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(Source: Official Wire)

The $53 million question

Theyearly price to expand San Diego'sconvention center is revealed and has city and tourism officials asking. . .

By Jeanette Steele

UNION-TRIBUNE STAFFWRITER

A San Diego Convention Center expansion beingchampioned by Mayor Jerry Sanders and the tourism industry got a price tagyesterday – at least $52.5 million a year in new taxes or fees over threedecades.

Options being discussed include a $1 to $2surcharge on San Diego Zoo and SeaWorld San Diego admissions, a 1 percent to 3percent tax on food and drink sales and an increase in the city's hotel taxfrom 10.5 percent to as high as 15.5 percent.

Convention center officials want to add400,000 square feet to the bayfront facility, saying they stand to lose large,lucrative trade shows to cities with bigger exhibit halls.

The poster child for flight risk is Comic-ConInternational, the San Diego-born pop-culture extravaganza.

Members of the city task force looking at theissue expressed concern that the cost of an expansion is a major obstacle intoday's dismal economic climate. At the minimum, raising the city's hotel taxwould require a public vote.

“It's my opinion that the emperor has noclothes,” said Bill Evans, owner of the Lodge at Torrey Pines, the Bahia and Catamaran hotels.“It's not whether it's a valid project, it's can we afford this?. . . I don't see anything here today that shows me there's arealistic chance of funding even half of this.”

Hotelier Richard Bartell, whose company ownsHumphrey's Half Moon Inn & Suites and other properties, said it isquestionable whether hotel companies would be willing to tax themselves againafter creating a 2 percent room price assessment for tourism marketing in 2007.

“I don't know if there are enough votes therein order to fund this,” Bartell said, referring to approval that would berequired from large hotels.

Officials at SeaWorld San Diego and the SanDiego Zoo said they had not seen any concrete proposals and declined tocomment.

The $52.5 million price tag is only accurateif the city also builds a 500-room bayfront hotel. Without the annual $3.7million projected from the hotel, the city's cost jumps to $56.2 million.

Also, the city might need to raise more thanthat – as much as $78.7 million a year – to get the best ratings on bonds thatwould be issued upfront for construction.

But for the city, the new expenses would bepartially covered by a projected $17 million rise in hotel and sales taxes,according to one estimate.

The bigger prize for those who support theproposal is the projected $372 million a year in new direct spending, whichmeans the money conventioneers lay out for hotel rooms, meals, transportationand souvenirs.

Elected city officials weren't immediatelycowed by the cost of expanding the center, which currently measures 814,000square feet, including about 616,000 square feet of exhibit space.

But Councilman Carl DeMaio said he's againstresidents bearing the burden.

“My rule of thumb here is, the people whodirectly benefit from the convention center should be the ones helping tofinance its expansion,” DeMaio said. “If they are not willing to support it,it's probably not a good idea to proceed.”

The likely candidates, according to DeMaio,are hotels and the San Diego port district, whichcollects revenue from the convention center's parking garage.

Councilman Kevin Faulconer, whose districtincludes downtown, said he wants to look at options other than fees and taxes.

“Just because other cities have used some ofthese mechanisms doesn't make them the right one for San Diego,” Faulconer said.

Cities coast to coast are using similartactics to fund expansions in what has been a multiyear building boom forconvention centers.

The list of new fees and taxes beingconsidered in San Diego includes a $2 taxidrop-off or pickup surcharge and an additional $5 to $10 in rental car fees.

A food and drink tax – a first for San Diego – would be the hardestto pass because it affects residents, said Michael Hughes, vice president ofresearch and consulting for Tradeshow Week, an industry publication.

But the trick to marketing any of these ideasis to lean heavily on downtown interests, Hughes said. The key issues, he said,are the size of the fees and the zones in which they are charged.

“The more downtown-centric these maps aredrawn, the more successful these will be politically, as the Gaslamp-area hoteland restaurants benefit so directly from the San Diego Convention Center,” Hughes said.

Heywood Sanders, the nation's foremost criticof the convention center boom, said San Diego, by its ownprojections, would be paying $375 for each nightly hotel room stay sparked bythe expansion.

“Of course, there's no guarantee they'llactually come year after year,” said Sanders, a University of Texas professor of publicadministration who has questioned whether San Diego's conventionexpansion, and others, will reap the promised benefits.

The cost figures, released yesterday at a taskforce meeting, came from Piper Jaffray and Convention Sports & Leisure, twoconsulting companies hired by the city's convention center corporation.

The task force made no decisions yesterday; ameeting on financing options is scheduled for July 6.