The Morning Report
Get the news and information you need to take on the day.
Reader Dan Wilkens wrote me this following my previous post on the $20 million subsidy to the visitor industry that is the new Convention Center expansion:
Fair questions you raise as far as the effect on the City of San Diego’s cash flows. But what about all of the rest of economic impacts: direct revenues to convention related businesses (ie hotels, bus companies, restaurants, visitor attractions, etc) which of course translate into jobs (not always very high paying jobs but a job is job). So, a question might be, is $20 million a year or less (or whatever the amount actually turns out to be) worth preserving those economic impacts and jobs? It seems to me that’s the policy question.
I agree, that is the core policy question. My point was to make it clear this is a sacrifice and to spur the discussion of whether it’s a worthwhile investment or not. If we’re going to spend $20 million a year, for many years, to create jobs are these the jobs we want to create?
Brant Will wrote this:
Your estimate on the debt service on any new debt also seems extremely high. The annual debt service on the City’s last General Fund-backed financing is around $6.5 million on $168 million in outstanding debt. I have no idea what the new Convention Center expansion is supposed to cost but I’d guess you’re off by about a factor of 10 on your estimate. I’d check my figures and re-run the calculations.
Brant, I didn’t have to do any calculations for that post and that’s what made it so nice. These are all figures from the Convention Center Corp. and the mayor’s task force on expansion. For the annual financing cost, I pivoted off this excellent and timeless explainer of the expansion by Liam Dillon.
According to the most recent report from the task force’s financing consultant, annual debt service on construction would range from $44 million to $57 million, and could be tens of millions more depending on the project’s bond rating and the construction and possible revenue generated by the related hotel and retail parts of the project.
You can also find discussion of the financing in the Final Report of the task force here (look at Page 46 for example).