Pioneer Institute says convention center plan will cost the state $5B in lost revenue

Boston Business Journal –

A new analysis of the Boston Convention and Exhibition Center’s planned expansion in the city’s Seaport District claims that the buildout will ultimately cost the state $5 billion in lost revenue for roads, schools and other public services over a 16-year span.

According to The Pioneer Institute, the Boston-based think tank that authored Monday’s report, the Massachusetts Convention Center Authority’s proposal to finance a 1.3 million-square-foot addition to the BCEC will result in billions in state tax and surcharge revenue to be diverted from the commonwealth’s coffers. The financing plan is expected to last for decades, or until all of the bond debt associated with the expansion is retired.

The BCEC’s founding legislation in 1997 drew from a series of revenue sources, including additional taxes and surcharges on area hotels, rental car rates and tourist trolleys, to fund the construction of the 2.1 million-square-foot exhibition and convention center in the city’s South Boston neighborhood.

While the convention center officially opened in 2004, its financing arrangement was to last through 2034, according to Pioneer. At that point, according to Pioneer’s analysis, all of the diverted hotel, car rental and trolley tax revenue is expected to revert back to the state’s general fund.

Charlie Chieppo, a senior fellow at Pioneer and the author of the BCEC report, said the plan to expand the convention center by some 60 percent will require an extension of that financing arrangement through 2050. He said the move will ultimately cost the state’s general fund around $5 billion in lost tax revenue, or around $312 million per additional year, in the interim.

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