Los Angeles greenlights controversial $2.6B convention center

Dive Brief:

• The Los Angeles City Council has approved the contentious L.A. Convention Center Expansion and Modernization Project, according to a Monday news release from the Los Angeles Tourism & Convention Board. The project will cost approximately $2.6 billion, according to a letter from Matthew Szabo, the city administrative officer.
• The construction team is made up of general contractors PCL Construction and Webcor and architect Populous, alongside AEG Facilities and infrastructure developer Plenary Group, per the release. The group will use a design-build delivery method on the project, according to a July 2024 news release from the Los Angeles City Tourism Department.
• As part of the build, the construction team will combine the two existing South and West Exhibit Halls into one, contiguous 750,000-square-foot hall by adding 190,000 square feet of space, per the September release. Contractors will also add 39,000 square feet of new meeting room space and 95,000 square feet of multipurpose space.

Dive Insight:

Overall, the project will cost the city’s taxpayers $5.9 billion when borrowing costs are included, with $5.45 billion coming from the city’s General Fund, according to a Sept. 18 letter that pushed back against the plan from Kenneth Mejia, Los Angeles City controller.

In addition, the city will be obligated to make lease payments from April 2029 to April 2056, according to Meija’s letter, and it could be decades before the impact to the city’s General Fund is in the black. Further, it would take another 25 years for the city to recoup the $3.2 billion impact to the fund and break even, Mejia noted, which would be in 2081.

“Due to the City’s consistent budgetary and financial problems with no real solutions for long-term fiscal health and uncertainties regarding the ambitious timeline of completion, our Office cannot recommend going forward with the current plan at this time,” Mejia wrote.

The project’s timeline is also under the metaphorical gun — since the city is hosting the 2028 Summer Olympics, construction needs to begin immediately to host slated events such as judo and wrestling, the Los Angeles Times reported. If there are any major delays, the facility may not be ready for those events.

On the other hand, the city’s tourism board argued that the city has been at a disadvantage when it comes to recruiting large conventions to Los Angeles because of the lack of contiguous space, which the expansion would help with. 

The board also noted that the expansion will generate economic growth through local businesses who are dependent on the convention center.

“An expanded and modernized Convention Center will transform the landscape of Downtown Los Angeles for following generations,” said Kimberly Weedmark, general manager of the LA Convention Center. “We appreciate the LA City Council for their future facing vision, as this project will allow us to increase the number of top-tier programs that we welcome to Los Angeles, while granting our current clients continued growth opportunities.” 

In that vein, Los Angeles Mayor Karen Bass called for the project to move forward on Sept. 18.

“The convention business is highly competitive, but with this effort, we are sending a signal that Los Angeles is ready to compete and win on a global scale. Our decision is a signal about the kind of L.A. we are building for future generations,” Bass said in the news release. “We must move our city forward.”