Tuesday, December 6, 2011
SAN DIEGO The Convention Center expansion is expected to cost about $520 million. On Tuesday, the City Council voted to begin creating a district that would allow city hotels to charge additional taxes to fund most of the expansion.
But there’s disagreement among hoteliers about the proposal. Taxes would increase between 1 and 3 percent, with hotels closer to downtown paying more. However, hotels in downtown are also expected to benefit the most.
Hotel Owner Bill Evans said he supports an expansion, but properties like his in Mission Bay and others further away from downtown would face an unfair burden and see little benefit.
“This has been rushed, and we need to take a little bit of time,” he said. “This is a half-billion dollars investment we’re talking about.”
Several council members agreed, saying the financing plan is unclear.
San Diego’s chief financial officer said a final plan would be ready next May, but a majority of the council said the city has to get moving or risk losing valuable conventions like Comic-Con.
Mike McDowell, who is with the San Diego Lodging Association, said all of San Diego would benefit through increased tax revenue.
“The greatest fiscal impact occurs when the Convention Center’s core mission is fulfilled by putting heads into beds and delivering TOT [Transit Occupancy Tax] to the city,” McDowell said.
Hotel owners still have to vote on the issue. Two-thirds of them need to agree to the tax: However, votes are weighted, and those who would pay 3 percent count more than those who would pay less.
There are also questions about the City of San Diego’s contribution to the project. Current estimates show the city contributing $105 million over 30 years. The money is slated to come from the increased hotel tax revenue expected to be generated by the larger conventions an expansion would allow for. However, several council members expressed concern that the city’s costs aren’t capped and could increase if tax revenues fall short.