City Asks Port Of SD To Kick In Millions For Convention Center Expansion
November 29, 2011 1:48 p.m.
Kevin Faulconer, San Diego City Councilmember
Roger Showley, growth and development reporter for The San Diego Union-Tribune
CAVANAUGH: Our top story on Midday Edition, the City of San Diego is making a formal presentation to the port commission today regarding the proposed expansion of the downtown Convention Center. The city is asking for a financial commitment of $3 million a year from the port to help pay for the expansion. Joining me to talk about the request are my guests San Diego councilman Kevin Faulconer. And welcome back.
FAULCONER: Good morning. Thanks for having me.
CAVANAUGH: And Roger Showley is with us. He's growth and development reporter for the San Diego Union Tribune, and he's been doing a lot of reporting on the proposed expansion. Rodger, hello
SHOWLEY: Hi, Maureen.
CAVANAUGH: Councilman Faulkner, tell us about the presentation the city is going to be making to the port today.
FAULCONER: Well, it is going to happen today, that's a presentation really looking 591-piece of the financing plan for an expanded Convention Center. A plan that I strongly support because I believe when you talk about jobs, when you talk about the economy, there is perhaps no better project in San Diego on the drawing board right now than a Convention Center for what it means not only for our downtown area, but the tremendous amount of dollars that it generates that we request use in virtually every neighborhood throughout the city. Part of the puzzle is how do you pay for the expansion ata I time when you certainly have very limited general fund dollars? And so part of the puzzle if you will, part of that pie is asking the port district to help contribute for the expansion. And we'll see what happens today, but I think there's an open mind, because from the port's perspective, a lot of the tenants will certainly benefit from an expanded Convention Center, expanded economic activities. It's one part of the financing. The largest portion of the financing of course is envisioned to come from the hotels that benefit the most from an expanded Convention Center. So we've been spending a fair amount of time at this at the City Council, and the mayor's office.
CAVANAUGH: How much is the proposed expansion supposed to cost in total?
FAULCONER: Approximately $550 million.
MAUREEN CAVANAUGH: How much is the port being asked to contribute?
FAULCONER: About $60 million. As you've taken a look at this, if you look at it in terms of percentages, about 2/3 of the expansion is envisioned to be paid from the hotel industry. And we've started that process at the council that will allow that vote in essence, the hotels, to vote to assess themselves. Certainly they know the economic benefit that they will derive from it. And from the city's standpoint, certainly as we can get larger conventions to come to our city, and just as importantly, keep those that we already have, ComiCon probably being the best example that most people are familiar with, that people come, have a great time in our city, spend money, and then leave.
CAVANAUGH: Roger Showley, do you agree that there is something in this for the port of San Diego?
SHOWLEY: Well, they put out a very detailed report for today's meeting that justified the investment they have. They have been backers of the Convention Center from the very beginning. The first Convention Center project was opened in 1989, and they paid the entire cost, about $200 million out of cash. And the second phase was photocopied in 2001, and they contributed 4.5 million a year for that cost. And that was a more expensive addition. And this is the first time. So they're a continued partner in the project
CAVANAUGH: We constantly hear of municipal and state and county entities, governmental entities looking for any spare cash they can because they're cash strapped these days. But that's not necessarily the case with the Port of San Diego, is it, Roger?
SHOWLEY: Well, they're not as rich as they used to be because they lost control of the airport, you know, a few years ago. So they don't have the kind of money sitting in the bank that they can throw at a project like this. So they actually are not going to be contributing as much to the Convention Center as they are currently. If you want me to go into that, I will. The current project or the 2001 expansion they gave $4.5 million a year, but that expires in 2014, and now they're being asked to contribute only $3 million. So the $4.5 million will continue to be a requirement by, I guess, the city, and I'm waiting to hear from Kevin Faulconer and other people as where they're going to find the money to pay for that. Because part of this financing plan that's going to the City Council calls for some of the hotel taxes that the city is going to collect to go into its portion of this expansion. So you can't spend the money twice.
CAVANAUGH: Would you like to answer that question?
