Expansion’s certain but cost isn’t; Question of funding for a larger Convention Center lingers

Philadelphia Daily News

February 1, 2006

Page 15

By MARY FLANNERY

There’s no designated funding yet to pay for the expansion of the Pennsylvania Convention Center – and no one can say for sure how much it will cost – but owners of 27 properties in its path got legal notice in the last two weeks that the Commonwealth is coming.

The expansion will cover two square blocks and extend the Convention Center to the east side of Broad Street between Arch and Race streets. It is scheduled to open in 2009.

Over the next two months, the Philadelphia Redevelopment Authority will follow up on its notices of interest by sending appraisers to each property bordered by 13th, Broad, Arch and Race streets. Then, the haggling will begin as some property owners, with their own appraisals in hand, are expected to contest the RDA’s valuation of their parking lot, carwash or office building.

Meanwhile, Convention Center officials are gathering data for an operating plan, a cost estimate for construction and a financing plan.

“We are trying to figure out the cost and the revenue in today’s dollars,” said Convention Center president Al Mezzaroba.

And consultants to the Convention Center Authority are completing analysis of the expansion’s anticipated economic benefit.

“This is multitasking. We don’t have the luxury of doing this step-by-step,” said Michael J. Masch, state budget secretary. “We hope that everything we are doing converges at the right moment.”

A reason for the urgency is the increase in Center City real-estate values. A Convention Center study in 2000 estimated that site acquisition and related costs could total $103 million. Today, experts say that figure has doubled.

The complete expansion project, including land acquisition and construction, is pegged at $632 million – at least.

How it will be paid for must be resolved. State law authorizes up to $400 million to be spent, and limits the state’s contribution to no more than three-quarters of the pro-ject’s cost. By that calculation, the project can be no more than $533 million. Another source must match at least 25 percent of the state’s financial commitment.

“We are attempting to determine where the match comes from,” said Masch. “The entire plan for expansion has not yet been written – what it looks like and who will pay the bills.”

Gov. Rendell said in an October press release that “ultimately the $632 million expansion cost is to be paid for with state gaming revenue.” His statement raises the question of whether the Legislature will lift the 75 percent funding cap.

Complicating matters is that Mayor Street has said the city should no longer shoulder the $15 million annual operating deficit of the current center. But City Councilman Michael Nutter, who chairs the Convention Center Authority, said easing the city’s economic burden was not the authority’s first priority.

Even with protracted negotiations, the RDA is confident it can wrap up negotiations within 14 months.

“We think we are on schedule to go out and bid the first contracts on March 1, 2007,” said consultant Harry Perks.

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