Budget committee notes CAO update on Los Angeles Convention Center expansion, flags revenue and timeline risks

The Los Angeles City Budget and Finance Committee on July 1 noted and filed an update from the City Administrative Officer on the proposed expansion and modernization of the Los Angeles Convention Center, while highlighting persistent risks tied to digital signage revenue, utility timelines and tariffs.

The CAO report described results of a value-engineering review, estimated projected revenues from a six-sign digital program and presented a ballpark debt-service estimate the city would carry under current assumptions.

The report matters because the expansion’s financial model relies heavily on a proposed digital-signage program — including two freeway-facing signs — and because the project schedule is compressed to align with the city’s longer-term event goals. Committee members pressed staff on the legal, federal and utility approvals that would be needed to realize the largest revenue assumptions.

City Administrative Officer Matt Szabo and assistant CAO Ben Seja told the committee the city and developer partner APC LA are finalizing a project agreement to set the contract terms and risk allocation. Seja said the staff-led value-engineering process generated more than 300 ideas and that the team selected roughly 56 items with an estimated value of about $129 million in reduced scope or avoided cost. “The largest cost avoidance item selected through the value engineering process was the deferral of Gilbert Lindsay Plaza. That is a $52,000,000 cost avoidance,” project executive Gary Lee Moore said.

Seja presented the team’s traffic and marketing revenue estimates for the project’s six-sign digital program and said those signs would produce an estimated $60,000,000 in nominal revenue annually over 30 years under the current plan. “The freeway-facing signs represent 68% of the revenue,” Seja said. Staff said removing the two freeway-facing signs would reduce projected signage revenue from $60 million to $29 million annually and “would add nearly $1,000,000,000 to the 30-year general fund obligation,” a figure the CAO team said would make the project cost-prohibitive in their view.

Seja offered a ballpark annual general-fund impact under current interest rates and assumptions of roughly $30,000,000 a year (about $29.3 million, as stated in the presentation). He stressed that figure is an estimate and that the final number will depend on the fixed price from the developer, final revenue assumptions and the project agreement’s terms.

The staff presentation also identified operating and other long-term savings: about $10 million in annual cost reductions from value engineering, roughly $2.5 million in increased annual revenue from parking and events, a 30-year value-engineering savings of roughly $306 million, an incremental revenue estimate of about $75 million over 30 years and operating expense reductions around $90 million over 30 years. Staff told the committee they currently estimate tariff-related cost risk at $30 million to $50 million.

Council members focused questions on three principal risks: (1) whether a state law change and a federal amendment to the 1968 state–federal agreement would permit freeway-facing digital signs; (2) Department of Water and Power (DWP) capacity to deliver required utility work in the compressed timeline; and (3) contingency and pricing risk in APC LA’s bid because some material PA (project agreement) terms were still under negotiation when pricing began.

Councilmember McCosker urged maximizing signage revenue, saying, “max out the signage.” Several councilmembers said they were skeptical the federal approvals would arrive in time. Members also pressed staff on alternatives for increasing non-general-fund revenue — for example, air rights or adjustments to local sign district regulations — and sought more clarity about deferred elements such as Gilbert Lindsay Plaza and the extent to which recommendations were simply moving costs to other funding tracks rather than eliminating them.

Gary Lee Moore, the project executive and former city engineer advising the team, said the compressed timeline increases risk and that city departments and the developer are working daily to limit open issues. Ben Seja said the council should expect a further update after APC LA delivers its pricing; staff said that pricing is expected the week of July 14.

Public commenters at the start of the meeting — including representatives of the Los Angeles Area Chamber of Commerce, the LA/OC Building Trades Council, the Los Angeles County Federation of Labor, Painters and Allied Trades District Council 36, the California ITSE Council and the South Park Business Improvement District — urged the committee to move the project forward for jobs and economic impact. James Finney Conlon of the Los Angeles Area Chamber of Commerce said, “We humbly ask you to support item 1 in order to continue the advancement of the LA Convention Center.”

The committee voted 5–0 to note and file the CAO report. Staff will return with APC LA’s pricing and the finalized project-agreement terms for council consideration.

Next steps: staff said APC LA’s fixed-price proposal is expected the week of July 14 and that council will receive a subsequent report before any vote to issue debt or finalize the project agreement.