FAULCONER: I think Roger's assessment is right on, particularly when he talked about the ports and their contribution. The port has been a player, the port has benefited certainly from an enhanced Convention Center. Of the port tenants that surround it have. So I think it's a logical move for the port to continue to be involved. And as Roger points out and I tried to as well in the earlier segment, there's many pieces of the puzzle to try to make this happen. There just are not, Maureen, general fund dollars lying around, whether it's at the City of San Diego or the port district. So as we've looked at the hotel industry taking the lead on this and keeping in mind they still have to go out to vote to assess themselves to do that, and that will be up to them to convince their members to do that, but there is a funding gap that has to be identify forward this project to become a reality. This is something that certainly the mayor's office is working on, the council has been a large part of that, but it is going to take many pieces of the puzzle to come together on something that I think has strong support of how successful the Convention Center has been. Roger pointed out that it was first constructed in the late 90s, San Diego and downtown was a vastly different place. We have a very important competitive advantage versus other cities on our ability to have these type of conventions attract revenue. And we've done a lot of work to say how big should an expansion be, because you don't want to build it too big and not have people come. But I believe we've develop aid plan that says this will what will work to not only keep the conventions that we have that are growing but to attract some of the bigger conventions from across the country that'll bring in more revenue to the city.
CAVANAUGH: Roger, we have on our website, KPBS.org, a slide show of renderings of what the expansion might look like. Can you though, because I know you've seen manner renderings of this proposed expansion, can you describe for us a little bit what the expanded Convention Center would look like?
Showley: The most interesting thing about the expansion is a proposed park on top of the roof. I think it's a five-acre public park that you'll be accessing near the pay. That's probably the most interesting thing for the public who don't go to the conventions. The the second thing is they're going to be hiding all the truck traffic that goes behind the Convention Center inside the building. You'll be able to walk from the Convention Center to the bay and not be pummelled by all these trucks blasting back and forth on the road. Inside the Convention Center, you'll see much bigger exhibit halls, and more meeting space, another ball room, and the whole idea here is to attract more conventions and more conventions happening at the same time. So I think the thing to keep in mind about this, this is really the last time that we can expand this particular Convention Center building. Ten years from now, there'll be calls for another Convention Center expansion, and at that point, they're going to have to find some other place to put it.
CAVANAUGH: As councilman Faulkner pointed out, they're trying to put together funding for this expansion in a kind of puzzle piece, a little from here, a little from there. Hotel owners are being asked to pick up part of the tab. What has your reporting been telling you, Roger, about how happy or not happy the hotel owners are about that?
SHOWLEY: Ics we should keep in mind. It's not the hotels paying for it, it's their guests that are going to be paying for it. They're going to be raising the hotel tax people pay by three percentage points. It's in three different segments, the hotels closest to the Convention Center will add 3% to the hotel tax. And mission bay and that area, mission valley will be 2%, and then the outlying hotels in the San Diego of city will pay 1%. So the hotels closest to the Convention Center, I believe they'll get a lot more business, so therefore they're the ones in the middle think less so, are and the ones in the far reaches wonder if they're going to get any benefit at all. So there's a little bit of a pushback by some hotel owners about having their guests pay for something that they don't know they will use. Of
CAVANAUGH: Right. Now, when this expansion, councilman factor in, was originally proposed weren't redevelopment funds supposed to be paying for part of it, and where does that stand now since redevelopment agencies as we once know them are really no longer part of the picture?
FAULCONER: That was potentially one of the funding sources. And as you correctly point out, we're in a holding partner as it it were in terms of the future of's development, and we're all waiting for a course decision that we hope will take place by January. I've been such a strong supporter of redevelopment because I've seen what it's done for our city, and how San Diego has done it right, and how so many other cities come to San Diego to look at what we've done, look at how you've invested those dollars, and so it's from a return on investment standpoint, it's been phenomenally successful. I believe the actions of the state legislator to change that in that -- and to extort a ransom payment from the cities that want to continue was extremely shortsighted. But that's part of a court subject right now. So those moneys are not being envisioned as part of this, and so we're trying to figure out, OKAY, how do we bring those that benefit the most, and in this case certainly the hotels to the table to pay for the lion's share of the expansion and put it together and make it work? Roger mentioned one of the -- what I believe one of the biggest benefits if you're just a San Diegan who is not going to come to the Convention Center for a convention is the park on the top of the building. And I think it offers an extraordinary opportunity for particularly in the midst of our urban environment fair nice open space, and to me that's been one of the more appealing aspects, getting away from the financial benefits of this, but the open space and the ability of the public to come down and interact with the building.
