The Sacramento City Council on Tuesday approved a scaled-back renovation of the convention center, choosing to save money for a second, undetermined project intended to draw tourists and conventioneers to the city.
“It’s a big night,” Mayor Darrell Steinberg said Tuesday afternoon in anticipation of the vote. “From the very beginning my belief has been that it would be a missed opportunity to put all of our money in a single asset to increase tourism and hotel demand.”
The more modest remodel of the aging convention center on J Street, between 13th and 15th streets, will include new east and west lobbies, a kitchen and a community plaza with an outdoor amphitheater between the convention building and the neighboring Community Center Theater.
The original $170 million proposal would have added more than 100,000 square feet to the convention center. The new proposal adds about 20,000 square feet but reconfigures the space to allow faster turnaround between two large conventions – a major limitation in the current configuration that keeps some bookings away.
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The City Council agreed Tuesday to finance about $90 million in construction costs on the convention center largely through bonds backed by hotel occupancy taxes. The final price tag will likely be closer to $120 million, said city project manager Desmond Parrington, with additional costs for environmental reports, design and other issues.
Tuesday’s vote allows the city to move forward on design and finance plans, with further approvals expected later this year.
That scaled-back plan leaves the city with the ability to finance about $22 million for another project, said City Treasurer John Colville.
Steinberg said he believed the fund could include another $20 million or more through other funding sources, including naming rights for the convention center.
“We landed in a better place,” Councilman Steve Hansen said Tuesday afternoon of the monthslong process to arrive at the two-project plan. “The building is better, the financing is better. Everyone is happy, which is not easy in Sacramento.”
Steinberg championed the idea of the more modest remodel prior to taking office. In October, he pushed for council members to delay an approval on the larger project until he was sworn into office and could have a vote. Tuesday’s plan is the culmination of seven months of wrangling on the mayor’s part.
Steinberg said he planned to ask the City Council to allot the extra money to a “destination Sacramento” fund in August and to begin exploring ideas. He envisions the extra bond money being used to “reactivate” the waterfront by investing in Old Sacramento, the Powerhouse Science Center or the riverfront area around Jibboom Street, largely now a warren of gas stations and economy hotels.
The City Council would need to pick a specific project before bonds could be issued to pay for it, Parrington said.
Steinberg said whichever endeavor the City Council ultimately chooses, he’d like to begin soon rather than waiting until the completion of the convention center.
“This city is capable of big things, and we can do more than one big thing at a time,” he said.
The plan also includes a push for a 350-room hotel located east of the convention center, Steinberg said. Hansen said the city had “conversations going on with folks” but no firm commitments on that project.
Hotel rooms are critical to the success of the growing convention center, as more rooms are needed to support larger conventions. Hansen said the city is about 2,000 rooms short compared to similar markets.
Adding those rooms near the convention center along with 250 rooms from The Sawyer, the Kimpton hotel in development near the arena, could help boost annual hotel revenues by $22 million within five years, said a city staff report. That would bring in about $2.7 annually in additional transient occupancy taxes.
“The demand is there,” Parrington said. “As a result, we’d be able to get more (large convention) business.”
The projects will be funded with bonds backed by the city’s transient occupancy tax, which is expected to raise about $250 million, Steinberg said. Some of that money has already been allocated for a revamp of the Community Center Theater and an upgrade of Memorial Auditorium. Both projects were approved last fall and are in the design phase.
Some of the money for those projects will also come from state loans, money saved from closing the facilities during renovations, and other city funds.
Bonds will likely be issued in 2018, with work starting shortly after that. The proposal estimates construction will be finished by 2020.