Anaheim Eyes Renovation of Convention Hall

Aiming to boost its convention-based business, city officials are proposing spending some $60 million to expand and renovate the Convention Center here as a companion to the Walt Disney Co.’s resort project.

Targeting the fierce national convention market, the expansion plan is also geared to win support from the powerful local hotel and motel lobby for a hike in the bed tax, which would boost the levy 2 percentage points to 15%.

The additional revenue--some $5 million--would finance loans to pay for the convention renovation as well as wider streets, larger sewer pipes and other projects needed to support the city’s revitalization efforts, city sources said.

City Manager James D. Ruth said Thursday he will ask the City Council next month for permission to hire financial and design consultants to study the feasibility of renovating the 27-year-old facility, which is the centerpiece of the city’s convention business.

“If the market analysis says it’s needed, then we think we can do it,” he said.

The Convention Center, which is across the street from Disneyland, is one of the largest such facilities in nation, with five exhibit halls and a 9,000-seat arena.

Hotel and motel owners have complained in recent months that the city-owned facility needs updating--adding more meeting rooms and larger lobby space--if it is to remain competitive in attracting conventioneers.

“San Francisco, Las Vegas, San Diego and Los Angeles are all expanding (their convention halls) and our visitor and convention bureau is telling us we’ve got to make these improvements,” Ruth said. “The city wants to keep its market share.”

In addition, the overhaul of the city’s infrastructure is vital to the Disney’s $3-billion resort project, which, as proposed, includes at least 1,800 new hotel rooms, a 5,000-seat amphitheater, lushly landscaped walkways, a shopping district and a new theme park next to Disneyland called Westcot.

Disney officials say approval for their own ambitious project may be at least a year away. Meanwhile, the city is intending to proceed with its renewal plans regardless of Disney’s decision.

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If the hotel and motel owners lobby against the bed tax, it would be very difficult for the city to finance infrastructure improvements planned around Disneyland and the Convention Center. Ruth said the goal of the tax is to pay for these without overburdening the tourism industry. It takes a simple majority of the five-member City Council to impose such a tax.

City officials contend that hotel and motel owners should share in the improvement costs because they stand to profit from the city and Disney projects.

This week, city officials started meeting with members of a local tourism industry to pitch their plan.

Many hotel and motel owners have been cautious about committing to the bed tax increase. “I don’t think anyone is crazy about the tax,” said Councilman Bob D. Simpson, who is also a spokesman for the Anaheim Hotel/Motel Assn. “I think everyone realizes that it’s critical to move forward with the project. And, it is equally important to put a funding mechanism in place to make it happen.”

Elaine Cali, spokeswoman for the Anaheim and Orange County Visitor and Convention Bureau, said her group realizes money spent “to make the product better is going toward the benefit of everyone. It increases the slice of the pie that everyone would get.”

She added that the business and tourism leaders in the county “are obviously looking forward to expanding and renovating the city’s Convention Center. It’s something you have to do to keep pace with the competition. . . . Your clients expect it.”

Deputy City Manager Tom Wood said the city’s economic future demands going ahead with its revitalization plan.

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“If we stand still, we may lose market share and revenues which are available for citywide use,” Wood said. “Tourism is the city’s business and it has tremendous benefits to the community. In large measure, the health of the (tourism) industry reflects the health of the city.”

Under the city’s Convention Center renovation plan, the 2% bed tax hike, coupled with an existing 1% of the bed tax already allocated for Convention Center improvements and an annual $1.6 million from the Convention Center budget will raise $9.1 million a year. It would be used to finance $120 million in construction loans.

This money would then got toward the $230-million price tag for the infrastructure improvements and Convention Center renovation.

The city is also expecting to receive about $108.9 million from county, state and federal funds for various transportation and utility projects. City officials have repeatedly said that no general fund money will be used for the projects nor will they raise residential taxes.

Increasing the Bed Tax

Anaheim is considering raising its hotel bed tax from 13% to 15% to help finance a major overhaul of its tourist hub. The proposed rate would be among the highest in the nation.

How Anaheim Ranks

U.S. cities with the highest bed-tax rates:

Columbus 15.8% Seattle 15.2 Anaheim (proposed) 15.0 Houston 15.0 Chicago 14.9 Cleveland 14.5 Los Angeles 14.0 St. Louis 13.9 New York 13.3* Knoxville 13.3 Memphis 13.3 Atlanta 13.0 Austin 13.0 Dallas 13.0 San Antonio 13.0 Nashville 12.3 San Francisco 12.0 Washington 11.0** New Orleans 11.0***

* Plus $2 surcharge per night

** Plus $1.50 surcharge per night

*** Plus $1-$3 nightly surcharge

Bed Tax Trend

Anaheim’s bed tax has increased 63% since 1983:

July, 1983: 8%

August, 1987: 10%

June, 1990: 11%

February, 1992: 11.6%

July, 1992: 13%

Sources: Campaign to Keep Travel Competitive, City of Anaheim; Researched by JANICE L. JONES/Los Angeles Times