OCEAN CITY — Just one week after state lawmakers approved Maryland’s share of the funding for the next expansion of the Roland E. Powell Convention Center, resort officials this week found themselves defending the project.
Citing a need to gain a competitive advantage over similar facilities in the state and region and increase the economic impact, the Mayor and Council last fall approved phase 3 of the convention center expansion, which will add roughly 30,000 more square feet of exhibit space to the ever-expanding facility. The project will cost an estimated $34 million, of which 60 percent will be paid for by the state through the town’s partnership with the Maryland Stadium Authority (MSA) and 40 percent from the town, or about $13 million, which will be paid through a one-cent addition to the food and beverage tax dedicated to the convention center expansion.
Last week, state lawmakers approved Governor Larry Hogan’s fiscal year capital budget which included $500,000 in funding for the state’s share of the project for the first year and the full $20 million contribution in out years. Less than a week later, the Mayor and Council found themselves defending the convention center expansion and its $34 million price tag.
During the public comment period at Monday’s meeting, former councilman and fiscal watchdog Vince Gisriel said he thoroughly reviewed the feasibility study and market analysis and questioned the need for expansion at this time.
“Now, there are plans to add an additional 30,000 square feet of exhibit space to the already existing 60,000 for a total of 90,000 square feet,” he said. “I read the latest feasibility study or market and economic analysis to determine the logic behind the expansion. Before proceeding with this project, I believe that the Mayor and Council should take a second look.”
By way of background, the original convention center was built in 1970 with 40,000 square feet of exhibit space on two levels along with seven meeting rooms and breakout rooms and other areas. In 1990, a market and economic impact study found the facility captured a significant amount of convention activity within the state and throughout the mid-Atlantic region and recommended the facility be renovated and expanded to 80,000 square feet of exhibit space along with 30,000 square feet of meeting space and 20,000 to 25,000 square feet of ballroom or swing space.
To that end, the convention center was expanded in 1997, although not to the extent the study seven years earlier recommended. The convention center has been expanded since, including a roughly 19,000-square-foot ballroom in 2012 and the new 1,200-seat performing arts center, which opened in late 2014. The expansions increased the total exhibit space to around 60,000 square feet and phase three approved last year will move that figure closer to 90,000 square feet.
The latest proposed expansion was approved after a feasibility study commissioned by the town revealed there was a demand for increased convention and trade show space in the state and throughout the mid-Atlantic region and Ocean City’s convention center should be expanded to remain competitive. Ironically, Gisriel quoted extensively from that same study and report when he called on the Mayor and Council to reconsider the expansion this week.
“The latest feasibility report indicates that such an expansion would better accommodate long-term users that serve the local economy,” he said. “While this may be true, do you spend $34 million of local and state funds to accommodate a relatively small number of events that occur each year.”
Gisriel attempted to point out the study suggests there is already ample space available to accommodate most of the conventions and shows the resort attracts already.
“The town is considering an expansion to capture between 9 and 12 percent of the conventions and trade shows in what has been described as a very competitive market,” he said. “The report points out that a key trend in the convention industry is that over the last two decades, the supply of exhibition space and meeting space has seen significant growth while the demand has not kept up.”
In addition, Gisriel said the town’s share paid for by a one-cent addition to the food and beverage tax was somewhat disguised as falling on the backs of tourists and conventioneers who use the facility and that is was largely borne on the backs of the residents and property owners.
“I keep hearing that any debt service incurred by an expansion will be paid for by the food and beverage tax,” he said. “I believe that no one pays more food and beverage taxes than our year-round residents and absentee property owners who frequently come to Ocean City. These are the people who go out to our restaurants, bars and nightclubs on average more than any other group. Any way you look at it, the food and beverage tax is on all of us.”
Councilman Dennis Dare, however, disputed much of Gisriel’s assertions about the convention center expansion and said the studies and economic impact analysis justified the project.
“I want to remind the public the initial renovation of the convention center several years ago called for us to be able to realize over 75,000 square feet of exhibit space, but the Mayor and Council at the time thought that was perhaps too much,” he said. “The Mayor and Council decided to build half at that time, something like 45,000 square feet, and if that proved to be successful we would build the other half.”
Dare pointed out the leap from the original 40,000 square feet to the proposed 90,000 square feet was done in phases as the demand for more space at the facility grew in kind. Dare said he was confident the latest expansion would pay for itself in spades over time.
“Now, 15 years later we did another feasibility study to explore building the other half and it proved the same thing as it had originally,” he said. “So, I’m pretty confident that the number that building is being expanded to in phase three will be not just successful for the building but also successful for the town of Ocean City.”
Dare pointed to some of the major events such as the Maryland Association of Counties (MaCo), the Maryland Municipal League (MML) and the state firemen’s convention as examples of events that have outgrown the existing space.
“We have many events and conventions that take up the entire space now and if we didn’t expand and accommodate the growth, we could very well lose them,” he said. “Already today we approved an event for MaCO. They use every inch of the space now and their event is growing. They have been very loyal, but we have to be able to accommodate them.”
While much of the discussion was on the larger events, Dare pointed out the latest expansion would allow the Convention Center to accommodate multiple smaller events simultaneously.
“Expanding the space allows us to do more than one event at a time,” he said. “You can have a hand bell choir here and a baseball card convention or something elsewhere and that doubles the impact for the town. It’s not just that we can accommodate 60 percent of the events. We can now accommodate two smaller events at a time and that’s a big, big factor in the expansion of the Convention Center.”
