Can LA Afford This Bet? LA’s Civic Center Expansion and $900M Bond Gamble

The future of the Los Angeles Convention Center (LACC) hangs in the balance, caught between the vision of a world-class venue and the stark reality of the city's precarious finances. A monumental decision looms, one that carries a multi-billion dollar price tag and the potential to reshape the city's budget for decades to come. After a contentious Budget and Finance Committee meeting on September 16, 2025, a new, more cautious path has emerged, but the debate over how—and when—to modernize this critical city asset is far from over. Let's break down the escalating costs, the financial risks, and the dramatic shift in recommendations that will soon go before the full City Council on September 19, 2025.

A Spiraling Budget: How Did We Get to $2.72 Billion?

The LACC Expansion and Modernization Project has seen its budget swell dramatically over a short period. What was initially a large but manageable figure has ballooned into a staggering $2.72 billion total project cost. This latest figure represents a significant increase from the $2.2 billion estimate from just a few months prior in March 2025.

So, what’s driving this surge? A recent Addendum Report from the City Administrative Officer (CAO) points to several key factors:

• Increased Construction Costs: The core design and construction costs have jumped from $1.845 billion to $2.035 billion. This increase is partly due to a revised proposal submitted on August 28, 2025, by the project developer, AEG Plenary Conventions Los Angeles, LLC (APCLA), which incorporated higher costs for work required by the Department of Water and Power (DWP).
• City-Retained Costs: These are costs the city holds for contingencies, project management, and other items. They have grown from an estimated $527 million to $566 million. As construction costs rise, so do the contingency funds, which are calculated as a percentage of those costs.
• DWP Power Needs: A major driver of the recent cost spike relates to the evolving scope of work for the DWP, including the construction of a new Network Station and the relocation of utility vaults. The allowance for DWP-related work has increased significantly, adding to the project's bottom line.

Facing the Fiscal Cliff: A City on "Negative Credit Watch"

This massive expenditure comes at a time of great economic uncertainty for Los Angeles. The Chief Legislative Analyst (CLA) has painted a grim picture, warning that the city just completed a "very brutal" budget process and that approving this project could mean sacrificing other essential services. According to the CLA, if the city moves forward as planned, it will be "very, very limited in terms of being able to add any additional firefighters in the next decade. Any additional police officers improving your rec and park services, paving another street that is all going to be at risk".

Further complicating the matter is the city's financial standing. All four major rating agencies have placed the city on "negative credit watch," citing concerns over its financial position, structural deficit, and rising liability claims. Proceeding with a project that adds nearly $3 billion in new debt could exert further negative pressure on the city's credit rating, potentially leading to a downgrade. A lower credit rating would make all city borrowing, including for this project, more expensive.

A Dramatic Turn: The New Recommendation for the LACC

Faced with these mounting risks, the City Council's Budget and Finance Committee took decisive action on September 16, 2025. In a narrow 3-2 vote, the committee approved a new set of recommendations that represent a significant pivot from the full-steam-ahead expansion plan.

Instead of pushing forward with the entire $2.72 billion project before the 2028 Olympic and Paralympic Games, the new proposal calls for a more measured, phased approach:

1. Close Out the Current Plan: The first step is to end all activities associated with the current expansion project plan.
2. Modernize Before the Games: The city will use its investment in the Early Works Agreement to focus on deferred maintenance and essential upgrades to the existing LACC footprint. This includes critical improvements to technology, accessibility, fire safety systems, and cosmetic upgrades to enhance the visitor experience, all to be completed before March 2028.
3. Initiate a New, Competitive Bidding Process: Following the 2028 Games, the city would initiate a new Request for Proposal (RFP) for a full expansion project, ensuring competitive bidding to control costs. This would also allow for exploring other options to maximize the site's economic impact, such as including housing or hotels.

This new direction aims to balance the need for a modernized, Olympic-ready facility with a more financially responsible strategy that avoids locking the city into a massive, long-term debt obligation at a time of fiscal crisis.

The full City Council now faces a critical choice. Will it endorse this new, phased-in approach, or will it push forward with the original, more ambitious and costly expansion plan? The decision made in the coming days will not only determine the future of a vital city asset but will also set the course for Los Angeles's financial health for a generation to come.