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$250 million Plan Considered to Expand San Jose Convention Center to 880,000 sq ft;
One Source of Funding Is to Increase Hotel Occupancy Tax from 10% to 14%

By Joshua Molina, San Jose Mercury News, Calif.McClatchy-Tribune Regional News

May 1, 2008 - The artist's renderings show a majestic San Jose McEnery Convention Center nestled between the Marriott and Hilton hotels, with glass windows surrounding ballrooms and silver light streaming through the roof, illuminating the sky.

In an effort to stay competitive as a destination for big gatherings, San Jose is considering a $250 million-plus expansion plan of the convention center. This week, the city released conceptual drawings of what the center could look like and approved spending more than $5 million to push the project forward.

The city council, acting as the redevelopment agency board, Tuesday agreed to spend $4.25 million on schematic designs by LMN Architects. An additional $1.5 million for pre-construction services will go to Gilbane Building for work related to the replacement of the convention center's central heating and cooling plant.

While the council generally is supportive of the expansion, questions about the cost dominated the discussion.

"We all agree that the convention center is an important economic engine in our city," downtown Councilman Sam Liccardo said in an interview. "The question for me is whether we are investing $250 million in a hula-hoop factory when all the kids are using PlayStations. I want to make sure that this is a market that is expanding before we decide to buy in."

The proposed expansion would nearly triple ballroom space to 60,000 square feet and more than double meeting space to 64,000 square feet. The center's total square footage would increase by 30 percent to 880,000.

The expansion would be built in front of the current entrance along San Carlos Street. A finely landscaped walkway would connect to the Civic Auditorium across the street.

A consultant's study last year suggested more space would increase annual event bookings by 57 percent, increase hotel-room tax revenue by up to $2 million and pump $50 million into the local economy.

Bill Ekern, project manager for the redevelopment agency, said the convention center could be a more popular destination for companies looking to come to Silicon Valley.

"We think the expansion creates more opportunities for business to come downtown," he said. The city currently heavily subsidizes the facility.

Much of the money for the expansion would come from the formation of a new hotel taxing district, which would generate $125 million. The proposed tax on hotel guests would amount to an additional 4 percent on top of the current 10 percent bed tax.

The rest of the expansion would be paid for by the redevelopment agency through the issuing of bonds, Ekern said.

But precise details on the funding are still several months away. The council will take up the matter again in October or November, after the new schematic designs give the council a better idea of what the project will cost.

Although he's for expanding the convention center, Councilman Pierluigi Oliverio voted against the extra funding at Tuesday's council meeting. Among other things, he cited opposition to building the center out toward San Carlos Street.

"Just crank it up and build the thing as tall as you need to do," Oliverio said.

Still, a majority of the council members believe the city should move forward with the design process.

"We're certainly not going to get there if we don't get going now," said Councilwoman Nancy Pyle. "So go, go, go!"

Contact Joshua Molina at jmolina@mercurynews.com or (408) 275-2002.

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To see more of the San Jose Mercury News, or to subscribe to the newspaper, go to http://www.mercurynews.com.

Copyright (c) 2008, San Jose Mercury News, Calif.

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