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City Council Clears Path For Convention Center Expansion

Some of the last remaining hurdles in the path of the proposed $520 million San Diego Convention Center expansion project were cleared today in a series of votes by the City Council.

Some of the last remaining hurdles in the path of the proposed $520 million San Diego Convention Center expansion project were cleared today in a series of votes by the City Council.

The council approved the project's environmental impact report and financing plan, imposed a tax on hoteliers to help pay for construction, and executed an agreement with the Port of San Diego, which owns the land. The city's findings under the California Environmental Quality Act matched those made by port commissioners last month.

Votes on certain details of the project, including the actual issuance of construction bonds, will come later, according to the mayor's office.

Backers of the plan say San Diego is losing the largest trade shows to cities that can offer larger facilities. Once the expansion is done, the local center will have 2.75 million square feet, and the greatest amount of contiguous floor space on the West Coast at 750,000 square feet, project manager Charles Black told the council.

The city can expect an extra 25 major trade shows per year, bringing 250,000 visitors and their wallets to San Diego, according to Black.

He said the annual economic impact of expansion on the region would be $689 million, including a direct bump of $76 million in spending at restaurants and retail outlets. The city will receive an additional $13.5 million in tax revenues, he said.

"Needless to say, this expansion is of major significance to our economy and specifically to our visitor industry, which itself is rebuilding following Sept. 11 and the great recession,'' Mayor Jerry Sanders told the council. "Fortunately, the visitor industry fully understands the importance of this project and has put money where its mouth is, agreeing to fund the lion's share of the costs.''

In a unique financing arrangement, hotel property owners in downtown San Diego -- which stand to gain the most from extra convention business -- will be charged 3 percent of their room rates, with the money going to pay off construction bonds. Those in Mission Valley and Mission Bay will pay 2 percent, and others in outlying areas 1 percent.

The levy is expected to raise nearly $30 million annually to pay the debt service. The city plans to kick in $3.5 million annually, and the port will add $3 million a year.

Two more major approvals -- one from a judge, the other from the California Coastal Commission -- are required before ground is broken on the project.

While hoteliers voted overwhelmingly in favor of the financing plan, a judge will have to sign off on the procedure because, according to City Attorney Jan Goldsmith, it touches on a gray area of the law.

Goldsmith said a judge has been assigned to the case, but no court dates have been scheduled. Budget cuts in the courts are slowing down the process, so it could be well into next year before a ruling is issued, he said.

The second approval will have to come from the California Coastal Commission, which could come early next year. Black said construction is currently set to start in early 2014, with completion in early 2017.

"We have a competitive advantage in the city of San Diego because of the strong support we have in our city and our community for what the tourism economy means to our city,'' Councilman Kevin Faulconer said. "We cannot and should not ever take that for granted, because other cities would be happy to step into that role.''

His colleague, Todd Gloria, said the council is hoping to improve the economy by creating jobs and increasing vitality at the waterfront while protecting the city's general fund from any volatility in the bond market.

Councilman David Alvarez, the lone dissenter in a series of 7-1 votes, cited a consultant's report that said an expansion of half the size would accommodate most of the trade shows that are bypassing San Diego.


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