Voting for the Convention Center (21 Responses)

Last night the Senate gave preliminary approval to legislation authorizing the borrowing of $1 billion for expansion of the Boston Convention and Exhibition Center in South Boston.

I came to feel comfortable with the bill and did vote for it, although I share a number of common concerns about this kind of legislation:

  • I’m troubled about public debt levels in Massachusetts.
  • I’m nervous about the concentration of power in quasi-public authorities.
  • I feel we have to work extra hard to make sure we get an accurate analysis of the economic merits of new government projects, since the pressure to move forward with projects that may create jobs is always very strong.
  • I’m uncomfortable when government tries to operate like a business. The foundation of financial discipline in the business world is private money at risk. When we are using taxpayer money, we need to have a lot of transparency in place to protect the public. Additionally, those who gain power in the political process and end up running major public agencies don’t necessarily have the training and expertise to make good business decisions.
  • Finally, if we can raise another $1 billion in capital, my personal first choice for deploying it would be to further improve public transportation in the region.

All of that said, after a day of reading and consulting, I came to feel comfortable with the bill. Here’s why:

  • The convention center is a part of our regional infrastructure. It’s a public utility like an airport or a public transportation system. It supports our hospitality and tourism industries. It really is not a viable business on its own — even on an operating basis, the center covers only about 70% of its operating costs and the capital costs have always been entirely covered through taxation.
  • I am personally unsure as to how much the convention center contributes to our economy, but for me, the deciding factor is that the huge subsidy for the center is comprised entirely of taxes on the hospitality and tourism industries: Room occupancy charges, sales taxes in the vicinity of the convention center, surcharges on Boston car rentals, sight-seeing charges, parking facility charges. For the nitty gritty on the financing of the convention center, read the 2004 bond prospectus. So, speaking very broadly, the regional hospitality industry, as a collective, is financing the project through their pricing structure. And they appear to want to go forward with the project — I’m not hearing criticism of the project from within the industry.  It is really based on their politically-expressed business judgment that I’m willing to support the project.
  • And what if the industry is wrong and the new space sits empty? It’s mostly the industry’s problem: While the future of the convention business is unclear, it seems very unlikely that the costs of a debacle would end up burdening the general taxpayers of the Commonwealth. The debt obligations of the convention center are not general obligations of the Commonwealth. They are special revenue bonds supported by pledged revenue sources from the hospitality industries, indeed primarily from Boston hospitality industries. If the pledged revenues sources don’t keep up with costs, there is a provision for an automatic increase in Boston hotel taxes to cover the deficit. There was some regional debate over a provision in the bill which allows the treasurer to also pledge hotel tax revenues outside the Boston area as additional security for the bonds. In the debate, the financial committee heads indicated that the probability of reaching this layer of security was low, that the provision served primarily to add comfort to bond-holders, boost the bond rating and increase the marketability of the bonds. While some legislators outside the Boston area opposed this provision, to me it felt fair — the benefits of Boston business vibrancy do extend to hospitality firms well beyond Boston itself.
  • I also drew comfort about the proposal as I listened to public and private expressions of faith in the management team of the convention center coming from both politicians and business leaders.
  • Given that the project is primarily financed by taxation on the hospitality industry, I did not feel feel as strongly about my personal preference in favor of using the taxing capacity to support transportation. My instinct is that the hospitality industry and its customers might be better off with $1 billion in public transportation enhancements, but I can’t prove that and I’m not prepared to tell the industry what’s most important for their customers.
  • Along the way, there were discussions about process issues — transparency provisions, bidding rules, fiscal oversight — the bill the Senate passed made a number of improvements in these areas.

The House has already passed a bill, so the next step is conference committee.

You can read the official Senate press release here.

See this previous post for links to commentary and resources about the convention center.

Please note, this thread is not open for comment at this time.


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    Will Brownsberger
    State Senator
    2d Suffolk and Middlesex District