March 29, 2011--Proponents of a $2 billion expansion of the South Boston convention center are proposing that lawmakers hike Boston and Cambridge hotel taxes as well as tour bus and airport car rental fees as possible ways to raise nearly $120 million a year to cover the build-out.

The Convention Partnership, a group of business leaders and government officials studying the expansion plan, yesterday offered several ways of covering the project's massive costs, including:

--Raising Boston and Cambridge hotel taxes to 15.4 percent from the current 14.4 percent, which would generate about $26.7 million a year;

--Netting $3.4 million annually by increasing surcharges paid by customers of Boston tour buses, airport car rental agencies and other tourist businesses; and

--Using other unspecified revenue sources, such as a tax on possible future state-licensed casinos.

The committee, which will make its final report next month, also suggested three ways of paying for the project without immediately raising taxes, such as using some of the $152.3 million a year in statewide hotel taxes currently used for other things.

But former Massachusetts Convention Center Authority board member Charles Chieppo yesterday pointed to a 1997 study predicting the Boston Convention & Exhibition Center would generate some 800,000 hotel-room-night stays per year and 3,800 nearby hotel rooms by now. Neither has happened.

"Now they're turning those estimates on their ear and saying: 'You didn't get that (level of activity) because you haven't built enough hotel rooms,' " Chieppo said.

Plans call for issuing $1 billion of bonds to cover the cost of expanding the meeting space -- and spending $78 million to $117 million in principal and interest annually for 30 years to pay the money back. Additional parking will cost up to another $122.5 million, which the center expects to pay out of existing funds.

The committee also said finding a business partner to build the proposed $650 million hotel will require some $200 million in state and city subsidies.

MCCA chief James Rooney admitted that few Bay State residents want higher taxes, but he said the project will create "economic development" and an estimated 10,000 jobs, half of them permanent.

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