House Appropriations takes look at request to finance third phase of expansions
(March 8, 2019) The latest expansion at the Ocean City convention center inched closer to commencement following last weeks’ House Appropriations Committee hearing for legislation allowing the Maryland Stadium Authority to issue bonds totaling $24.5 million for the project.
City Engineer Terry McGean was among the voices testifying in Annapolis last Thursday in support of HB 178. During the 2018 General Assembly session a similar bill was introduced that cleared the house before failing to leave the Senate Rules Committee.
“This is the third and final phase of a program that began in 2011 to improve the buildings condition in a very competitive regional convention center marketplace,” he said.
McGean said a pair of previous convention center expansions, which constructed the Performing Arts Center, renovated the ballroom and replaced an exhibit hall, were completed in 2012 and 2015.
“This project consists of a 30,000 square foot addition to our main exhibit hall, increasing our available exhibit space from 60,000 square feet to 90,000 square feet,” he said.
McGean said the current 60,000 square feet of exhibit space is below par for comparable facilities in Virginia Beach, Myrtle Beach, South Carolina and Wildwood, New Jersey.
“The addition will put us back on an even footing with our competition,” he said.
Mayor Rick Meehan said providing more space at the convention center is essential for attracting larger gatherings.
“There’s an old saying in Ocean City, ‘as goes the convention center goes the town of Ocean City,’ and that could never be more true than it is today,” he said.
Meehan noted the expansion has support from the Maryland Municipal League, Maryland Association of Counties, Maryland State Firemen’s Association, the Ocean City Hotel Motel Restaurant Association and the Maryland Chamber of Commerce.
“Those particular organizations and conventions have outgrown our facility [and] they are all looking for more space,” he said.
Cognizant of fiscal concerns statewide, Meehan noted the legislation is forecast to be revenue positive.
“The revenue produced [and] the tax revenue the state receives on a yearly basis exceeds the debt service,” he said.
In 2016, the Stadium Authority produced a feasibility study that indicated adding 30,000 square feet of exhibit space would result in between $2.6 million to $3.5 million in additional tax revenues for the state and up to $1 million for Worcester County. SB 177 includes annual bond debt service payments of $1.75 million from fiscal 2022 through fiscal 2039.
Matthew Palmer, Gov. Larry Hogan’s deputy legislative liaison, said HB 178 and cross-filed SB 177 are similar, albeit providing increased funds, to HB 133 from 2018 that was previously approved by the Appropriations Committee.
“It moves up the amount the Maryland Stadium Authority may bond for the Ocean City convention center to $24.5 million,” he said.
The 2018 legislation would have allowed the Stadium Authority to assume $21.7 debt capacity, with $20.4 million of bond proceeds to cover construction costs, with Ocean City contributing $14 million towards construction, and both entities contributing $50,000 annually to a capital improvement construction fund.
Del. Wendell Beitzel (D-1A Garret/Allegany) requested clarification regarding fiscal changes made subsequent to the committee approving HB 133 in 2018.
“In the end how, much is the state paying for this and how much is being paid by Ocean City?” he asked.
McGean said the revised legislation now requires the resort to contribute $15 million towards construction, with total building costs budgeted not to exceed $37.5 million.
“This bill also increases both what the city and Stadium Authority contribute annually into our capital reserve fund,” he said. “Right now, we each contribute $50,000 per year that will move up to $100,000 per year.”
Meehan said the city has previously earmarked funding for the capital project, which the Ocean City Council first approved in November 2016.
“We’ve already passed our bond issue and have $15 million waiting to proceed for this project,” he said.
McGean said the added capacity would allow increased bookings and result in more attendees patronizing area lodging and eating establishments.
“That means more Maryland jobs, more spending in Maryland and more tax revenue for Maryland government,” he said.
Meehan said the current convention center building is a far cry, for those old enough to recall, from the original structure that was opened in 1970.
“It was a building with a big ramp that extended out in front of it,” he said. “If you saw it, you’d wonder how we ever did business.”
Meehan said in 1996 when the convention center was initially expanded the city entered a new era and were finally able to compete regionally, with the latest round of growth intended to lure new business while accommodating multiple functions simultaneously.
“It’s now time in 2019 to move forward so that we can keep up with the demands that this produces to the town,” he said.
Del. Carl Anderton Jr. (D-38B Wicomico) said as a Lower Shore resident the potential upside from the expansion is exciting while also asking Convention Center Executive Director Larry Noccolino for insight regarding potential lost revenue.
“How many events have you … had to turn down because you didn’t have enough space,” he said.
Noccolino estimated turning down about a dozen and a half inquiries recently, with more than ten of those events infeasible regardless of the proposed enlargement.
“They were just entirely too big [and] that would be with the expansion,” he said.
Anderton expressed surprise and wondered if, perhaps, the expansion should be expanded.
“Wow, so maybe we’re not expanding big enough?” he said.
Noccolino noted the bay fronting facility has geographical limitations on growing the buildings footprint.
“The only place we can go now is up to the sky,” he said.
The idea appeared to briefly resonate with Anderton.
“Let’s go,” he quipped.