There are boondoggles, there are big boondoggles, and then there are public development disasters. Los Angeles has just embarked on a disaster.
Last week, the Los Angeles city council approved an expansion of the Los Angeles Convention Center with a price tag of $2.62 billion. The number itself is impressive. But what is even more impressive, or totally depressing, is how the city got to that figure.
Back in 2015, after a deal to combine a new football stadium with the convention center fizzled when Farmers Field ended up not being built, city tourism officials came up with a new scheme to expand and modernize the center with the aim of boosting the city’s competitive position. While acknowledging that other cities had built or expanded their centers on the “naïve assumption that, ‘if you build it, they will come,’” they asserted Los Angeles was “not a second-tier market or a desperate city trying to be more than it can realistically be.” The Convention, Sports and Leisure consulting firm promised that the center would see at least a 42% increase in convention attendees and hotel room nights after the expansion.
At that point, the cost estimate for the LACC expansion was $470 million. But year by year, as city staff tried to engineer a public-private partnership and design an updated and expanded venue, the price tag grew. By February 2020, the city council was warned that cost estimates had grown to $957 million. The figure from the city’s chief administrative officer in November 2023 came to $1.4 billion. What the city council accepted and supported last week was $2.62 billion — with every realistic likelihood of increasing more in the future.
So, what will the city get for $2.62 billion, which will be paid off via $193 million in annual debt service for the next 30 years? The chief administration officer says the project will create 2,153 new jobs each year after the expansion, the product of $150 million in new visitor spending each year. Local downtown interests and construction interests assert that it will be “transformative” for downtown, and by boosting the city’s convention center space will allow L.A. to compete for larger events against the likes of New York and Chicago.
The argument, set out by CSL in 2015, that more space means more convention business had been repeated by the CAO’s office in the years since. The 2023 report forecast that the hotel room nights generated each year by the center would grow from 288,045 to 490,758 — a 70% increase. Even now, the city continues to use those figures, as well as even more expansive estimates of increased tax revenue.
Yet the convention market has changed significantly in the last decade. When CSL delivered its forecast in 2015, Chicago’s McCormick Place had 937,600 convention and trade show attendees. Last year it saw 794,250. The total attendance of New York’s Javits Center in 2015 was 2.16 million. For 2024, its attendance came to 1.37 million. The Las Vegas Convention Center saw 1.3 million convention and trade show attendees in 2015. The comparable figure for 2024 was 1.1 million.
The 2015 white paper that made the case for the L.A. expansion cited examples of “large conventions that would choose Los Angeles if the LACC had adequate levels of properly designed and placed space offerings and program solutions.” The list included the annual meetings of the American Heart Association and the American Academy of Ophthalmology. That year, the AHA meeting in Orlando had 17,978 attendees. Last year, its attendance totaled 12,900. The 2015 ophthalmology meeting in Las Vegas had 28,355 attendees. The attendance for the 2024 meeting in Chicago was 16,543.
Even as Los Angeles commits to spending hundreds of millions of dollars in annual debt service — public dollars that could be used to employ police, firefighters, and other public servants — the likelihood of any significant increase in the city’s convention business is effectively nil. As L.A. has debated its convention center expansion, other cities have continued to add to heir own spaces, justified by the same arguments: downtown transformation, competitive demands, and optimistic consultant studies. And Los Angeles, which for years has had to offer its convention center space almost for free — token $1,000 rentals for space which should rent for $500,000, $710,000, or $1.1 million — will inevitably have to continue to give it away well into the future.
Built south of downtown in an area with effectively no nearby hotels or amenities, the L.A. center never offered the kind of environment typically sought by meeting planners and convention attendees. But it did offer a spacious home for the local auto show, other local public shows, and a large number of film shoots for major movies. Still, those did not bring out-of-town attendees to the city and do anything for the area’s economy. The answer was supposed to be the development of a great big hotel next door, together with restaurants and other attractions. Phil Anschutz’s AEG opened a 1,001-room JW Marriott/Ritz Carlton hotel together with the L.A. Live entertainment complex in 2007, using abundant public subsidies. Even that didn’t significantly reduce the deficit in nearby hotel rooms, or increase the center’s convention business.
In 1999, the LACC’s strongest year after a 1993 expansion, the center produced about 375,000 hotel room nights for the city. Things slid after that, as competing expansions in Las Vegas, San Diego, and other cities competed with L.A. The center managed about 290,500 room nights in 2012, by offering free rent deals to event organizers. But the figure fell again, to about 245,000 in 2019.
In the end, L.A.’s $470 million convention center expansion has turned into a $2.6 billion one, in an overbuilt and declining market where Los Angeles and all of its competitors increasingly have to give their space away for next to nothing. Sounds like a great deal!
[Ed. Note: While L.A.’s convention center expansion began as a pairing with a never-built NFL stadium, it’s now being driven in part by a deadline to get the building ready for hosting events during the 2028 Olympics — even as L.A. has touted this as a “no-build” Games. Alissa Walker’s Torched newsletter has all the details.]
