Minimizing the financial risk to the city is making the possibility of a public-private partnership (P3/PPP) look ever more appealing for the multi-million-dollar planned overhaul of the Los Angeles Convention Center. The original plans for the facelift carried a price tag of $470 million. Since that time, the cost estimate has increased to $720 million, according to a new city report.
A public-private partnership (P3/PPP) in which a private-sector developer would finance the project would cost more than $1 billion. However, the long-term savings would overshadow those higher costs.
The project calls for expansion of the facility to include retail, a hotel and housing. Last June, an architectural firm was chosen for the $470 million upgrade. In February, the idea of a P3/PPP was floated, with a private firm responsible for designing, financing, building and then managing the convention center.
The center is currently managed by an outside firm in a partnership with the city. The recently announced higher costs are said to be because of increased construction costs as well as additional costs such as design and legal work.
The recent city report offers two options for a partnership. One would result in the demolition and rebuilding of the West Hall and another would simply renovate the hall. Either choice would result in new retail, office space and housing. Costs were set at between $911 million and $1.13 billion.
While the idea of a P3/PPP for the project has been kicked around for some time, some city officials note that a partnership between the city and a private partner would mean the city would not have to increase its bonded indebtedness. The P3 option also would generate more revenue, said city officials. The report will get more attention at the next City Council Economic Development Committee.