City Council gets OK to hike hotel tax

Gov. Rendell yesterday approved a state law that will allow City Council to boost Philadelphia's hotel tax, in part to help fund the expansion of the Pennsylvania Convention Center.

Rendell said the new money will be crucial to keeping the project moving forward since it is now clear that it will cost more than the $700 million set aside by the state. And Rendell warned that there is "no appetite" in the General Assembly to contribute more money.

"The expansion is constantly in peril because of increasing costs," Rendell said. "Without those extra dollars, I'm not sure we have an expansion of the Convention Center."

The prices of steel, concrete and copper have soared in recent months around the globe, sending up construction costs.

"It's just gone off the charts," said Thomas "Buck" Riley, chairman of the Pennsylvania Convention Center Authority.

Riley said the expansion plans have been scoured for savings. And he said it is "clear as crystal" that the project will cost more than $700 million.

"We have it down to the point where it is bare bones," he said. "There is no flexibility in going to a lower cost."

The new law allows the city to increase the hotel tax from 7 percent to 8.5 percent, if City Council passes legislation to make that happen. Council has recessed for the summer so no action can be taken until September.

The hotel tax at the current rate brought in $37 million last year. One-seventh of that money goes to the Greater Philadelphia Tourism and Marketing Corp. while the rest goes to the Convention Center Authority and the Philadelphia Convention and Visitors Bureau.

The state legislation does not spell out how the increased tax, estimated to bring in an extra $8 million to $9 million, will be allocated. Rendell said one idea is to give one-third of the money to the Center for construction while splitting the rest between GPTMC and the PCVB for marketing.

The money, Rendell said, could pay for a $35 million bond to help finance the project.

Mayor Nutter called splitting the money up into three portions "one idea that's been floated" but maintained that the decision will be made in Philadelphia by those involved in the expansion.

"Obviously, the main goal here is to build the center because then you have something to promote," Nutter said. *