Convention Center Expanders Eye City’s Day-to-Day Money

Convention Center Expanders Eye City’s Day-to-Day Money

Photo by Sam Hodgson

The San Diego Convention Center

 

How can the city of San Diego continue to dream of big buildings at the same time police, fire, streets and libraries continue to struggle?

For years, Mayor Jerry Sanders and other boosters of a downtown library, Convention Center expansion and new stadium have answered the same way: The city will erect a firewall between the pot of money that pays for general city services and the pots that will pay for the big buildings.

But for the Convention Center expansion, that firewall is crumbling.

Backers of the $550 million expansion of the Convention Center will need $60 million from the city’s day-to-day operating budget over the next 20 years to finance the project, they said. The money will come from room taxes from a new 500-room hotel proposed as part of the expansion.

The project’s backers said the money wouldn’t even be in the city’s coffers if the city didn’t expand the center.

“The real truth here is that those revenues that can be characterized as general fund revenues would not exist but for the expansion,” said Charles Black, the project manager for the expansion. “That’s what’s going on here.”

Black also pointed to the expansion’s overall effect on the region’s economy. The expansion is projected to have a $700 million total annual economic impact, Black said.

But the grab for the day-to-day operating budget will cannibalize some of the city’s projected benefits. Expansion backers estimate about a $13.2 million annual bump in hotel-room and sales tax revenues for the regular city budget from the project. They want to use $3 million of that money.

Steve Cushman, Sanders’ point man on the expansion, said the city’s budget still would benefit from the expansion.

“Irrespective, there will be certainly well in excess of $10 million a year based on the previous studies that we’ve done that will go to the general fund on a net basis,” Cushman said.

Subscribe to the Morning Report.

But the city likely would be on the hook should tax projections fall short.

Black and Cushman spoke to me after the City Council voted 7-0 to lay the groundwork for securing the majority of the money needed. If ultimately approved by the council and city hoteliers, visitors to San Diego will pay between 1 percent to 3 percent more on their hotel-room bills. This special tax is expected to generate $29 million to $30 million a year.

But that leaves a gap Cushman has been trying to fill since May. He’s targeted the Unified Port of San Diego and the downtown redevelopment agency for funds, though so far both have cried poor.

I haven’t spoken with council members or the mayor yet. But historically, they’ve all been opposed to using day-to-day budget dollars for the expansion.

In fact, recently council members have gone even further. After years of fighting, the council forced the downtown redevelopment agency to shoulder remaining debts for the first Convention Center expansion and Petco Park to relieve the day-to-day budget’s burdens.

They questioned any kind of spending from the day-to-day budget on the Convention Center.

“While no one questions the economic benefit of the Convention Center, many have questioned whether the Convention Center should be supported by the city’s General Fund — which traditionally supports neighborhood services such as police, fire, libraries, parks, streets, etc.,” a November 2010 memo from City Council members Kevin Faulconer, Todd Gloria, Carl DeMaio and Marti Emerald said.

Sanders has said repeatedly that businesses benefitting from the Convention Center expansion should pay for it. He addressed numerous big building efforts in a September 2009 speech to the San Diego County Taxpayers Association. After the speech, he called financing a Convention Center expansion “the bigger ‘if’” among projects he wanted to build.

“That’s working with industries around San Diego to see how we can finance that without using general fund money,” Sanders said.

During Monday’s meeting, city staff said they planned to release the full Convention Center financing plan by the spring, but council members said they wanted to see it before the end of the year.

Liam Dillon is a news reporter for voiceofsandiego.org. He covers San Diego City Hall, the 2012 mayor’s race and big building projects. What should he write about next?

Please contact him directly at liam.dillon@voiceofsandiego.org or 619.550.5663.

Like VOSD on Facebook.

Voice of San Diego is a nonprofit that depends on you, our readers. Please donate to keep the service strong. Click here to find out more about our supporters and how we operate independently.


Liam Dillon

Liam Dillon

Liam Dillon is senior reporter and assistant editor for Voice of San Diego. He leads VOSD’s investigations and writes about how regular people interact with local government. What should he write about next? Please contact him directly at liam.dillon@voiceofsandiego.org or 619.550.5663.

