As San Diegans try to digest why an ambitious effort to celebrate the 100-year anniversary of the 1915 party that transformed San Diego and Balboa Park fell apart, it helps to think of it the way a key player saw it — as a startup.

The city of San Diego partnered with hotel owners to try to turn $2 million into $30 million. They wanted to draw millions of visitors to San Diego for an event of worldwide reach that would have transformed the region.

Unlike most startups, however, this one didn’t actually begin with a product or an idea. All it had was a goal: Raise a lot of money to do something gigantic.

As the organization scrambled to meet expectations, management turnover disrupted it, political leaders mismanaged it, costly vendors failed to deliver and now little time remains to put on an event of lasting significance.

READ MORE: What Now? There’s Still Money for a Balboa Park 2015 Bash But Little Time

We wanted to understand what happened. Here’s what we found.

It’s Hard to Raise Taxes in San Diego

To understand what happened to Balboa Park Celebration Inc., the nonprofit group created to throw a giant party marking the centennial of the 1915 Panama-California Exposition, you have to understand where it got its money.

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From the beginning, insiders believed three main sources of money would launch the effort. The city and foundations would contribute and another good chunk would come from the Tourism Marketing District, or TMD. About $900,000 of the $3 million invested in the effort came from the TMD. But the TMD had a major impact on planning.

It was a TMD committee that set the expectations and framework for the organization that would eventually be created to run the effort. It was the TMD that decided the celebration would bring in millions of out-of-town visitors.

And that was crucial: TMD funds can only be used to lure visitors to San Diego with marketing.

The mastermind behind the TMD was Mike McDowell. This is him, second from the left. To the right are former Mayor Jerry Sanders and Irwin Jacobs, the founder of Qualcomm. In this 2012 photo, they’re waiting for word on the City Council’s decision to accept Jacobs’ plan to remodel Balboa Park.

File photo by Sam Hodgson
File photo by Sam Hodgson

McDowell is very influential. In 2004, he was the top deputy of C. Terry Brown, owner of the Town and Country Resort.

That year, McDowell formed an alliance of hotel owners, public employee unions and arts and culture groups to raise the city’s hotel room tax with a ballot measure. The City Council put it on the ballot, outlining where the revenues would go. Everyone in the coalition stood to gain.

It failed.

McDowell feared the city would someday stop funding the Convention and Visitor’s Bureau and other programs he believed helped his industry.

So he figured out a way to raise the tax without voters. By 2007, he had persuaded the city to help hotel owners create a special district of hotels — the TMD. They would effectively raise the hotel room tax but as a fee levied by this special district. Only the hotels — not voters — would have to approve it.

And the money could only be used to lure visitors to San Diego. It was just like the tax increase proposed years earlier but without the obligation to fund other city programs.

This was McDowell’s innovation. The concept has since spread to dozens of cities in California. In spite of legal challenges, San Diego renewed the TMD right before former Mayor Bob Filner took office.

Crucially, however, the operating agreement for that renewal was not signed by Filner’s predecessor.

The TMD’s board of directors gets to decide where its money goes. That board is made up of hotel representatives and is led by McDowell’s boss, Brown.

In 2010, McDowell persuaded the TMD to match a $300,000 investment from local foundations and $400,000 from the city to give seed money to the nascent effort to celebrate the 100th anniversary of the 1915 Panama-California Exposition. And it was McDowell who crafted the new organization’s Memorandum of Understanding with the city of San Diego.

The organization grew out of this document from the TMD. It set the framework for the organization going forward. “We will produce an extraordinary visitor experience,” it promises.

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