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Sunday, Jun 4, 2023

A Look Back — and Ahead — as the LA Convention Center Turns 50

Five decades ago, Charles Luckman — a developer and architect whose portfolio includes The Fabulous Forum in Inglewood and New York City’s Madison Square Garden — made a bold prediction about the future of downtown.
The area south of 6th Street, east of the 110 Freeway and north of the 10, he told the Los Angeles Times in 1971, “will be completely rebuilt in 20 years.”

Luckman was known for his business acumen, and it was his firm city leaders tapped to design the Los Angeles Convention Center.

The expansive $41.8 million civic project had been in the works for three decades before it opened 50 years ago this month.

It was built with one goal in mind: to spur growth in the downtrodden southern corner of downtown — an area dominated by warehouses and parking lots.

The architect’s prediction largely came true though it took longer than 20 years.

An entirely new neighborhood, today known as South Park, eventually sprung up. High-rise residential towers and dozens of new hotels now line the blocks sprawling east and north from the convention center, and plenty more are on the way.

“The presence of the convention center is influential, not just in South Park but in downtown as a whole. Tourism is an industry that sustains much of downtown,” said Ellen Riotto, executive director of the South Park Business Improvement District, which represents 2,500 property owners in a 52-block area.

“We’re starting to move to sort of a 24/7 style of economy, and that’s largely due to the growth in the residential population. But the heartbeat of it has always been the attractions of the convention center and entertainment hub of L.A. Live,” she added.

As L.A. boosters gear up to mark the convention center’s golden anniversary with a celebration planned for July 29, plans are also moving ahead on a $1.2 billion expansion designed to secure the venue’s future in an increasingly competitive convention market.

What Luckman failed to see in his crystal ball was the private development of Staples Center on convention center property — and the arrival of three professional sports teams — which helped make his vision a reality.

In 1998, just five years after the city completed a $500 million expansion of the convention center in a bid to draw big bookings away from larger convention centers in other markets, it demolished the convention center’s northeastern section to make room for Staples Center.

The expansion had doubled the convention center’s size, but in 1996, it was still unable to fill its halls and was left with construction debt that required $20 million a year in taxpayer subsidies. 

The Staples effect

At the time, Steve Soboroff, managing partner of shopping center development and leasing company Soboroff Partners, was serving as an economic adviser to then-Mayor Richard Riordan. Soboroff said he had seen the financial reports and wasn’t surprised by the lackluster performance.
“There was no way in a million years I’d host a convention in downtown,” Soboroff said. “It was surrounded by flop houses. It was gross. There were no reasons to go downtown.”

That’s when it occurred to him, he said, that an arena might do the trick.

Soboroff already had relationships with Philip Anschutz and Edward Roski, who had recently acquired the Los Angeles Kings. Soboroff said he was able to convince them that they could make money developing a new arena. The city sweetened the deal by offering up 8.5 acres at the convention center under the terms of a ground lease.

The Anschutz Entertainment Group Inc.-owned and developed Staples Center opened in the fall of 1999, home to not only the Kings but the Los Angeles Lakers and Los Angeles Clippers. It would accomplish what the convention center, by most estimates, could not on its own.

Today, the arena draws 4 million visitors a year, compared to the convention center’s 2.7 million.

Without the Staples Center, Soboroff said, “There would be less hotels, there would be less conventions. I don’t believe that the Arts District, or any of these other downtown districts, might have flourished like they have done.”

“Right out of the box, the Lakers won three world championships in a row.

L.A. and Staples Center and our sunsets were not on TV just during the Rose Bowl; they were on TV 300 times a year on national television. It became a very beneficial thing to downtown,” he added. 

Attracting visitors

That’s not to say the convention center didn’t do its part.
“Conventions bring hotel guests and restaurant guests and all that,” Soboroff said.

The first E3 trade show for the video game industry, for example, was held in Los Angeles in 1995.
 It’s now a mega event that brings tens of thousands of developers and journalists to the Los Angeles Convention Center and makes headlines around the world. And the Anime Expo, which has a lease at the Los Angeles Convention Center through 2030, drew 115,000 visitors in 2019.
The convention center can be credited with the construction of more than a handful of South Park’s new hotels.

Since 2005, the Los Angeles City Council has given more than $797 million in taxpayer subsidies to the developers of eight hotels, including the InterContinental Los Angeles Downtown at the Wilshire Grand, Hotel Indigo, Courtyard Los Angeles at L.A. Live and Residence Inn Los Angeles at L.A. Live.

The subsidies came in the form of tax breaks. L.A. allowed these developers to keep future bed tax revenue that would have otherwise funneled into the city’s budget, funding public services. Their reasoning? More hotel rooms were needed to keep the convention center competitive.

That argument is also being used to drive plans for a convention center expansion that would be developed by downtown-based AEG in partnership with the city and Plenary Group USA.

AEG, which also built the $2.5 billion L.A. Live complex next to Staples Center, took over operations of the convention center from the city in 2013, promising to reduce operating costs.

In 2018-19, before the pandemic hit and totally upended revenue streams, the convention center generated an operating profit of $8.3 million, of which $4.9 million went to the city.

“We’ve changed the way the facility operates to a place where we’re not dependent on the city’s funds. We’re self-funding. We’re not a drain. We are providing that economic impact driver,” said Ellen Schwartz, the convention center’s general manager.

Eyes on growth

In their plans, AEG and the city say the proposed expansion would lead to an additional 191,400 hotel room bookings each year; 1,900 full-time jobs; and a $6.7 million increase in annual revenue.
Those plans were presented last week to the Downtown Neighborhood Council’s planning committee, and Schwartz optimistically projects that construction will begin in the next 12 to 18 months.

But Heywood Sanders, a professor of public administration the University of Texas at San Antonio who studies convention center development and urban politics, is skeptical that even a large city like Los Angeles will be able to steal conventions away from other destinations.

The market, he said, is just too crowded.

“There are a great many cities that have over the past couple of decades built new or expanded convention centers or added subsidized or entirely publicly owned and financed hotels next door,” he said. “At the same time, it’s not clear that there’s much in any significant growth in the demand.

“It is a zero-sum market environment,” Sanders added.

In general, he said, elected officials are spurred on to stay in the race not because of the economic returns generated by convention centers but because of development opportunities.

And, in the case of the Los Angeles Convention Center, it’s difficult to argue the venue hasn’t fueled the complete rebuilding of South Park.

“The last time I was by a couple of years ago, I was struck by how many new apartments there were,” Sanders said.

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