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Convention center expansion on hold as St. Louis officials worry about debt
CONVENTION CENTER

Convention center expansion on hold as St. Louis officials worry about debt

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ST. LOUIS — City officials, worried about piling on debt at the edge of a recession, refused on Thursday to approve the financing of the long-awaited expansion of the downtown convention center.

But leaders at the St. Louis Convention and Visitors Commission warned that more delay would exacerbate a cash crunch growing in severity at the tourism office, which is funded largely by hotel taxes. Late last month, the commission furloughed dozens of staff and instituted 20% pay cuts for all employees.

Commission officials said on Thursday that the agency was still burning through almost $1 million a month, had less than $2 million in cash on hand, and couldn’t count on hotels, decimated by the coronavirus outbreak, paying their taxes next quarter.

Commission President Kitty Ratcliffe said the issue of $105 million in bonds for the expansion would provide about $5 million in cash to the agency, enough to pay some of its bills in coming months. Moreover, St. Louis is already competing for conventions years away and banking on new facilities as a selling point.

“We’ve got other customers that are talking to us about 2023,” she said. “For our future, we need to be able to tell them the project is still moving forward.”

But members of the St. Louis Municipal Finance Corp. balked at issuing the bonds.

“With just the severity of everything that’s gone on in the economy right now, I would think you’d want a little more clarity about where this is going before we approve this motion,” said St. Louis Budget Director Paul Payne, a member of the finance corporation’s board.

The five-member board pushed to hold off a final vote until late May, hoping to know more then on the length and severity of the recession that has hit the travel and hotel industry particularly hard. Only Comptroller Darlene Green’s representative fought to approve the measure on Thursday.

The meeting came just more than a month after St. Louis and St. Louis County, which is also participating in the plan, each gave final approvals to the bond issue.

Days later, COVID-19 hit the country.

The finance corporation approval was the last needed in the long-delayed $210 million expansion plan.

Ratcliffe and regional leaders first pitched the expansion in October 2018. It relies on the reuse of $6 million annual payments, funded by hotel taxes, first pledged by the city and county to build the Dome at America’s Center, where the NFL Rams used to play. That 1991 debt is scheduled to be paid off next year, and the convention center expansion would rely on extending those $6 million payments another 40 years to amortize new bonds the city and county each issue.

Comptroller Green wrestled with St. Louis Mayor Lyda Krewson for a year over which city office would actually control the bond issuance, and the lucrative payments that go along with it. While the city’s Land Clearance for Redevelopment Authority was involved in the initial downtown real estate purchases for the project and could have issued bonds, the finance corporation, run by Green’s office, eventually won control.

Bond attorney Charles Saulsberry and financial underwriters with Siebert Williams Shank said on Thursday that approval would give the finance corporation flexibility to test the bond market and sell the debt if conditions become favorable. They would still need final approval from Green and Krewson.

Deputy Comptroller LaTaunia Kenner, who represented Green at the meeting, said the office’s financial advisers wouldn’t let them get into trouble. “I understand everyone’s concern,” she said. “It’s a concern of mine, too. But we also know that we need jobs and we need to make decisions now so we can get ahead of the curve.”

Kenner also expressed concern about the commitment of St. Louis County, expected to issue its bonds later this year.

“We don’t want the county to back out,” she said.

Earlier Tuesday, at its own board meeting, the convention commission approved spending $6 million on a $54 million plan to turn the nearly dead St. Louis Outlet Mall in Hazelwood into a youth sports complex.

The money, pledged in April 2018, was to be paid out over 10 years, until backers of the POWERplex project recently sought the cash up front, raising some eyebrows. The money will only be paid out if all other financing is secured, commission attorneys said. Area philanthropist Dan Buck, leading the development team, said last month he hoped to close on financing soon.

Convention commission chairman Andrew Leonard said Thursday that the board was getting calls from county council members. “The county executive wants this to go through,” he said. “As far as we know, the county project is green-lit and we’re the last stop.”

Only commission treasurer Jeffrey Barone voted against Buck’s request, calling it a “speculative venture that has not otherwise been able to raise enough capital to proceed.”

“Some would advise us that we have to pass this resolution to make sure the county continues to support the expansion of the convention center,” Barone said. “These two measures are completely separate. I trust the county will continue to support the future viability of our convention center for the benefit of our region regardless of how we vote on this resolution today.”

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