San Diego's Changing Waterfront

ST. JOHN: This is KPBS Midday Edition. I'm Alison St. John in for Maureen Cavanaugh. It's Wednesday, June 25th. Today on Midday Edition we focus on downtown dreams. There are a lot of plans swirling around San Diego for the waterfront downtown. There's the idea catapulted into the mix over the weekend by UT San Diego to build a stadium by what's now the tenth avenue marine terminal. And there's more methodical progress being made on a possible Convention Center expansion on the bay. The City Council voted yesterday though not unanimously to move ahead with a strategy that could fund it. We'd like to hear from you. Do you like the idea of expanding the Convention Center? Do you worry about whether the public will be forced to foot some of the bill? Do you see it in the public interest? Right now we have on the line Bill Evans, who is executive vice president of the Evans hotel group, and chair of the San Diego hotel/motel association. One of the industry's most affected by the Convention Center expansion plan. Bill, thanks for being with us. EVANS: Thank you very much for having me. Just to correct you, I'm a past chairman. I'm not the current chairman of the hotel/motel association. ST. JOHN: Thank you for that. However, you are very much involved with the Convention Center over the years; correct? EVANS: I have. I'm a former chair, and I led the last expansion that resulted in doubling the size of the Convention Center, and it's been very, very successful. I think it's probably been the most successful Convention Center expansion in the history of the United States. ST. JOHN: So fill us in. What did the City Council actually vote on yesterday? EVANS: Yesterday, they pretty much voted on the framework of financing for the proposed expansion. And that's a 3-tier financing plan, the first tier would be the hotel owners of the property would self-assess a 3-tiered tax, which would be 1% for the people furthest away, 2% for the people in mission bay, mission valley, and the people in downtown San Diego would be putting a 3% tax on the hotel rooms. Those funds would be used to produce about $36 million that would be used to pay debt service. The port of San Diego is coming in with a $3 million a year for 20 years guarantee, and the remaining funds would be paid by the City of San Diego, which is currently between three and 3.5 million a year. ST. JOHN: So the part that would affect the hotel/motel association the most is the extra percent on the hotel tax. EVANS: Right. At a minimum, 75% of the cost of it is expansion would be paid by the hotel community. ST. JOHN: So do you like the plan? EVANS: The expansion is something that is going to be of great benefit. I think all one has to do is look at the skyline of San Diego and look at the hotels and the buildings and the renaissance of downtown, and I think people can look at it and trace it directly back to the Convention Center and the past expansion. To tell you how successful it was, last time when we proposed the Convention Center expansion, we thought there'd result in about $11 million of extra tax revenue for the City of San Diego. And on the third year, we produced $24 million of extra taxes. It was over doubly successful than what we thought it was going to be. ST. JOHN: So that's no question that there's a lot of people who would like to see it happen. But what about the financing plan? Where do you stand on that? EVANS: Well, regardless of -- the current plan which was passed yesterday I think has some inequalities. If you think about the Marriott Hotel that shares a wall with the Convention Center, they'll be paying three cents, and people have that hotels down in San Ysidro would be paying 1%, and they'll get no benefit from it. But at the end of the day, it's not necessarily them coming to the Convention Center, it's the next time they come, or telling their friends about it. There's no doubt that there's benefit to all of the community of San Diego when a tourist comes, brings money from the outside, and spend its in the San Diego community. ST. JOHN: But are you opposed to the idea which I believe is going to go to the hotel owners later this career; correct? EVANS: It is. And it's going to be a very, very tough vote. A lot of people are going to have to look into their hearts and say do we really want to kill the Convention Center expansion? The 2 percenters, and the 1 percenters, we went to the mayor's office and made some good arguments as to why they could have adjusted it to make it more equitable. It didn't pan out. But myself included, my hotels are in mission bay and La Jolla, and we see almost no direct business from the Convention Center. But we're planning on supporting the expansion and the proposed tax, because the alternative is there's no Convention Center expansion. And that will hurt us all. ST. JOHN: Of course. This is just 1/3 of the financing plan. EVANS: No, it's not 1/3. It's really one of three parts. ST. JOHN: One of three. Got it. EVANS: 75% of the overall price. ST. JOHN: Got it. So what is your -- if you were a betting man, and you obviously talk to a lot of people in the industry, what is the chances that this thing would pass in -- is it March? EVANS: I think it's going to be close, but I'm going to be working very hard to try to convince people this is the right thing to do. It's going to be difficult on some of the people in the outlying areas to really understand what the direct benefit that is, but we're going to give it a shot. I think this is -- the hotel community wants this, they are going to have to stand up and pay the lion's share of it. The hoteliers do benefit, but the port, if the port is going to be paying $3 million, you have to ask yourself, what will they gain out of it? And the port has done two separate reports both showing they're going to gain at a minimum of about 3.5 to $4 million a year in extra