Dallas needs to build a new convention center to compete with other cities across the country, a consultant and city staff said Tuesday.
The downtown Kay Bailey Hutchison Convention Center, which was built in 1957, doesn’t have enough rooms, modern updates or surrounding amenities to allow the city to attract the most lucrative events , according to the consultant and city staff.
Their solution? Build a new one for $1.9 billion.
But first they need the approval of the city council.
The city hired WSP USA Inc., an engineering and design firm, in January for about $5 million to plan a 10-year redevelopment for the convention center on South Griffin Street and surrounding areas from Union Station. Eddie Bernice Johnson looking west to the Dallas Farmer’s Market.
The group told council members on Tuesday that officials should move forward with the most expensive of the three options. A new center would spur more downtown development and bring billions in spending and new property taxes to the area, according to the consultant.
A council member raised concerns over more than $600 million still owed on the convention center and adjoining Omni Hotel.
Building a new center west of Lamar Street, with a portion that spans Interstate 30, would spur the most development and allow convention business to continue even under construction, said the consultant. Other options to upgrade or add to the existing facility could cause disruptions that would reduce revenue.
Rosa Fleming, director of convention and event services for Dallas, called the project “transformational” for the city, warning that the aging Kay Bailey Hutchison Convention Center could be surrounded by new development if it doesn’t happen.
“This includes redeveloping a portion of downtown that has historically turned its back on south Dallas and effectively served as a barrier to development in the southern sector,” Fleming said.
City staff and the consultant seek approval from council’s transportation and infrastructure committee to send the proposal to city council.
The agreement is two-fold: the board is expected to approve a design contract for a new convention center. The city also needs voters to approve raising hotel occupancy taxes by 2 percentage points to pay for the redevelopment. The earliest the proposal would go to voters is November.
The committee on Tuesday postponed a decision on making a recommendation to the full city council until January.
Estimates during the summer for the construction of a convention center west of Lamar Street cost up to $3 billion, according to the consultant, but WSP has revised it to $1.9 billion. Dan Baer, the project manager, did not provide a reason for the lower figure.
Voters would be asked to allow the city to raise the taxes it collects on a hotel room to 15% to raise about $1.5 billion over 30 years. The city currently charges 13% and sends about half to the state.
To raise more money for the project, the council in October approved asking the state to designate a three-mile area around the convention center as a “project funding zone,” where occupancy taxes , sales and mixed drinks are collected from hotels in this area. are used by Dallas for projects related to the convention center or arena.
Fleming said the state has since approved the funding zone, which allows the city to collect all hotel taxes generally collected by the state starting next year. It could raising approximately $2.2 billion for downtown redevelopment projects in and around the convention center over 30 years.
Council member Adam Bazaldua voiced his support for the project, saying some of the revenue from the hotel tax increase could be earmarked for improvements at Fair Park, which he represents. The state allows up to 20% of revenue to be used for costs related to a stadium, music hall and other venues in a city-owned park.
Council member Cara Mendelsohn said she was not in favor of any of the options for upgrading the convention center and noted that the city still had an outstanding debt on the current building and the adjoining Omni Hotel, both operated by the city. She also questioned the lack of public involvement in redevelopment ideas.
Fleming said the city owed $226 million for the existing convention center and up to $400 million for the hotel.
Mendelsohn said moving the convention center would free up more land for additional hotels that would compete with the Omni and suggested the city restrict new hotels in that area until debts are paid off.
“At the end of the day, that’s what it’s all about,” she said. “This is a land grab, and it’s at the expense of our taxpayers.”