingly dire warnings as Friday’s deadline for making a decision approaches.

Chief Legislative Analyst Sharon Tso, who advises the council on policy matters, told the committee Wednesday that she fears the project’s first phase won’t be done in time for the 2028 Games, when the Convention Center will host several competitions, including judo, wrestling and fencing.

Tso also warned that the ongoing cost of the project would make it much more difficult for the city to hire more firefighters, recruit more police officers and pay for such basic services as street repairs. Four months ago, the council approved a budget that closed a $1-billion financial gap, requiring cuts to city personnel.

“We just completed a budget process that was very brutal,” she said. “If you’re happy with the level of service that we have today, then this is the project for you.”

At City Hall, the Convention Center is widely viewed as a facility in need of serious repair, including new elevators and escalators, up-to-date restrooms and overall cosmetic upgrades. Expanding the Convention Center would allow the city to attract much larger national conferences, exhibitions and meetings.

The project, if approved, would connect the Convention Center’s South Hall — whose curving green exterior faces the 10 and 110 freeway interchange — with the West Hall, which is a faded blue.

The council has already pushed for several cost-cutting measures, including the removal of a plaza planned on Figueroa Street. Mayor Karen Bass and the council also have hoped to generate new revenue by installing digital billboards — two of them within view of drivers on the 10 and 110 freeways.

Even with the freeway-facing digital signs, the cost of expanding and operating the Convention Center could reach $160 million in 2031, according to City Administrative Officer Matt Szabo, a high-level budget analyst.

The cost to taxpayers is expected to average about $100 million per year over three decades, according to updated figures prepared by Szabo.

The Convention Center expansion has become a top priority for business groups, labor leaders and community organizations who say that downtown L.A. desperately needs an economic catalyst — one that will creates thousands of construction jobs and spark new business activity.

After the pandemic, office workers never fully returned to downtown, and dozens of stores and restaurants shut their doors. Homelessness and drug addiction also continue to plague portions of downtown.

“We want to see downtown recover. We want it to be a place Angelenos can be proud of, and this is the solution,” Cassy Horton, co-founder of the DTLA Residents Assn., said at the committee hearing.

Labor and business leaders told the council members that the city has a long track record of developing plans for upgrading the Convention Center, only to shelve them once it’s time for a decision.

“For more than a decade, we’ve studied this project, we’ve debated it, we’ve delayed it,” said Nella McOsker, president and chief executive of the Central City Assn., a downtown-based business group. “We’ve been deciding whether or not we are a city that can maintain and invest in this essential asset, and every time we make that delay, the cost increases.”

McOsker is the daughter of Councilmember Tim McOsker, who voted “no” on the repair proposal. An outspoken supporter of the expansion, he argued that the city took on a similar financial burden 30 years ago when it financed the construction of the Convention Center’s South Hall.

Yaroslavsky, in turn, said she was concerned not just about the project’s cost but the potential for it to pull resources away from the Department of Water and Power.

Dave Hanson, senior assistant general manager for the DWP’s power system, told the committee that deploying his workers at the Convention Center could result in delays on utility work elsewhere, including a San Fernando Valley light rail project and the installation of underground power lines in the fire-devastated Pacific Palisades.

“DWP may — we don’t know for sure yet, because they don’t know for sure yet — may have to sideline other critically important projects, including reconstructing the Palisades and all these other projects,” said Yaroslavsky, who represents part of the Westside.

Yaroslavsky’s alternative proposal calls for the city to regroup in four months on strategies for requesting new proposals for expanding the Convention Center, as well as other strategies to “maximize the site’s positive economic impacts.”

Hernandez, whose district includes part of the Eastside, said council members remain open to the idea of the Convention Center expansion as the project heads to a final vote.

“So it’s not that we’ve ruled out any options,” she said. “We’ve added more options to the conversation.”