  • 857 Posts
  • 29
    Followers

Show comments
Before you comment, read these simple guidelines on what is not allowed.

34 comments
Emmett McMahon
Emmett McMahon subscriber

@ ibphotos You make a lot of sense. That is the way it SHOULD be.

EKM
EKM

@ ibphotos You make a lot of sense. That is the way it SHOULD be.

Philip Ellsworth
Philip Ellsworth subscriber

city council out on this, the new mayoral candidates and then follow up when they get elected, what we need is a paper for the people of the people to keep an eye on city government leaders to make sure they do what they are suppose to be doing, instead of putting tax payers on the hook for an expanded convention center, stupid wings on the bay, the destruction of Balboa Park, adding a new charger stadium, etc. People should be going to jail/prison for all this corruption including the leftest judges that rule in favor of the city each and every time no matter what they chose to do is illegal or not. The city attorney should be recalled and jailed for corruption too.

1mark
1mark

city council out on this, the new mayoral candidates and then follow up when they get elected, what we need is a paper for the people of the people to keep an eye on city government leaders to make sure they do what they are suppose to be doing, instead of putting tax payers on the hook for an expanded convention center, stupid wings on the bay, the destruction of Balboa Park, adding a new charger stadium, etc. People should be going to jail/prison for all this corruption including the leftest judges that rule in favor of the city each and every time no matter what they chose to do is illegal or not. The city attorney should be recalled and jailed for corruption too.

robert lopo
robert lopo subscriber

5) A Stadium and Convention Combo is a poor idea.

ibphotos
ibphotos

5) A Stadium and Convention Combo is a poor idea.

Don Wood
Don Wood subscriber

Consultant projections of future revenues on projects like this are notoriously over-optimistic. Not sure this is something the council should bet the general fund on. The mayor has always said that those who stand to profit from this project, like the downtown hotels should pay for it instead of dipping into the general fund. What's changed since Jerry said that?

Don Wood
Don Wood

Consultant projections of future revenues on projects like this are notoriously over-optimistic. Not sure this is something the council should bet the general fund on. The mayor has always said that those who stand to profit from this project, like the downtown hotels should pay for it instead of dipping into the general fund. What's changed since Jerry said that?

Don Wood
Don Wood subscriber

Consultants projections of future convention revenues for projects like this are notoriously over-optimistic. In this case, if the revenue projections are even $10 million a year off, the city could end up spending all the revenue it gets from increased TOT taxes to help pay off the bonds, leaving the city with zero net gains in its general fund every year. That would leave the city subsidizing a project for tourists using money that is needed for streets, fire and police services. Voters wouldn't take kindly to that in future elections.

Don Wood
Don Wood

Consultants projections of future convention revenues for projects like this are notoriously over-optimistic. In this case, if the revenue projections are even $10 million a year off, the city could end up spending all the revenue it gets from increased TOT taxes to help pay off the bonds, leaving the city with zero net gains in its general fund every year. That would leave the city subsidizing a project for tourists using money that is needed for streets, fire and police services. Voters wouldn't take kindly to that in future elections.

Richard Ross
Richard Ross subscribermember

So, the Bonzo Squad led by Mayor Squanders, Mr. Cushy, and accounting's Gray Area Mr. Black now have (courtesy of the Mayor's hiring and the city's taxpayers) a $250,000 (New) Yorky consultant to put together a new financial consortium (A.K.A. confus'em). This East Village structure will be comprised of a combination new Charger Stadium, a Convention Center expansion and last but not least another Charter school. The last one because the upper floors of the new downtown library won't be completed for that charter school due to lack of funding.

Activist
Activist

So, the Bonzo Squad led by Mayor Squanders, Mr. Cushy, and accounting's Gray Area Mr. Black now have (courtesy of the Mayor's hiring and the city's taxpayers) a $250,000 (New) Yorky consultant to put together a new financial consortium (A.K.A. confus'em). This East Village structure will be comprised of a combination new Charger Stadium, a Convention Center expansion and last but not least another Charter school. The last one because the upper floors of the new downtown library won't be completed for that charter school due to lack of funding.

Jeff Brazel
Jeff Brazel subscribermember

vKogen the new rate will be 15.5% for downtown hotels once the proposed bond district is approved by the participants, but good catch I should have included the rate in my comment.

