|By Benjamin Spillman, Las Vegas
Review-JournalMcClatchy-Tribune Regional News
Aug. 13, 2008 - A slump in Las Vegas conventions and tourism has Southern Nevada boosters reconsidering the schedule for an $890 million renovation of the Las Vegas Convention Center.
On Tuesday, officials with the Las Vegas Convention and Visitors Authority told their board of directors they will break the project into three phases beginning with renovations on existing buildings, a move that will save money on financing but could also push the completion date of the overall project beyond the original projection of 2011.
"What we are taking is a very fiscally responsible and conservative approach to make sure we don't overextend ourselves," authority spokesman Vince Alberta said.
By breaking up the project, paid for with revenue bonds, into phases the authority will reduce its debt service costs $5 million in the 2009 fiscal year, $13.5 million in 2010 and $28 million in 2011, Alberta said.
Instead of embarking on the most ambitious elements of the project first -- such as a makeover of the building facade and parking lots and a new concourse that would connect the north and south halls -- the authority will start with lower-profile upgrades.
"Certainly some elements of the project have higher values than others," said Jeremy Aguero, a principal at the economics research firm Applied Analysis.
Last year Aguero published a paper that said the expansion would be worth $5 billion to the local economy. It was based on a long-term look at the value of convention visitors, who on average spend about $1,600 each.
"We would certainly like them to go forward with the master plan as it was proposed originally," Aguero said.
Under the new plan, the project's first phase will cost $395 million and include: relocation of some utilities, renovations of meeting rooms in the north and central halls, refurbishing the concourse and restaurants between the north and central halls, adding rest rooms in the central hall and completing new police and fire stations.
Some of that work is already in progress.
Near the completion of the first phase, the authority will consider the economy and the cost of continuing before moving on to phases two and three, Alberta said.
"If there is any impact it would likely be on phase three," he said, of the phase that would include the most visible improvements, such as the facade upgrade and new concourse.
The authority's biggest annual customer was happy to hear the news.
Officials at the Consumer Electronics Association, which owns the International Consumer Electronics Show, were uneasy about the prospect of construction disrupting their 2009 event.
Around the time the original schedule was approved they stated construction in front of the center would impede their ability to host the show.
"We were a little stressed by the original plan," said Karen Chupka, the association's senior vice president for events and conferences.
Chupka said doing the biggest renovations first would have made it impossible for the association to lease exhibit space in the Silver Lot parking area and sell banner space on the facade of the convention center.
"We were potentially looking at a $2 million or $3 million loss in revenue," Chupka said. "This kind of opens up all that real estate again."
The authority board, a group that includes local government officials and top-level managers from the biggest resort companies in Las Vegas, voted in May 2007 to authorize the renovation project even though the cost was 21 percent higher than a previous $737 million estimate.
At the time board members said it was important for Las Vegas to keep pace with other jurisdictions such as Phoenix, Chicago, New York and Orlando, Fla., which collectively have authorized $4.5 billion in upgrades to their convention centers since 2003.
The authority planned to finance $822 million of the project and pay the remaining $68 million in cash.
Authority President and CEO Rossi Ralenkotter said the upgraded facility would reassure big trade show clients that Las Vegas would keep up with technology improvements and other trends that make a convention center relevant.
Ralenkotter said keeping trade show guests happy in the future will be critical to maintaining hotel occupancy rates around 90 percent even as Las Vegas resorts add 47,000 rooms to the existing 133,000-room inventory.
He added that the authority wants to increase the percentage of Las Vegas visitors who come for trade shows from 15 percent to 20 percent. "These anchor tenants are what you build the shopping center around."
But the economy has changed significantly since the board authorized the upgrades.
For Las Vegas, the unprecedented boom that began when the economy recovered from Sept. 11 started to unravel late in 2007 and early this year.
As the scope of the real estate woes grew, global credit availability shrunk from a gusher to a trickle.
At the same time, the price of oil started to shoot skyward, topping out at more than $140 per barrel this summer.
As the situation unfolded, the number of tourists coming to Las Vegas shrank and airlines started cutting flights to save money on fuel.
In the fiscal year that ended June 30, gambling revenue statewide was down 1.85 percent, the first decrease since 2002 when it tumbled 3.7 percent in the wake of Sept. 11.
June also saw the average daily room rate in Las Vegas fall 16 percent to about $113, the biggest one-month drop since February 2002.
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