Is expanding the Columbia Convention Center smart for the city? A new study has answers
Expanding Columbia’s convention center in tandem with the private construction of luxury hotels and a commercial tower nearby would have a greater economic impact now than it would have had before the COVID-19 pandemic, according to a study obtained by The State.
Columbia leaders have long debated the project, which calls for expanding the Columbia Metropolitan Convention Center, located on Lincoln Street in the Vista, by 96,000 square feet. The plan includes construction of three hotels with near or above 4-star ratings and a mixed-use tower with office space and apartments built by private developers.
If all of those developments came to fruition, it would mean $7.8 billion in new spending in the area and the addition of nearly 2,000 permanent jobs over 30 years, according to the study. The development would also create more than 2,000 construction positions.
The developer pitching the hotel and tower construction is Ben Arnold of Arnold Companies, who has called the plan a “game-changer” that would dramatically improve Columbia’s future prospects. But it’s an expensive pitch. Start to finish, the whole plan would cost $511 million and take about four years to complete, according to the new study.
The city would be on the hook for $75 million to expand the convention center, but the bulk of the rest of the development would use private dollars. Columbia received $9 million for the project in last year’s state budget — $10 million less than the city asked for.
Leaders of a variety of city-associated groups have penned letters supporting the development, including the Midlands Business Leadership Group, the Vista Guild business association, City Center Partnership and the Vista property owners group.
The convention center has historically lost around $1 million dollars each year. Between 2009 and 2018, the convention center averaged just over $2.1 million in revenue but had $3.5 million in expenses, according to the study.
The venue would still lose money after expansion, but the annual loss would be cut to less than $400,000 per year by its seventh year of operation post-expansion while bolstering spending at surrounding businesses, according to the study.
That study is an update of a similar report completed in 2019. The city visitors bureau requested an update to show if the COVID-19 pandemic affected the plan’s feasibility and, if so, how. City leaders have been waiting on the update before making a decision on the development proposal.
The new study found the pandemic to have little impact on the development’s long-term success. Instead, construction efforts would catalyze slightly more spending than was estimated in the initial report. In 2019, the study estimated $7.2 billion in new spending over 30 years, compared with the updated $7.8 billion estimate.
The project would also cost more than first estimated. In 2019, the estimated cost for the entire development was $428 million. Now, it’s $511 million. (The annual rate of inflation in 2019 was 2.3%. In 2021, it was 7%. So far in 2022, the national rate of inflation has hovered around 7.5%.)
Both versions of the study were conducted by Chicago-based development consultant Hunden Strategic Partners.
Expanding the convention center only makes financial sense if it’s paired with the new hotels, office space and apartments proposed by Arnold, the study also concludes.
“The new developments and renovations would generate significant visitation, spending and new taxes that rationalize investment,” the study said, adding without “the proposed public-private partnership, the benefits will not accrue and the (convention center) complex will stagnate.”
Arnold has said if the city doesn’t make a decision soon, he will pursue an alternative development that he says wouldn’t have the same economic impact for Columbia.
Some local leaders have pushed back on the proposal. In October, state Rep. Kirkman Finlay, R-Richland, and Joe Taylor, who was elected to Columbia City Council in November, presented a competing study they commissioned with $10,000 of their own money.
That report found the expansion plan was risky and relied on “exceptionally optimistic” new levels of attendance. The Hunden report estimates nearly 344,000 people will attend events at the convention center its first year after expansion. In 2018, 132,000 people attended events at the venue.
“I support the convention center expansion, as long as it’s the right expansion at the right time,” Taylor said in October, before being elected to cCity cCouncil. “But I also support fixing Finlay Park, putting power lines underground downtown, fixing the Columbia Canal and cleaning up the appearance of the city as a whole. (The current convention center proposal) just introduces a huge amount of risk.”
(The city’s once-ornate but now dilapidated Finlay Park is awaiting an $18 million remodel. The Columbia Canal was breached during a major flood in 2015 and still waiting on millions in repairs.)
Taylor and Finlay’s report was produced by Shefelton Associates, a firm formed in 2021 by Chris Shefelton who now works in Mayor Daniel Rickenmann’s office.
This story was originally published March 9, 2022 at 5:00 AM.
