Revised Report Estimates San Diego Convention Center Expansion To Be $539M
Thursday, September 3, 2015
We're sorry. This audio clip is no longer available. A transcript for audioclip 25238 has been made available.
A revised report on San Diego Convention Center options was released Wednesday to correct a financial cost-benefit analysis impacted by a consultant's use of an incorrect construction cost estimate.
The recalculation did not, however, change the conclusion of Convention, Sports & Leisure International that it would be best for the city of San Diego to pursue the contiguous option — attaching the new floor space to the old, rather than building an annex a block or two away.
In figuring the cost of the contiguous option, CSL International originally used a projected construction cost of $410 million. The actual anticipated price tag to add 210,000 square feet of exhibit space, more than 101,000 square feet of meeting space and 60,000 square feet of ballrooms is $539 million.
That compares to a $428 million projected cost to build a separate building, called the "campus" alternative, that would be of similar size.
The consultant based the preference for the contiguous option on the return on investment, which would be larger since most current and prospective clients of the convention center prefer keeping everything within one structure, according to the report, originally released Monday.
City and tourism officials commissioned the report to get a handle on market conditions after previous plans for an expansion of the meeting facility were stalled by a court ruling that found the funding mechanism to be unconstitutional.
Center and tourism officials have long said their customers prefer keeping the new and old floor space together, but the earlier plan was only approved by the California Coastal Commission with modifications that reduced the impact on views and public access to the waterfront.
According to the report, a contiguous expansion of the center would generate $157.1 million annually in direct additional attendee spending and give a $6.3 million boost to hotel room taxes, compared to the average amount of the last seven years.
Putting new floor space a few blocks away in the campus option, would bring in an extra $61.2 million in annual spending and $2.4 million into city tax coffers.
"This study reaffirms that the contiguous expansion is the ideal approach for the most immediate impact, and provides the best return on investment," Mayor Kevin Faulconer said after its initial release Monday. "It's time to expand the convention center."
Faulconer said his administration will begin talks with the tourism industry, City Council and "other stakeholders" to lay the groundwork for moving forward with the contiguous project. Because it would be mostly funded with a hotel room tax hike, the plan would go before voters, likely next year.
The city still has to resolve a lawsuit challenging the Coastal Commission's approval of the project. City officials will also continue to explore the off-site expansion idea, according to the mayor.
CSL International conducted phone and email surveys of 200 current, past and potential convention center customers, held focus group sessions in Chicago and Washington, D.C., and met with representatives from the hospitality industry, elected officials and the Port of San Diego, which owns the land.
According to the consultant, the city could expect one additional large convention or trade show annually with a contiguous expansion, but one fewer if the campus option is adopted, because such events are outgrowing the current building. Organizers of the large shows had little interest in the campus option, according to the report.
The city would also receive seven to eight more medium-sized conventions and 11-14 smaller shows, the report said.
To view PDF documents, Download Acrobat Reader.