New York's Jacob K. Javits Convention Center will finally get a long-awaited makeover using proceeds from a bond sale in 2005, when the expansion and renovation was expected to be much larger.
The New York Convention Center Development Corp. board yesterday approved the renovation and expansion of the convention center on Manhattan's Far West Side using $390 million of remaining bond proceeds from a $700 million issue that sold almost four years ago.
The bonds are backed by a $1.50-per-night hotel tax in New York City. Some of the bond proceeds were already spent on land acquisitions, demolition, and other costs.
The project's cost will total $463 million and will also use $65 million of interest earned on the bonds and excess tax revenue, and $8 million of the corporation's unrestricted funds.
The new plans are modest, relative to the general project plan approved in 2006. The plan approved yesterday calls for $391.3 million of renovation work, $39 million to add 100,000 square feet to the center, and $33 million in other costs.
The renovation work is expected to begin this year and be finished in 2013. Expansion work will begin this year and be completed next year, according to the plan.
When the deal was priced, the state was looking at a $1.68 billion expansion that utilized several sources of funding, including $700 million from the city and state. The convention center was to grow by 1.335 million square feet, including 340,000 square feet of exhibition space.
Subsequent reviews and due diligence of the original proposal and completed designs revealed that the expansion's cost would be "significantly greater" than estimated, according to the new general project plan. The city hotel industry opposed increasing the hotel tax to pay for the additional costs and in early 2008 then-Gov. Eliot Spitzer said the plan was dead.
New York City could still get a greater expansion of its convention space, but in Willets Point, Queens, as part of proposed redevelopment of an industrial area around the new Mets ballpark.
Moody's Investors Service assigns the bonds its A3 rating. Standard & Poor's and Fitch Ratings do not have an underlying rating on the bonds.
