By Scott Lewis.
One of the biggest ironies of the Convention Center expansion’s demise is that this path — the one that has taken six years, cost $10 million and ended in nothing — was considered the least risky.
And yet, with one 7-0 vote Tuesday, the San Diego City Council abandoned the effort. The $520 million plan to expand the facility — the biggest construction project on the city’s docket — is now dead. It won’t have to fight off the last environmental litigation from attorney Cory Briggs, who engineered this collapse. It will not pass go.
It is one of the biggest, gnarliest and most embarrassing legal failures the city has ever seen. Never mind the countless hours of hearings, meetings and public pronouncements, the Convention Center Corporation has already spent $7 million on “due diligence, land acquisition costs, entitlement and design,” Steven Johnson, the Convention Center spokesman, told me Tuesday.
The agency also got a $3 million loan from the now defunct Centre City Development Corp. — that all is lost too.
Again, though, this was the safe route. Years ago, as they started to march toward an expansion of the facility — considered vital for competing with cities like Las Vegas and Anaheim — boosters decided several crucial things. All of these decisions led to the ultimate failure.
• The hotels that would benefit most from the expansion would not pay for it themselves.
• A tax increase was needed. And it was best that the tax be on hotel rooms, paid by the visitors.
• This would effectively be an increase to the hotel room tax, otherwise known as the Transient Occupancy Tax.
• Normally, to increase the tax, they would need voters to approve it by a more than two-thirds majority (which they couldn’t get when they tried a decade earlier).
So they had to come up with something creative. It had to have the effect of raising the tax without actually being considered a tax increase.
Here was Mike McDowell, a hotel industry lobbyist and one of the masters of the project, to us in 2011. He was still feeling the sting of a 2004 attempt to raise the hotel-room tax that failed. And he wanted to explain why they had to come up with a special way to describe the new tax that would not make it, you know, a tax.
Why the emphasis on trying to craft it into an exception? Why not just let it go to a vote and don’t even worry about it?
You asked me very early on what I learned from the 2004 election. And that is that a two-thirds vote threshold is too risky. Having learned that lesson and going down that road, would you come back and call me stupid?
Not stupid, but the decision cost the Convention Center millions. And now, the Convention Center is falling apart from disrepair.
So now what happens?
At least some of the momentum seems to have shifted to an idea the Chargers have been trying to get some traction behind for years. Look, they say, just build us a stadium nearby, put a little retractable roof on top of it and your big conventions can spill over to that facility.
This was anathema to city leaders for years. It was just simply not worth talking about. So important was contiguity to a Convention Center project that these other ideas would solve nothing, save giving the Chargers a new stadium. Here’s how Convention Center Corp. Chairman Phil Blair put it in an op-ed to us:
The San Diego Convention Center Corporation released results this week of a recent survey on this very topic that was sent to executives of the leading convention, exhibition and conference producers. Of those responding, 64 were current clients of the San Diego Convention Center and 98 percent of those said it was “extremely important/critical or very important to have contiguous exhibition halls in a single venue when booking their major events.”
But this is no surprise to those of us who have been talking with clients over the past six years as we explored various expansion options.
That’s not going to help a campaign for a non-contiguous facility.
Mayor Kevin Faulconer, for the first time that I have seen, now is open to the idea of a non-contiguous Convention Center/Stadium. And he said he’s been meeting with developers about the idea. City Councilman David Alvarez also touted it.
But the faulty myths were still trying to survive this onslaught of debunking Tuesday. Council President Todd Gloria told KPBS that hotels were only willing to fund a contiguous facility.
Let’s be clear: They weren’t willing to fund anything. If the hoteliers wanted to put up $500 million to fund the Convention Center expansion, they could do it tomorrow. They could each write a check for whatever they think they should put in.
The problem is, they don’t trust one another. They want to pass the cost on to their visitors’ bills. But they want all their competitors to have to do that too — in the same amount.
The government offers a way to do that, through taxation. But anti-tax forces in California long ago made it clear that to increase taxes, you have to get a vote of the people.
The Chargers now face that same obstacle. They can build a new stadium with their own money. But to satisfy the Convention Center’s needs and their own, they’re going to need hundreds of millions more than the team is willing to put up.
It will be interesting to see what they come up with that could possibly win over San Diego voters, let alone two-thirds of them.
Originally posted at the Voice of San Diego.