An $890 million convention center renovation that Las Vegas boosters once said was vital to the local economy will likely be put on hold.
On Thursday, Las Vegas Convention and Visitors Authority officials said they will seek to suspend the project until at least the middle of 2010.
President and CEO Rossi Ralenkotter will propose delaying the project to the authority’s board of directors Tuesday, but board Chairman Oscar Goodman is already in favor of the idea.
“I can’t say that’s a good thing, but it is a practical thing,” Goodman said.
Room tax revenue in Clark County, the authority’s primary income source, has dropped sharply in recent months.
In October the authority’s share of room tax funding fell 15 percent. It was down 19 percent in November and down 22 percent in December. For fiscal year 2009, the authority had projected it would receive $243 million in room tax revenue but has since revised the projection to $190 million.
The authority has already committed $140 million to the convention center renovation. Some $96 million was funded through commercial paper.
It will cost the authority about $4.5 million to $5 million annually to service the existing debt for the project. Had it continued to finance the entire $890 million proposal, the debt service would have grown to about $76 million annually.
The original proposal called for dramatic upgrades to the convention center’s facade and common spaces.
It would have increased gross square footage from 3.2 million square feet to 3.8 million square feet, a relatively modest increase.
But it would have greatly expanded space for certain types of uses that were in increasing demand at the time the project was approved at the $890 million level.
For example, the proposal called for a 37 percent increase in available meeting space, 78 percent more restaurant space, 78 percent more taxi space and 67 percent more space for food service.
Although the announcement is yet another bad sign for the Las Vegas economy, there was evidence the convention center renovation project was losing momentum months ago.
In August, when the convention and trade show demand was clearly waning, the authority board voted to break the project up into three phases, with the most ambitious and costly portions pushed back to the latter phases. The first phase was projected to cost $395 million.
Vince Alberta, a spokesman for the authority, says now it is time to suspend the project altogether.
“It has been something we have been evaluating, I would say since the first quarter of this year,” Alberta said. “With the recession, we think it is fiscally responsible and prudent not to incur additional debt at this time.”
Karen Chupka, vice president of marketing and conferences for the Consumer Electronics Association, agreed with Alberta.
Chupka’s group operates the International Consumer Electronics Show, the largest annual convention and trade show in Las Vegas.
“It seems to be a good move for everybody,” she said. “Clearly, the economic impact on meetings has been challenging for shows.”
Jeremy Aguero of the economics research firm Applied Analysis said the suspension is an unfortunate reflection of the state of the economy.
Aguero supports the project. In 2007, he prepared a report that said without improvements to the convention center, Las Vegas would lose $5 billion in convention-related economic activity.
“What we were looking at was the potential loss of traffic,” Aguero said. “That continues to remain a concern.”
Las Vegas is the nation’s top location for trade shows and conventions. It hosts 44 of the nation’s top 200 conventions and trade shows, according to Tradeshow Week magazine. Orlando is second with 24.
Goodman says he’s hopeful work on the renovation can resume in 2010.
“We are number one now. We have the other cities nipping at our heel trying to knock off number one,” Aguero said.
Contact reporter Benjamin Spillman at email@example.com or 702-477-3861.