JB619
JB619

vKogen the new rate will be 15.5% for downtown hotels once the proposed bond district is approved by the participants, but good catch I should have included the rate in my comment.

Eliel Lopez
Eliel Lopez subscriber

Any project that has the potential of putting the city and its taxpayers "on the hook" should financial projections not pan out, as is often the case, should not be considered in the first place ! If big money wants a certain project done, they can pay for it themselves.

Eliel Lopez
Eliel Lopez

Any project that has the potential of putting the city and its taxpayers "on the hook" should financial projections not pan out, as is often the case, should not be considered in the first place ! If big money wants a certain project done, they can pay for it themselves.

Eva Vargas
Eva Vargas subscriber

Why are we protesting a National Burnout by sitting in on Civic Center property? We should be protesting a City Burnout in Civic Center, we have just as much mismanagement in our city. Kill two birds with one stone.

evavrgs
evavrgs

Why are we protesting a National Burnout by sitting in on Civic Center property? We should be protesting a City Burnout in Civic Center, we have just as much mismanagement in our city. Kill two birds with one stone.

vkogan
vkogan

Is my math wrong?

Jeff Brazel
Jeff Brazel subscribermember

Sorry hit the wrong key, more to the real question is there demand for another 500 rooms (seems real plausible), and when will that hotel be completed and contributing to the "potential shortfall" and where is the money until that hotel is contributing. The City is taking hotel tax money now and using it to feed the general fund, that is the problem, those dollars should be used for things like a Convention Center.

JB619
JB619

Sorry hit the wrong key, more to the real question is there demand for another 500 rooms (seems real plausible), and when will that hotel be completed and contributing to the "potential shortfall" and where is the money until that hotel is contributing. The City is taking hotel tax money now and using it to feed the general fund, that is the problem, those dollars should be used for things like a Convention Center.

Jeff Brazel
Jeff Brazel subscribermember

Ok guys $60M over 20 years is only $3M/yr. And the expansion of one 500 room hotel easily makes up that amount (500 rooms at $150/night with avg occupancy of 70% yields $2.97M/yr, and all of that is real conservative). The real question should be what is the likelihood of that 500 room hotel getting built, is there a demand for a

JB619
JB619

Ok guys $60M over 20 years is only $3M/yr. And the expansion of one 500 room hotel easily makes up that amount (500 rooms at $150/night with avg occupancy of 70% yields $2.97M/yr, and all of that is real conservative). The real question should be what is the likelihood of that 500 room hotel getting built, is there a demand for a

Fred Williams
Fred Williams subscriber

One way or another, this foolishness must come to an end...

Fred_Williams
Fred_Williams

One way or another, this foolishness must come to an end...

David Crossley
David Crossley subscriber

"Sanders has said repeatedly that businesses benefitting from the Convention Center expansion should pay for it." Wouldn't that be true for the Chargers and their new stadium as well?

aardvark6
aardvark6

"Sanders has said repeatedly that businesses benefitting from the Convention Center expansion should pay for it." Wouldn't that be true for the Chargers and their new stadium as well?

Jim Gerber
Jim Gerber subscribermember

The projected revenues from the convention center expansion are estmates calculated by consultants hired by the expansion proponents. Do you think it is possible, just maybe, that estimates of revenue growth may be, ahem, wrong? Could it be? Could economic models predicting the future actually, truly, not work? Wow, what a world that would be!

JimG
JimG

The projected revenues from the convention center expansion are estmates calculated by consultants hired by the expansion proponents. Do you think it is possible, just maybe, that estimates of revenue growth may be, ahem, wrong? Could it be? Could economic models predicting the future actually, truly, not work? Wow, what a world that would be!

Ian Trowbridge
Ian Trowbridge subscribermember

Should anyone trust either of these men? The answer is very simple : absolutely not.

iantrowbridge
iantrowbridge

Should anyone trust either of these men? The answer is very simple : absolutely not.

La Playa Heritage
La Playa Heritage subscribermember

Benefits are endless. All we need is Leadership to keep both Comic-Con and the NFL Chargers in San Diego.

La Playa Heritage
La Playa Heritage

Benefits are endless. All we need is Leadership to keep both Comic-Con and the NFL Chargers in San Diego.