SHOWLEY: Maureen, I -- let me throw out something we haven't talked about yet. And that is the counter argument, counter proposal, which is from the Chargers for a Convention Center and stadium combination. That's not something the port is going to be talking about. But it is in the back of minds of some people wondering why are we spending $550 million on a Convention Center when we ought to be able to get a Convention Center and stadium for $900 million?
CAVANAUGH: We have Mark Fabiani spokesman for the Chargers on here a few months ago, and he was very, very enthusiastic in promoting the idea of this expanded Convention Center and stadium, both happening at the same time, at the same place. The dual use concept. But the mayor is not for that. And councilman Faulkner, are you entertaining that at all?
FAULCONER: Well, I think you could expand the Convention Center and building a Chargers stadium. And that's one of the key areas the mayor is working on right now. How is the financing plan going to work for that? It's BEEN very clear, I think that one of the most important things for the space for an expansion is continuous. So you have the ability for your convention guests to be right next to each other, not across the street, over the railroad track, etc. And I think that makes a lot of sense. I am one of those people that believes and am optimistic that you can do both. But the key obviously to both is going to be a financing plan. How do you make sure it works in this case in the convention from, and on the Chargers stadium as those options are put on the table? How does a plan work that makes sense for the Chargers but also makes sense for the taxpayers??
So do you like this plan or not? Do you like the dual use plan
FAULCONER: I think it's been pretty clear to me that for the Convention Center to work and be expanded it has to be contiguous. So I think -- and you would not have the industry support, the hotel industry for a portion of the center that they believe would not get used as much
SHOWLEY: I think that's going to happen, if I can just be futuristic about this, is that they would build this Convention Center expansion by 2016, and around 2020 when it's time for a new stadium discussion, maybe they'll say, yes, we can build a new Convention Center area next to or part of the stadium project. The whole thing about the stadium is very difficult because of the Chargers as a team, how they're playing right now is not very good. And the financing is all up in the air. And there are so many issues about redevelopment that maybe it's premature to be talking about the stadium. But I'm guessing ten years from now, it may be quite timely to do it.
CAVANAUGH: You make an interesting point but as we speak right now, these are two separate ideas, and the one that the port commission is hearing about today is the expansion of the Convention Center only. I wanted to get in, Roger, before we have to leave the fact that time is somewhat of the essence in getting this project started, at least for supporters of the convention expansion. Tell us what's at stake
SHOWLEY: Well, I think the time they're all look at is 2015. That's the last year of the ComiCon contract to be at the Convention Center. While that's nota as big a convention money-rise as some of the other ones are, it's a very high profile signature convention San Diego has had for so long. And ComiCon you remember was wooed by all kinds of places elsewhere in California to relocate, and they said, no, we'll stay in San Diego. But we would really like more space. We're running out. So the convention planners hope they can get this thing done by 2016, the time of the ComiCon that year, and celebrate it in all sweetness and light again
CAVANAUGH: And councilman Faulkner, when do you see these puzzle pieces coming together to a public that the City Council can actually vote it?
FAULCONER: We're scheduled to move forward in the only again in December but also in January on the enabling legislation that will allow the hotel vote to take place. The answer is soon, Maureen. Because we know we have a need for the project. And when you talk about economic benefit, you talk about job and this economy, tell be a $700 million economic benefit, including 17 million in transient occupancy revenue, 6,000 permanent jobs. The Convention Center works for San Diego. There's no doubt in my mind an expanded Convention Center will work. So I'm strongly supportive of moving and moving quickly.
SHOWLEY: I think Maureen, also to point out is that bids are very low right now for public projects because the construction industry is on its back. If they wait too long, the economy is going to come back, and the prices will go up, and it'll become more difficult to finance this. So in that sense, time is of the essence.
CAVANAUGH: Well, we have been told that it is possible that the port commission may actually vote and decide today whether or not to extend that financial commitment to the Convention Center expansion. So we'll keep listening to KPBS. We will bring you that news later in the day. I've been speaking to San Diego councilman, Kevin Faulconer, and the UT's Roger Showley, thank you both so much
SHOWLEY: Thank you.
FAULCONER: Thank you.