Taxpayers Could Be On Hook For Convention Center Expansion, Attorney Says
Monday, October 7, 2013
Credit: Fentress Architects
The financing for the San Diego Convention Center expansion is being called into question in advance of the California Coastal Commission vote Thursday.
Coastal Commission staff already recommended against the plan because it will take away recreation space and views of the bay. But now attorney Cory Briggs says the plan's financing is based on flimsy numbers. Briggs represents the Navy Broadway Complex Coalition, a group concerned about coastal development, and San Diegans for Open Government.
IBA Report on Convention Center Expansion
An Independent Budget Analyst report on the Convention Center expansion's financing plan.
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The Convention Center expansion is estimated to cost $520 million. San Diego city officials have promised the expansion would not use any more than $3.5 million a year from the city's general fund. But Briggs said that's not true.
Briggs said the plan underestimates the true cost by at least $33.5 million. Part of that comes from a $13.5 million increase in the price to buy land from a Port tenant called Fifth Avenue Landing. A November 2012 Independent Budget Analyst report mentions this price increase, but Briggs said the bump hasn't been accounted for in the expansion plan's projected cost.
The plan also doesn't cover a new kitchen facility, which Briggs said could cost between $20 and $40 million.
"The estimates are based on guesses by the people at the city and the Port who really just want an expansion to help their political supporters, even though we're at least $33.5 million over their own budget numbers," Briggs said.
He also criticizes the city of San Diego for not hiring an architect to make schematic drawings of the expansion plan until October 2012, which he said means incomplete plans will go before the Coastal Commission on Thursday.
The Coastal Commission staff report says the plan's proposed changes "do not contain sufficient detail" to determine whether the expansion plan meets requirements of the California Coastal Act.
"The city and the Port didn't bother to hire a single person qualified to estimate the expansion costs, or tax revenues, until after the expansion was approved," Briggs said. "To this day, no estimate has been done to professional standards."
The November 2012 Independent Budget Analyst report confirms that if the expansion goes over budget, the city's general fund could be forced to make up the difference.
Interim Mayor Todd Gloria supports the Convention Center expansion and said in a statement last week that he remains hopeful it will be approved by the Coastal Commission.
Alex Roth, a spokesman for Gloria, said he "politely disagrees" with Briggs.
"We’re supporting this project because it will bring 7,000 permanent jobs to San Diego, serve as a powerful economic engine for the region and generate millions in tax revenue for public safety, street repairs, libraries and a whole host of city services," Roth said. "That’s why this project has the support of everyone from labor to the business community to the 13 cities that have submitted letters to the Coastal Commission supporting the expansion plan."
Roth added that the expansion plan's statistics "are based on years of research by leading experts, including the global firm AECOM."
"Given that the Convention Center currently turns away a year’s worth of business annually because of its current size restrictions, it’s not hard to imagine the massive economic boost this expansion will provide,” Roth said.
City Councilman David Alvarez, who is running for mayor, was the sole "no" vote when the council approved the expansion's financing plan in October 2012. Alvarez told KPBS Midday Edition last week that he voted no "because the numbers weren't really being presented to us accurately."
"At the end of the day, the city is now on the hook for $3 million annually to build that expansion," he said. "I'm very concerned with the report the Coastal Commission has put out in terms of the bridge that's being required in order to accept the project. There's estimates it could be about $50 million in terms of cost, and who's going to be on the hook for that? I don't want taxpayers to be on the hook for that."
But Alvarez also wrote a letter supporting the expansion to the Coastal Commission, citing its economic impact and saying he is "excited about the possibility of reimagining our public space."
His staff did not respond to requests for clarification about his position on the expansion.
City Councilman Kevin Faulconer, who is also running for mayor, said in a statement he is "proud to have led the City Council on moving this project forward."
"The Convention Center has delivered proven financial results for our region by fueling one of San Diego’s most important economic engines – tourism," he said. "Expanding the Convention Center will support and create thousands of local jobs. Analysis shows the Convention Center expansion will bring a great return on investment, increasing tourism and sales tax revenue the city will use to hire police officers and pave streets in every San Diego neighborhood."
Mayoral candidate Nathan Fletcher also said in a statement that he supports the expansion.
"There's no question we need more capacity to remain competitive in the visitor industry," he said. "I'm hopeful the city and Coastal Commission staff can reach an agreement on the remaining areas of disagreement prior to the hearing so the project can move forward and we can focus our attention and creativity on investing in our neighborhoods."
"It’s also critical that we diligently monitor the financing of the project to ensure taxpayers are protected," he added.
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