The Morning Report
Get the news and information you need to take on the day.
Let’s do a little thought exercise: Think of all of the businesses and trade associations that have conventions as a pie. A sweet, delicious pie.
San Diego gets a lot of this business. It has a very respectable slice of this pie.
But the pie is getting smaller.
Steven Malanga, a fellow at the Manhattan Institute, has been making waves with an op-ed that ran in the Wall Street Journal and City Journal. It’s chock full of facts but this one is brutal:
In 2010, conventions and meetings drew just 86 million attendees, down from 126 million ten years earlier. Meantime, available convention space has steadily increased to 70 million square feet, up from 40 million 20 years ago.
The delicious pie is 32 percent smaller.
At the same time, though, San Diego’s slice seems to be about as big as before — at least the slice the Convention Center itself carves out. More than 558,000 people are expected to attend 65 conventions in 2012 at the center. That’s slightly down from the year before.
For 2012, that will mean 763,000 hotel room nights. That’s slightly more than five years ago.
Now, though, Mayor Jerry Sanders and almost the entire visitor industry in San Diego have mobilized to warn San Diego that its slice of the pie is in jeopardy. And no, it’s not because the pie is shrinking. It’s because, they say, San Diego’s Convention Center doesn’t have enough space. As the mayor’s director of special projects wrote on Twitter the other day: “Last year it turned down a year’s worth of conventions.”
Ahhhh! We’re leaving pie on the table!
I am (really our new intern Alexandra Harris is) diligently trying to fact check that claim. We’ll get back to you on what conventions the center had to turn down and whether they could have been accommodated with more space.
But the fear about how much pie is being left on the table, or how much pie might be taken away if we don’t get a bigger Convention Center, isn’t limited to a tweet from the Mayor’s Office.
A major campaign has been driving that fear for many years.
To address it, boosters led by former Port Commissioner Steve Cushman have settled on a four-part plan:
I. Expand the Convention Center at a Cost of $520 Million: That will make it the largest one on the West Coast, they say. It will have grass on top, as well, to mollify complaints that an already walled-off waterfront would get a bigger wall. But how do they propose to pay for it?
II. Raise the Hotel-Room Tax: Voters in 2004 twice rejected hotel-room tax hikes. To get around asking voters again, boosters have decided to employ a complicated scheme. They will raise their property taxes through a special state program. But rather than the hotel owners paying the tax, the city will collect taxes on the visitors staying at the hotels. For visitors staying at those closest to the Convention Center, it will be a 3 percent hike. For staying at hotels in the radius of Mission Bay, it will be 2 percent. For the rest of the hotels in the city, it will be 1 percent.
The estimated $36.6 million a year this will raise by 2017, however, is not enough.
III. The Port Promises to Chip In: But only $3 million annually for 20 years. City officials expect to have to pay off loans for this for 30 years. No word on what happens at year 20.
IV. Pull Money from City Hall’s Day-to-Day Fund: If the mayor and Cushman get their way, the City Council will authorize an investment of $3.5 million a year or more for the project from the same fund that pays for parks, libraries, police and fire services. Their argument is that not only will we maintain our slice of the convention pie in this country, but it will get bigger. That means more people will come to San Diego and more money will come from them. So confident are they that this will happen, Cushman went so far as to deny that this investment is even happening.
Four things stand in the way:
I. The Football Team: The U-T San Diego indicated it would be endorsing a plan that would solve both the convention center and football stadium issues. I’m hearing that it will side with the Chargers who say a roofed stadium, planned correctly, would eliminate the need for the proposed Convention Center expansion. The idea already got a boost in a recent column by Nick Canepa.
Would the paper also join the Chargers in alleging that the hotel-room tax proposed is illegal?
II. The Legal Attack: If the U-T did make that last point, it would not be totally unexpected. The U-T’s new publisher, Doug Manchester, who used to own the hotels adjacent to the Convention Center, has long opposed hotel-room tax hikes. He also opposed the creation of a 2 percent hotel-room tax to support marketing of San Diego as a destination. As an anti-union manager for years, Manchester joining the hotel workers in this argument would be priceless.
III. Big Labor Fight Brewing: In exchange for agreeing to raise the hotel taxes, hotel owners are reportedly trying to wrest away control of some of the operations of the Convention Center. Many of those operations — like food service — are union jobs. Hotels want more meetings and dining in their own facilities. Lorena Gonzalez, the head of the Labor Council, warned at a Dec. 6 hearing on the proposed tax hike that worries about this may keep her from supporting the deal. And that could cause a majority of the City Council to reconsider. Watch what happens Jan. 23 when the council considers the issue again.
IV. The Coastal Commission: If labor and its allies can’t leverage their support on the City Council, the California Coastal Commission might find itself heavily lobbied. It will have to approve the massive construction project and if labor organizes opposition, it could get ugly.
So watch for these issues to come:
• The Jan. 23 City Council meeting about the financing for this project. The council will review the proposed hotel-room tax and decide whether to allow hotel owners to vote on it.
• The April hotel owners vote on whether to increase the hotel-room tax.
• The U-T and Chargers: On Monday, the Chargers released a statement saying they would cool it for a while with their idea to merge the stadium and convention center. That would be easier on the mayor, who’s trying to push both projects — separately. “If, for reasons completely unrelated to the Chargers, the existing convention center expansion plan fails, we hope that at that time City leaders will give our joint stadium-convention center expansion proposal a good, hard second look,” wrote Chargers Special Counsel Mark Fabiani.
• Finally, the Coastal Commission. If the plan gets that far, will it approve the design?
Then, of course, there’s the matter of the great, shrinking national convention pie. Officials in Boston see their convention business booming just like San Diego’s. And they say their $2 billion expansion plan is a no-brainer.
How long can the bubble in convention centers grow? And is San Diego really exceptional? Is our investment a no brainer? Would taxpayers sign off on a hotel-room tax increase if they were asked?
Many folks are concerned about other needs in the city right now. And that will lead us to our No. 10 story to watch in 2012: The city’s financial troubles. Surprise! They’re still here.
I’m Scott Lewis, the CEO of voiceofsandiego.org. Please contact me if you’d like at scott.lewis@voiceofsandiego.org or 619.325.0527 and follow me on Twitter (it’s a blast!):
Like VOSD on Facebook.