A bipartisan panel has issued a report recommendation the addition of retail and office space at the Hynes Convention Center in Boston to help reduce the facility’s nearly $2 million operating deficit.
Despite pleas from Gov. Mitt Romney that the John B. Hynes Veterans Memorial Convention Center at Boston’s Prudential Center be sold to the highest bidder, the 360,000-square-foot exhibition facility will remain state property.
Instead, a report from the Hynes Convention Center and Boston Common Parking Garage Commission recommended the possibility of adding retail to the center’s first floor along Boylston Street with offices upstairs to help reduce the nearly $2 million operating deficit, which must be footed by taxpayers.
“We started with a commission who expressed very divergent views about what we ought to do with the Hynes,” said state Sen. Dianne Wilkerson, a Roxbury Democrat and co-chair of the blue ribbon panel. “But as we received more information it became clear that it was not so simple to just sell it. The more we learned about the economic role of the Hynes, it became clear that the consensus was to keep the property.”
In its seven-page executive summary, the 12–member bipartisan panel declined to recommend a sale of the facility or opt for a private sector management team. Wilkerson acknowledged that more study is needed to determine whether the Hynes is being used to its fullest as a revenue generator.
Wilkerson said the panel also rejected the argument that having a pair of convention centers in the city – one in South Boston and the other in the Back Bay neighborhood – was a waste of taxpayer money.
“The bottom line is that the two facilities cater to different markets and are both doing well,” she said. “They are booked solid for the next several years and we wanted to remove any doubt in the convention market about this Legislature’s intention with respect to these two facilities.”
The Massachusetts Convention Center Authority (MCCA) owns and oversees the operation of the Hynes, the Boston Convention & Exhibition Center in South Boston, the MassMutual Center in Springfield and the Boston Common Garage.
‘A Compelling Argument’
During his campaign for governor in 2002, Romney called upon the Legislature to sell the Hynes as the second convention center in South Boston was under construction. The commission was established two years later in the wake of a budget crunch on Beacon Hill. At the time, Romney proposed transferring ownership of the Hynes and the Boston Common Parking Garage to the state pension fund, in lieu of making a $145 million annual payment to the fund. But state Treasurer Timothy Cahill – who oversees the fund – rejected the transfer, saying that his office manages money, not property.
Eric Fernstrom, a Romney spokesman, did not return a call seeking comment about the commission’s recommendations.
State Rep. Antonio Cabral, a New Bedford Democrat and a commission co-chair, said his goal was to eliminate most of the state subsidy to the Hynes, which has been as high as $18 million.
“From the beginning we knew that convention centers are a loss leader, but the Hynes has been an economic engine for the Back Bay,” Cabral said. “It generates meals and hotel taxes from the people who come to Boston, and some argue that it offsets the state subsidy. It’s a compelling argument.”
Still, Cabral said despite a $50,000 line item from the Legislature to support research for the Hynes, the panel lacked sufficient resources to do a detailed analysis that the convention center deserved.
“A lot more complex work needs to be done,” Cabral said. “We recommended that the Hynes enhance revenue possibilities with an expansion to help end the subsidy. But for that to happen, the authority has to take it to the next level of analysis.”
While the Hynes generated $9 million in direct tax benefits this year, a 17 percent increase over fiscal year 2005, the facility is still losing money. For example, in fiscal year 2006, the center was in the red by $1.8 million.
Steven Poftak, research director at the Pioneer Institute, a Boston-based think tank, said the release of the report – delayed by one year – has been highly unusual. While a summary was available, the full report has not been made public, he said. Banker & Tradesman had not received a copy by press time despite promises from Wilkerson’s office. An MCCA spokeswoman said she did not have a copy.
“There’s no underlying data to support the commission’s conclusions and that’s the piece that’s missing,” said Poftak. “We have always maintained that it is expensive to operate two separate convention centers. They are cannibalizing business from each other and the economic benefits of the centers are not as great as was originally advertised. It leads us to conclude that they may not be the best use of public funds.”
In addition, Poftak said while the MCCA likes to boast of the economic benefits of the Hynes, there is no way of knowing what impact the $960 million in borrowing to build the South Boston facility could have been if the money been spent differently.
Last week, a Boston Herald editorial railed against the findings of the commission, noting that the Hynes is a “waste of valuable space, in a neighborhood hardly in need of state-subsidized foot traffic. This report should be treated with the same urgency in which the panel acted – that is to say, none at all.”
In a prepared statement, the MCCA said it “welcomes the findings of the commission and will continue to market the Hynes to the fullest extent possible. After several years of indecision and uncertainty, we are very pleased to be able to give our clients full confidence that the Hynes will remain a convention center operated by the MCCA.”
