All the major aspects of the plan to pay for San Diego’s $550 million Convention Center expansion now are becoming clear. Mayor Jerry Sanders confirmed Thursday the money will come from both the city’s day-to-day operating budget and the Unified Port of San Diego.
Backers estimate they’ll need about $40 million a year to finance the project. Here’s a breakdown of the proposed funding sources:
The port. This is the obvious one. Sanders said he’s asked the port, which controls the region’s waterfront, for $60 million, or an average of $3 million a year for the next 20 years. The port paid to build the Convention Center and helped finance a subsequent expansion. Hotels on port tidelands would win with more convention business. That also helps the port’s bottom line because it receives rent from the hotels.
Port Commission Chairman Scott Peters, a city appointee, said Sanders’ request sounded reasonable.
“I’m in favor of a contribution in that range,” Peters said.
He added that the port is studying the expansion’s economic impact and will make a decision based on that report. On Monday, City Councilman Carl DeMaio suggested the port contribute $10 million to $15 million a year to the project. Peters said that was too much.
“That’s way more than we would make from the deal,” he said.
The city. This is the controversial one. The city’s day-to-day budget pays for services such as police, fire and road repairs. Backers of the city’s major building projects have argued for years that their efforts will use different pots of money. But supporters now say the expansion will need $3 million a year from the day-to-day budget. They defend their position because the expansion is projected to increase general tax revenues by $13 million annually.
“If it wasn’t money that we would have had, then I think that makes sense,” Sanders said.
The mayor added that he was unconcerned that revenue projections would fall short and the regular city budget would be on the hook.
“We won’t move into something that doesn’t have the assumptions coming true,” he said.
The tourists. This is the big one. The major funding source is planned to be a 1 percent to 3 percent increase in hotel-room taxes citywide. That’s expected to raise $29 million to $33 million a year, about three-quarters of the money needed. City Council voted Monday to take one of the first steps in that process.
The taxis and restaurants. These remain the nebulous ones. Steve Cushman, the mayor’s expansion point man, said he’s still planning to use surcharges on taxi cabs and food and beverages in the Gaslamp area to fill any remaining funding gaps. Cushman ruled out for now one long-discussed option, downtown redevelopment revenue, because of the uncertainty surrounding the program. The state slashed redevelopment as part of its most recent budget and a pending court case likely will decide how much money would be available.
“I’ve got to figure out how to do it without them,” he said.
It remains to be seen how council members will react to the financing plan, particularly the use of day-to-day budget dollars. In the past, many council members have questioned any subsidy from the regular budget for the Convention Center. But that may no longer be the case.
I asked City Councilman Todd Gloria about the expansion during our KPBS radio appearance this week.
Gloria said on the radio that he didn’t think the city planned to use money from its regular budget. After the program, I exchanged emails with his spokeswoman, Katie Keach. Gloria appears open to using the money.
“The Convention Center expansion must be a net benefit to the city’s general fund,” Keach said. “Councilmember Gloria is reserving judgment until a full financing plan is seen.”
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 email@example.com or 619.550.5663.
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