Los Angeles Convention Center Expansion Faces Challenges

Last year, leaders in Los Angeles explored options for upgrading their Downtown Convention Center without sacrificing essential city services.

The city’s budget team highlighted the center’s digital billboards, while a consultant proposed various cost-saving strategies, which included eliminating public squares that were part of the initial expansion plan.

Despite these initiatives, progress seemed stifled. Recently, city council members were informed that project costs had surged to $2.7 billion, reflecting an increase of $483 million within just six months.

There’s growing anxiety among city officials that the first phase of the project may not be completed in time for the 2028 Olympics, potentially jeopardizing its standing as a primary venue. Additionally, concerns have surfaced about Governor Gavin Newsom’s support for a state bill permitting the installation of two digital signs directed at busy freeway exchanges.

These digital signs are contested by advocacy groups, yet the city’s budget team believes they could generate significant advertising revenue for the initiative.

If funding for the signs does not materialize, city manager Matt Zabo indicated that the city would need to allocate approximately $111 million annually until 2058 to finance the convention center’s expansion.

The initial years could be particularly costly. For instance, by 2031, an expected $167 million from taxpayers may be directed toward the center’s debt and operational costs. Zabo addressed the Council’s Economic Development Committee, expressing concern about the sharp rise in costs since their last meeting.

“The risk is substantial,” he noted, “and the revenue our project relies on is increasingly uncertain.”

The latest developments seem to weigh heavily on some council members. Councillor Katy Yaroslavsky, who leads the council’s budget committee, asserted that revamping the convention center is critical for enhancing downtown’s economic vitality. However, she labeled the current plans as “too costly,” especially given the city’s struggle to fund essential services like policing and street maintenance.

“Without revenue from those signs, the burden on the city’s budget could become unmanageable,” her statement warned.

Izzy Gardon, a spokesperson for Newsom, mentioned that the governor’s office typically refrains from commenting on pending legislation and did not provide insights regarding the Digital Billboard bill. State Senator Mark Gonzalez, representing parts of downtown, conveyed optimism about reaching a resolution with the administration.

Council members are tasked with deciding on the project’s direction by September 15. Even some strong supporters within the council express apprehension about moving forward.

“I can almost hear some colleagues echoing thoughts like, ‘Do we really want a scenario where a stunning convention center ends up bankrupt?'” remarked Isabel Jurado, a trustee representing much of downtown.

Proponents of the expansion emphasize that LA could one day compete for larger events while revitalizing a downtown still recovering from the impacts of the COVID-19 pandemic.

The expansion has garnered widespread backing from organized labor, especially from local construction unions, who argue it will create thousands of job opportunities.

“We need projects like this; our members deserve work,” remarked Zachary Solomon, a business representative from the International Electrical Workers.

Despite the support for the convention center’s expansion, council members are navigating through numerous concerns. Analysts warn that significant construction delays might compel the organizers of the 2028 Olympic and Paralympic Games to remove competing venues, which could host a variety of competitions.

“It would be quite unfortunate to invest so heavily in a project that falls short,” cautioned Sharon Tsuso, a legislative analyst advising the council.

Stuart Marks, senior vice president of Plenary America, which is leading the convention center project, assured the council that the construction timeline is feasible. He emphasized that there are penalties for delays, and the firm involved has a strong track record with projects like the Staples Center.

As for the construction schedule, plans entail beginning later this year, pausing operations during the Olympics, and resuming again post-event.

This proposed expansion will connect the convention center’s Green South Hall and Blue West Hall.

Much of the recent cost hikes are tied to the city’s Water and Power Department’s estimates concerning utility relocation and the installation of extensive cabling.

DWP officials noted staffing shortages that may necessitate hiring additional external workers and indicated that delays at the convention center could affect other projects, including a new railway line in the San Fernando Valley.

The potential negative consequences of the project have raised serious concerns regarding its impact on funding for crucial public services.