LA committee delays decision on $3.2 billion convention center expansion after CAO flags rising costs and DWP changes

The Los Angeles Budget and Finance Committee on Sept. 9 continued for one week deliberations on the proposed Los Angeles Convention Center expansion and a plan to issue Municipal Improvement Corporation of Los Angeles (MICLA) lease revenue bonds after the City Administrative Officer outlined sharply higher cost estimates and lingering revenue and utility risks.

City Administrative Officer Matt Szabo told the committee the project team is asking the council to decide whether to proceed with the expansion as proposed or to terminate the project and reevaluate. Szabo said the project would add about 190,000 square feet of contiguous exhibit space, nearly 40,000 square feet of meeting rooms and a nearly 100,000-square-foot multipurpose room, and that the team has estimated the financing needed to complete the work. "This project is going to increase, by a 190,000 square feet, the contiguous exhibit hall space," Szabo said.

Szabo presented a total project cost of $2.72 billion — including $2.04 billion in construction costs and $565 million in city-retained contingency and related costs — and said the financing plan assumes borrowing about $3.2 billion once capitalized interest is included. He said the administration estimates an average annual net general fund impact of about $111 million across 30 years, with a peak net impact of about $167 million in fiscal 2030–31. "The schedule dictates that we must achieve commercial close by September," Szabo said, arguing the committee must act quickly to preserve any chance of meeting Olympic-readiness deadlines.

The CAO and staff also warned the committee that several costs increased in recent weeks, including nearly $200 million in additional Department of Water and Power (DWP) work and about $105 million in subcontractor bid increases. Szabo said the project assumes direct annual convention-center revenues of roughly $110 million and additional indirect general-fund tax revenue of $22 million over time, but that those assumptions are sensitive to changes in the signage program and other variables. "We are only assuming, in this case, 110,000,000 of direct, revenue from the convention center expansion," Szabo said.

A central revenue uncertainty is the proposed freeway-facing signage program. Szabo said the mayor's office had pursued state legislation to allow the city to realize significant signage revenue but that the bill had been amended to require Caltrans signoff consistent with a 1968 federal-state highway agreement that limits sign area. The CAO said that amendment effectively prevents the team from assuming any revenue from those freeway-facing signs at this time, cutting expected signage receipts by about $34 million annually.

Public speakers were largely split between urging prompt action to preserve jobs and regional competitiveness and calling for stricter spending controls or more scrutiny. Nela McCosker with CCA said the expansion would "put people to work, boost our restaurants, our hotels, our small businesses" and urged the committee to move the items to full council. "Let's turn inaction into action," she said. Several labor speakers, including George Bocanegra of the Western States Regional Council of Carpenters and Rob Notauf of the Los Angeles County Federation of Labor, said the project would create union construction jobs and urged approval.

At least one major event stakeholder urged a narrow procedural change rather than opposition. Lisa Caz, owner of the LA Auto Show, said she supports expansion but asked the city to delay construction start for 60 days to avoid disrupting the November LA Auto Show or to require an "event continuity plan" before demolition begins. "If construction begins next month, right before our show, those new vehicle launches will be severely disrupted," Caz said.

Committee members pressed the CAO and project staff on contingency, cost-control mechanisms and schedule risk. Councilmember Blumenfield asked for examples of "relief events" that could increase costs; Szabo and project staff said relief events include city-initiated scope changes, force majeure events and other contractually defined circumstances. Gary Lee Moore, introduced by the CAO as a project-management consultant and former city engineer, said the Bureau of Engineering and the Bureau of Contract Administration will oversee construction and inspection.

Members expressed particular concern about DWP’s recent cost estimates and the project's tight schedule to meet Olympic-readiness milestones. Szabo and staff said they currently believe the schedule can still meet the March 31, 2028 readiness target but warned that the margin is limited and that the city has already assumed many additional workdays and Saturdays in the construction schedule.

The committee also received a verbal amendment read into the record amending recommendations 2 and 3 in the CAO/CLA report (Council File No. 15-1207-S3). The amendment instructs the city attorney to prepare a fund ordinance to receive bond proceeds and a lease–leaseback ordinance related to the series 2025 bonds, each to be transmitted no later than Sept. 19, 2025.

With a range of remaining questions about DWP’s scope and cost, signage revenue, contingency and Olympic readiness, the committee did not vote on whether to proceed with the project. Instead, "without objection" members agreed to continue items 1 and 2 and the related closed-session item 3 for one week, to the committee’s next regular meeting, to allow DWP and other staff to provide updated assessments.

Actions recorded in the meeting included the verbal amendment to recommendations 2 and 3 and the continuation of items 1–3 to the next Tuesday meeting. No final decision on proceeding with or terminating the project was taken during the Sept. 9 special meeting.

The city team said the next steps are to return with updated DWP cost and schedule information, any developments on state signage legislation, and further detail on financing assumptions and risk allocation prior to a committee recommendation to City Council.

Ending: The committee paused its formal decision until DWP and the mayor’s office deliver additional analyses; the council will revisit the financing and authorization question at the committee meeting scheduled for the following Tuesday.