rent from their existing properties. So at the end of the day, it's going to be a cash-positive transaction for them. And the City of San Diego, which is the most controversial part of this. ST. JOHN: Public money. EVANS: Up to the $3.5 million they're going to have to pay. But even the more conservative numbers are now saying the city is going to make $12.5 million in extra tax revenue in this. This sounds like a pretty good investment, if you're going to pay 3.5 million but make $12 million out of the deal. ST. JOHN: But it seems like if 75% of it rests on the shoulders of the hotel people, that vote is the key one. Is there any way you would see as a way to tweak that? EVANS: I think the train has left the station. ST. JOHN: Okay. So it's on the table, and it is up to the hotel industry to decide. EVANS: It is. ST. JOHN: And even although you have some reservations, what would you urge people to do? EVANS: I think they're going to have to really support this. I think it's very, very important to their overall industry. And more important, you just can't always think what's good for the industry, you have to think what's good for the overall City of San Diego, and this is going to produce net to the City of San Diego about an extra 9, 10 million dollars a year at minimum toward the general fund. And this is to pay their employees' roads, help with the operation of the City of San Diego. And it's probably the best deal the city's had in a very long time, and I'm going to push the other hotel owners in town to support this. ST. JOHN: Okay. EVANS: Though for the last year and a half I've pushed very hard to slow this process down. ST. JOHN: Now that it's been decided by the City Council it's -- you're on board. EVANS: Well, I'm on board, and I'm going to push very hard to see this through. ST. JOHN: Okay. Thank you, that's bill Evans. We have on the line a caller now, Bridgette Branding who is president of unite your local 30. Who do you represent exactly? BRANDING: We represent the hotel workers here in San Diego. ST. JOHN: Good, well, thanks for calling in. So what is the laborer groups' position on this expansion plan? BRANDING: Well, we think it's a squandered opportunity. We think that the city, if they wanted to take real leadership had the opportunity to have an amazing project where they took into account the community's needs as well as the hoteliers needs, but from our position the only voice that has been heard in this process is the hoteliers' neats. We think if we're going to have this kind of public investment, that we should be talking about job quality, we should be talking about having San Diegans get preference for the hiring, we think we should be talking about lower income housing because the fact of the matter is that the jobs generally that are generated by the tourism industry require people to be eligible for low-income housing. We also think it's illegal. The very people who put Prop 26 on the ballot who didn't want there to be any tax increases without a vote of the public are now trying to subvert Prop 26, which we find very ironic. They claim they're going to be paying this tax. They're not going to pay a dime of it. They're going to add it to every hotel room, and the guests coming into San Diego are it is ones going to be paying this tax. ST. JOHN: Bill, how much more expensive will it make it for someone coming as a guest in San Diego? EVANS: It depends which hotels they'll be staying at. If they're staying close to the hotel core, it will be about a 3% increase. And the question to that, is what is the threshold people are willing to pay in TOT? She brings up some very, very valid points and that's one of them. ST. JOHN: Bridgette, some people say we need job, and this would create jobs. And any job is say good job. How would you respond to that? BRANDING: Well, I think that that's a very short-sighted view, because if we are really gonna count on the tourism industry to be an economic engine in San Diego, we should talk about how do we make tourism jobs be in the middle class? If you have a room attend apt for example who makes less than $20,000 a year, which a great majority of them do, how do you live in a very expensive city like San Diego? And the only way you can live is being subsidized by the taxpayer. So for example, the owner of the Marriott, the Hyatt, and the Sheraton, the three biggest hotels who are going to benefit greatly from this expansion, shouldn't they have a requirement to create better jobs if they are going to win the lion's share off of this expansion? And I agree with Mr. Evans that his hotel is probably going to see very little business out of the expansion. So I think that the hotels that are nearest to the Convention Center should be held to a higher part of that. I agree with that. Our union is prepared to file a lawsuit against this, yes. We think if it's such a great project that just like the ball park where the voters to the to vote, are the voters of San Diego should be allowed to vote on this. And if it really is great, then I think the voters are going to vote for it. But I don't understand why it has to be cloak and dagger, why we're going to let a handful of hotel owners make this decision when we're talking about general fund money. ST. JOHN: What difference would it make to laborer groups if the vote was from the people rather than the hotel owners in terms of the terms of your employment? Your contracts? BRANDING: Because I think if the voters had a chance to weigh in, we would end up with a project that benefits the community as well as the hotel owners upon that's my opinion. ST. JOHN: Okay. We also wanted to know what you thought, both of you, bill and Bridgette, about the possibility of expanding this whole dream. You know, if you introduce this idea that came up over the weekend from UT San Diego regarding a major development, including a stadium just south of the