Orange County will continue pressing forward with — and spending money on — a nearly $700 million convention center expansion, though the project is likely to be slowed because tax collections have collapsed amid the coronavirus pandemic.
In a presentation to county commissioners Tuesday, Orange County staffers said they may have to split the expansion into two phases. The overall project involves two physically separate additions: A multipurpose venue that would add more exhibition space and another section that would add a big ballroom and more meeting rooms.
But in the meantime, they said they plan to dip into budget reserves in order to continue designing both sections, which together would add nearly 1 million square feet to the Pentagon-sized meeting facility, which is already 7 million square feet overall and has 2 million square feet of exhibition space.
That’s because the funding source for the project — Orange County’s 6 percent tax on hotel stays — has essentially evaporated during the global travel collapse caused by the COVID-19.
County tax collections fell 97 percent in April — from more than nearly $26 million a year ago to less than $800,000. Budget officials now think the tax, which generated $284 million last year, may only produce $150 million this year. And they think collections could take up to five years to fully rebound.
Still, convention center leaders made it clear they remain committed to the project, which is a top priority for the tourism industry. Though the center typically operates at a deficit — taxpayers have spent $180 million to subsidize its operations over the years, in addition to several billion spent on construction and debt payments — private-sector businesses profit off it by selling hotel rooms, theme park tickets, meals and more to convention attendees.Advertisement
“We feel like we’re in a real good place with the timing of this expansion,” Mark Tester, the convention center’s executive director, told commissioners.
The bills are multiplying: Last week, Orange County paid more than $3.7 million to the design contractors.
Mayor Jerry Demings and county commissioners will ultimately have to vote on whether and how to proceed with construction, once the tax begins generating meaningful revenue again. Staffers said Tuesday they will likely recommend proceeding first with the multipurpose venue, and Tester said he’s still hopeful that construction could begin by September. Construction could take about three years.
Much of the staff presentation Tuesday was aimed at opponents of the expansion who have urged county leaders to spend their hotel taxes in ways that provide more benefits to tourism industry workers and the broader community. The county currently spends the vast majority of the tax in ways meant to generate more tourism business — either through the convention center or Visit Orlando, the publicly subsidized advertising agency.
Commissioners have other options. For instance, state law allows counties to use hotel taxes to build roads or other public infrastructure projects or to clean rivers and lakes. And local politicians in other communities — from Brevard County to the Panhandle — have also successfully lobbied state lawmakers to expand the law over the years, despite intense tourism industry opposition.
County commissioner Emily Bonilla said county leaders need to rethink their spending priorities.
“I appreciate the hospitality industry. They’ve brought a lot of jobs to this area,” Bonilla said. “But this hospitality industry has also brought down wages in the area and has caused a perpetual poverty in our community.”