The Unified Port of San Diego is scheduled today to approve a deal that spends $13.5 million in public money to gain control over land needed to expand the city’s Convention Center without City Council approval.

How is that possible?

That’s because the Convention Center Corp., a city-run nonprofit, is paying for it — at least for now. And the center buys or sells property related to the center. The board of the Convention Center Corp., whose seven voting members are appointed by the mayor and City Council, has approved the land deal.

The Convention Center Corp. has a $32 million budget, which comes from sources like rents and food and beverage income. The city gives the center an annual subsidy, too.

The structure of the land deal is important for many reasons, not the least of which is that the center doesn’t have $13.5 million to spend.

The center must pay $1 million once the deal closes, then $500,000 for the next five years until the balance comes due. That means the city either finds a way to finance the center’s expansion or the center walks away without paying the full purchase price.

The ultimate plan is that whatever agency finances the Convention Center expansion would at some point assume the land deal’s remaining debt, Convention Center officials said. But the obligation remains on the center’s books, not the city’s. And there’s no current plan on how to finance the expansion or who would do so.

“At this point our board decided to take it on,” Convention Center spokesman Steven Johnson said.

Right now, the center is paying for the land, a buyout of a private developer’s lease, through its reserves. Spending for the expansion already set the center back more than $2 million.

City and Convention Center officials also used the deal’s structure to defend paying more for the land than the port district’s $4.7 million appraisal.

The land deal is scheduled for approval at the port district’s meeting Tuesday at 1 p.m.


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