Convention Center on what is now the 10th avenue marine terminal. Does the hotel industry like that idea? Wouldn't that bring in a lot more visitors? EVANS: Well, I'd like to address this as first a citizen of San Diego. I think it's of massive importance to keep our working waterfront active. There are so few ports on the west coast of the United States , and San Diego has been very late to the party and hasn't done a lot to foster that working waterfront. And regardless of just what the hoteliers think about that piece of dirt, it's sexy, but statement it's so precious as to having that working deep water port there that personally, as a citizen of San Diego, I think it would be a -- an irreplaceable loss to change the utilization of that piece of property. ST. JOHN: And there is some talk of using this funding that is being gathered painstakingly for the Convention Center to help build that stadium. Where would the hotel industry stand on that? EVANS: Well, are the chargers came and talked to the hotel community about that, and I said most of the hotels are owned by very, very large corporations, and if you can show that it is going to be a product that the customers would want to use, then I think they'd be all ears. But so far I don't think the chargers have been able to demonstrate a product that would be -- that would fulfill the needs of the Convention Center. The Convention Center was not just designed by the Convention Center board of directors. They went out and talked to hundreds of different users as to what were the deficiencies of the current center, and they went back and designed it based on what the customer would want. Nowhere within there did I see that they needed seating for 70,000 people for a group. There are models across the country where cities have tried it, and to very limited success. ST. JOHN: We have on the line Irene McCormack, who is the spokeswoman for the San Diego port district. Thanks for calling in. You're the perfect person to ask a bit about this ambitious plan regarding the 10th avenue marine terminal also. This is very close to downtown. It is a magnificent location. Maybe it's wasted in a loading dock. MCCORMACK: Thank you for having me on. There's always the conversations you have about what's the highest and best use for industrial property like that. But when you look at it as a regional aspect, I'd have to go back to what Bill was saying as it being an irreplaceable loss for the west coast. There's not too many properties on the west coast. And you really need to protect them and help them grow. The port of San Diego is the fourth largest sea port on the west coast. And of all the 11 California ports, 50% of all the consumer goods that come into America come through the California ports. So it's not just what do we need locally. Of we really have to wonder and protect what we need regionally and nationally and globally because the port is part of a system of ports throughout the United States and throughout the globe. So that's the way the port looks at it now, and we are working on export strategies as well as the imports that we bring in now tenth to our 10th avenue marine terminal. And while it's a beautiful spot considering all the growth that has happened downtown in the last 50 years, we really need to keep it as an industry marine terminal at this time. ST. JOHN: I remember back in 2008, the last time that it actually hit the ballot, it was an initiative to develop a stadium right down there. Sean Connerton who is head of the US marine association came from Washington DC to speak against it and made this point, that it's part of a national network. However, the 10th avenue marine terminal isn't operation at its full potential. Do you think that it ever will? MCCORMACK: It isn't working at its potential right now, but yes, it will. Like I said, we're working on know an export strategy, working with solar turbines, with some other companies to export out of our port. Imperial county, believe it or not, depends on our port for all the fertilizer that comes in that they use on the crops that they grow there. So beyond the county lines there are a lot of people who need when we bring in. Ole brings in a lot of perishables, oranges, pineapples, bananas, all the way up to Canada. Those are the things that we work on to make sure that it will be at capacity some day. ST. JOHN: And I guess the question is, could all that keep going with a plan like the one we saw on the front of the local paper this weekend? Do you see that there's room down there for both to happen? MCCORMACK: No. And the voters voted 70% against that plan in 2008. And basically shut the door on anything like that happening. ST. JOHN: And one last question, the military has a very strong presence in the bay. Would they have a position on using that land also? BRANDING: Yes. The military, association the Navy, they -- they're repositioning their naval operations to the west coast because of the Pacific rim area that we're very keen on. And so what you're finding here is that the Navy is going to be having a lot more ships here. The San Diego port is going to become the biggest base for the Navy. And they use our port, both in National City, and 10th avenue, for military -- where they need military needs or logistical goods. So the Navy uses our port, they don't have their own ports. They use commercial ports to get their goods back and forth to wherever they are. So it would -- we would be hard pressed to allow that to happen. The Navy really needs what we have here. ST. JOHN: Okay, that's three different perspectives on some of the plans swirling around the San Diego waterfront at the moment. I'd like to thank Bill Evans, the former chair of the San Diego hotel/motel association. Thanks for being with us. EVANS: Thank you. ST. JOHN: And Irene McCormack VP regulations, port of San Diego. Thank you, Irene. MCCORMACK: You're so welcome.