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Longtime San Diego hotelier Bill Evans brought binoculars with him to our interview in an 11th floor room of his Catamaran hotel in Mission Bay.
He gave me the binoculars and asked if I could see the city’s Convention Center. With some effort, I spotted its pointed roof in the distance.
“It kind of puts things in perspective, doesn’t it?” Evans said.
Evans has come out against the city’s financing plan for the $550 million Convention Center expansion. The plan relies primarily on taxing hotel guests depending on their distance from the center. Guests at downtown hotels are supposed to pay an additional 3 percent, guests at hotels in Mission Bay are supposed to pay 2 percent and guests at more far-flung areas such as La Jolla are supposed to pay 1 percent.
Evans believes this scheme makes his hotel guests pay more than they should. And Evans has some weight behind his opinion. He’s headed one of the region’s major hotel associations, served on the Convention Center board and was on Mayor Jerry Sanders’ task force that examined the proposed expansion.
I spoke with Evans about who should pay for the expansion, his misgivings about the task force and why Darth Vader doesn’t stay in his hotels.
One note before you dive in. Like an earlier Q&A we did with hotelier and expansion proponent Mike McDowell, we tried to keep the conversation acronym free. But you do need to know one to follow the discussion: TOT stands for transient occupancy tax, the formal name for the city’s hotel-room tax.
Can you explain your position on the current funding plan for the Convention Center expansion?
The current plan has massive problems of inequity by way of benefit in comparison to cost. The Marriott hotel not only shares a wall with the Convention Center, its parking is in the basement of the Convention Center and its tennis courts are on the roof of the Convention Center.
If it was water, their water is boiling, Mission Bay is an ice cube and Rancho Bernardo is absolute zero.
What’s your alternative?
You have to think about who are the players that benefit. I think that the mayor in his press announcement last May, he says it’s important that the people that benefit pay the costs.
The very first time the port paid for the Convention Center. True, but the port benefitted from everything. There have been benefits for [downtown redevelopment]. Coronado has been getting this free ride. The city benefitted from huge amounts of TOT.
So as far as specifics, it sounds like you’re telling me more money from the port, more money from the city’s day-to-day budget in the form of TOT. Is that right?
I’ll give you an example. They’re saying the city is going to get like $12.5 million a year in TOT. In the latest plan what are they saying the city is going to put in, $3 million?
They tout that the Convention Center over the last 20 years has done $22 billion worth of economic impact just in the city of San Diego. That’s like a $1 billion a year, a little more. One would think there’s going to be close to another $1 billion in economic impact. Wouldn’t that be enough of a benefit for the city of San Diego?
Doesn’t the benefit to the day-to-day budget justify the time and effort that’s been put into this at a time when the pension payment is going up, they can’t fix a road, fire services have gone down, library hours slashed?
So you put no benefit in the jobs? You put no benefit in the overall economic impact of $1 billion a year? I don’t think it’s fair to say that the only thing we care about is the cash we get right now.
I hope that the people that benefit, whether the individual hotels, whether it be the port, whether it be the city, whether it be other cities, that everybody works together and they come up with a formula that is based on not what they can do, but what they should do.
What’s the number they say? Like 6,000 new jobs. Shame on anybody who is not going to do everything in their power to create 6,000 jobs in this community. Even if they don’t get a penny of TOT.
I don’t know if it’s necessarily the duty of the government to produce jobs, but if they have the ability to do so I think there’s a moral responsibility to do so.
Then how come you’re not willing to have your hotel guests pay an extra 2 percent toward that laudable goal of creating 6,000 jobs?
Because I think that we will stand ready to support at some level. I think everybody in the entire city of San Diego, all the hotels should pay a small amount as a base. And then on top of that base, there is added based on benefit.
Let’s take the argument for why backers of the financing plan say you benefit. It’s the idea of compression. When the hotels downtown are filled up by all the conventioneers, then people who want to come stay in San Diego go to Mission Bay.
Out to the colonies. You ever heard of the butterfly effect? It is a butterfly flapping its wings in Indonesia can affect the weather in the United States because there’s a chain reaction. You know that’s probably not true, right? This whole theory of compression, I think it’s an urban legend.
If you look at the Convention Center peak room nights on average for every month for 2010, on average for a month, there’s not one day that they eat up all those rooms just in those hotels at the Convention Center. They never once go outside of downtown.
Everybody’s, “Comic-Con, Comic-Con. I’ve seen Darth Vader walking through a hotel in La Jolla.” They’re there because they’re choosing to be in La Jolla. It’s not because its compression. I don’t have Darth Vader walking around Mission Bay.
But Darth Vader is not the point. The point is someone wants to come visit San Diego when Comic-Con is here and they can’t go downtown because Darth Vader is downtown. They instead come to Mission Bay.
Comic-Con is in the middle of the summer so it really doesn’t do much for us. It fills some downtown hotels. But you don’t build a church for Easter Sunday, right? You don’t build a Convention Center for Comic-Con or any major convention. There’s a huge misconception that the Convention Center expansion is for mega conventions.
Haven’t backers of the expansion said that all they need is something like three or four of the big conventions to come here on a rotating basis and then the project pencils out?
I’ve been in this business for a long time and when that was presented to the mayor’s task force, every inch of my body screamed something was wrong.
It could be true. I just find it very unsettling the magnitude of the benefit that they are suggesting could occur.
Then why did you vote yes on the task force?
That’s true. The questions that were answered was, should it be contiguous space? Yes. Should the Convention Center be expanded? Yes. Should there be an additional ballroom and its own kitchen so it could act independently? Yes. Nowhere in that did we say that the information within was accurate.
Yeah, but don’t you have some responsibility if you are concerned about the accuracy of the information or have questions about it? (San Diego County Taxpayers Association head) Lani Lutar votes no because she says …
It’s bogus. I’m sitting right next to her. My comments were all the way through on that.
There’s still a benefit of a having a Convention Center expansion. Not for the mega-groups, however. The filling in, the overlapping (of conventions), that’s what helps hotels.
What percentage of hoteliers citywide feel the same way you do on this?
I have no idea. I’m not aware of any strong support north of the San Diego River. But let me be very clear, I think there’s great support for the concept of expanding the Convention Center.
There’s a more philosophical discussion about the Convention Center expansion and the city’s general use of hotel-room taxes. The regular hotel-room tax rate is 10.5 percent. But if the Convention Center expansion passes and a tourism promotion charge is extended, the effective tax rate at its highest will be 15.5 percent. Is a 5 percent hotel-room tax entirely dedicated to tourism promotion the best use of that money?
I think the fact that we’re using potentially a third of what we’re charging the tourists for the purposes of bringing more tourists here, that’s pretty good.
If you look at the history of TOT, 100 percent of it was given to [tourism promotion]. Over the years, the percentage of that shrank, shrank, shrank until we saw the writing on the wall. It was like the city was some crack addict and they were stealing all of our stuff.
They were spending money that was injurious to their own health because they were making less money. Historically, [the convention and visitor’s bureau] has had like a six- or seven-to-one return on investment.
The city ought to be giving us more money. Because they’re going to get more. It’s just pretty simple economics that if you market it, they come.
Interview conducted and edited by Liam Dillon, who can be reached at email@example.com or 619.550.5663.
He covers San Diego City Hall, the 2012 mayor’s race and big building projects. What should he write about next?
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