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Study supports Convention Center expansion

A proposed expansion to the Baltimore Convention Center and a new downtown arena could increase direct spending by $138.7 million to $181.6 million annually, potentially supporting 2,360 to 3,100 new jobs, according to a study released Monday by the Maryland Stadium Authority.

The $150,000 feasibility study, requested by Mayor Stephanie Rawlings-Blake and Gov. Martin O’Malley, examined a May 2011 proposal from the Greater Baltimore Committee to build an 18,500-seat arena, a 500-room hotel and an expanded convention center. The stadium authority and the city paid for the study.

The new arena would replace 1st Mariner Arena, which opened in 1962, and the hotel would replace the Sheraton Inner Harbor Hotel. Willard Hackerman, president and CEO of Whiting-Turner Contracting Co. and owner of the Sheraton, has said he will take the lead in financing those aspects of the project.

Hackerman has said he will secure $500 million for the project — $325 million for the arena and $175 million for the hotel — contingent on a publically financed $400 million expansion of the convention center.

A spokeswoman for Whiting-Turner said the company would have no comment.

The new hotel would have 163 more rooms than the Sheraton it replaced and could generate from $5.2 to $5.6 million in new direct spending, which could support 80 to 90 new jobs, the report said. The new arena could generate $7.5 million to $8.8 million in direct spending, which could support 180 to 210 new jobs.

Donald C. Fry, president and CEO of the GBC, said that though all of the private sector funds are not yet in place, Hackerman “continues to reach out and talk to people throughout the country, his contacts and others,” to secure the money.

The expansion of the convention center — estimated to cost $400 million — would add 290,000 to 305,000 square feet of meeting and exhibition space and could draw 17 to 25 percent more conventions and trade shows, with attendance at those functions increasing by about a third, the report said.

The effects of that could be great: a 3½-day event with 5,200 attendants generates about $6.5 million in direct spending and results in about $900,000 in combined tax revenues for the city and state, the report said.

The project would be “transformational” for Baltimore and the state, Fry said.

“Certainly we’re pleased that the study indicates and recognized that there’s a need for the expansion of the convention center, and that that’s important for Baltimore,” he said. “[Monday’s] report was a significant hurdle because an independent source has stated that this type of facility, the expansion of the convention center, is needed.”

The study was done by Tampa, Fla.-based Crossroads Consulting Services.

As is, Baltimore’s convention center offers “one of the lowest amounts of total function space (i.e. exhibit, ballroom and meeting space) among its primary convention center competitors,” the report said. New or expanded convention centers have opened in Pittsburgh, Philadelphia and Indianapolis, and are under construction in Washington, D.C., and Nashville.

The expansion is critical because “market research suggests that remaining static will likely result in a decline of event activity over time,” the report said. A 15 percent decrease in convention center events could mean $2.1 million in lost tax revenues for the city and $4.3 million in lost tax revenues for the state, the report said.

Conversely, the new arena and hotel, and the expanded convention center could generate an additional $6.4 million to $8.3 million in city taxes and $12.8 million to $16.7 million in state taxes annually, the report said.

The report shows that the convention center’s expansion could cost the city between $487,000 and $695,000 annually and the state $975,000 to nearly $1.4 million more annually, assuming they continue to subsidize the center’s operating deficit. The state and city share the cost of the convention center’s operating deficit, which in recent years has been about $8.2 million, with the city taking on one-third and the state covering the rest.

“From an operational perspective, the incremental tax revenues estimated to be generated from the operations of an expanded BCC compare favorably to the estimated city and state contributions towards the operating subsidy,” the report said.

Fry said the next step is to maintain the $2.5 million that is in Gov. Martin O’Malley’s fiscal 2013 capital budget for preliminary planning and design of the project. The preliminary design budget would better estimate the cost of the project, as well as look at how to finance the expansion, Fry said.

“This project is ambitious, and the details of how to secure the public and private financing are complex,” Rawlings-Blake said in a statement.