In the News
By Scott Peters
I walked around downtown on a Comic-Con evening in July. It isn’t like any other convention you see; thousands of people, dressed up and dressed down, were roaming the Gaslamp and having a great time. It’s cool to live in a place that people pay to visit, and the events they attend can be world-class fun for us too. There were Comic-Con-related venues everywhere – in bars, museums, parking lots – not just on one convention center floor. No convention center floor, no matter how large, could have accommodated this carnival. It was so, um, non-contiguous.
Later, I went to Philadelphia for the Democratic National Convention. Philly may be one of our great cities, but when the heat index is 108, traffic is backed up and you have to walk a mile – yes a mile – from the car drop-off to the remote basketball venue, maybe not so great. It was pretty obvious to me in that cab and that heat that with San Diego’s weather, and with the proximity of our hotels and our restaurants to our meeting spaces, we have the makings of a one-of-a-kind events destination.
The idea we have long had to keep ourselves competitive as a convention destination is to expand the current convention center floor to create more contiguous convention space. And it’s not surprising that when the convention center surveys their existing customers, those customers say they want more space.
I was a warrior for the contiguous expansion. When I was Port chairman in 2011, we got a unanimous vote from all five port cities to contribute $60 million to help finance the expansion of the convention center. I lobbied the Coastal Commission, where I once served, for its approval. And I stood my ground when the then owners of the Union-Tribune urged me to switch my support to a non-contiguous combined convention center-stadium. I told them I would back the position of the Port. A combined facility might be a good Plan B, I acknowledged, if the contiguous plan became infeasible.
And that’s what happened.
A lawsuit blew up the financing plan because it required a two-thirds vote of the people, not just hotel owners. Now there is significant political opposition to ceding more waterfront to development. The $575 million contiguous expansion cost estimate was derived without engineering drawings, is wildly out of date and depends on a $200 million guarantee from the city’s general fund. There has been no accounting for the lost profits the convention center would incur from closing over 200,000 square feet for two years during phased construction or for the increased costs of operating a larger facility; that means that our current annual subsidy of $3.4 million from the city’s general fund will have to increase! (By the way, is it fair that the general fund pays this subsidy instead of the hotels that profit from the public’s investment in the convention center, when those hotels are assessed some of the lowest tourist taxes in the nation?)
Mayor Kevin Faulconer apparently recognized the futility or foolishness of the contiguous expansion when he pulled back his own proposal for an increase of visitor taxes to 15.5 cent to fund the contiguous expansion. But with an increase of just a penny more, we have an alternative that better competes in today’s market for conventions, keeps our football team, moves our downtown bus yard to less precious real estate and frees up Mission Valley for parks and educational uses. We should seize the opportunity.
The project is 385,000 square feet of leasable space: a 130,000 square foot exhibit hall; 100,000 square feet of stadium event-level, column-free exhibit space; 63,000 square feet of ballroom space and 80,000 square feet of meeting rooms. Since it is both a stadium and a convention center, VOSD has aptly coined the term “convadium.”
The leading experts on the market for conventions, including Hunden Strategic Partners and Conventional Wisdom (the very same experts used by the San Diego Convention Center itself to gauge the market for the last expansion), say that the trend in the industry is “pursuing and hosting numerous overlapping or back-to-back mid-sized conventions … in contrast to the prior ‘space race’ where cities have attempted to lure the few largest conventions. … Cities like San Francisco, Seattle and Indianapolis – all successful convention cities – have adjusted their focus to filling the calendar with consistent medium-sized conventions that can occur simultaneously or back-to-back. Convention centers today and their major hotel partners have recognized that having a ‘two piston’ convention engine, where one mid-sized show is occurring while another moves in or out, is more likely to lead to consistently full-hotels.” That is exactly how the convadium, to be programmed by the same people who book the convention center, would complement our existing facility. And we would also have the flexibility to book really major events that would use both the convention center and the convadium.
Look what happened in Minneapolis when it replaced its old football stadium with a new one, in exactly the same place. The city realized over $1.2 billion in office and hotel development leading up to the opening (all within three blocks of the stadium), and have $700 million in direct and indirect economic benefits in major bookings secured before the building opened. And that’s just a stadium, not a convadium. San Diego is looking at 200,000 additional hotel room nights annually, with new tax revenues of $125 million in the first 10 years solely because of the project.
Given its returns, the convadium project makes much more economic sense than building a stadium alone, particularly using $200 million from city general funds and $150 million from the county, as proposed by Faulconer and Supervisor Ron Roberts. In San Diego, we have traditionally agreed that convention space that will generate revenue is worthy of taxpayer support. The convadium financing is built to protect the general fund and to impose the cost on visitors. To the extent we generate more tourism tax revenues, we generate more general fund dollars, because of each 16.5 cents of tourism tax revenue, 4 cents goes to fund the project, 2 cents goes to tourism marketing and 10.5 goes directly to the general fund. The general fund also gets all the excess dollars from the new tourism taxes (the 4 cent part) that are not needed to pay for the convadium; these should be significant based on historic growth trends.
For the sake of constructive decision-making, let’s set aside the scare tactics.
Comic-Con has not said that it is leaving if we build the convadium, or staying if we expand contiguously. I am skeptical that it would leave San Diego at all, because San Diego is a star of its show, and it just bought three buildings here. All that aside, if we build additional space and gave Comic-Con total control over it during its events, it will be better off than it is today.
There is significant protection for the general fund. The project is not free from risk, but even the city’s independent budget analyst agrees that the hotel revenues generated by the convadium will cover the estimated costs. She doesn’t vouch for the estimates themselves, but there are large cushions against overruns. The city took calculated risks that Petco Park would generate sufficient private development to cover the public contribution, and it did. This project contains at least the same level of assurance.
This project is not “giving money to a billionaire.” It’s a public-private partnership in which both sides should contribute and both should expect benefits. I understand that the $650 million contribution from the owner and the NFL is one of the largest of its kind. San Diegans should vote based on the convadium’s benefits and economic returns for San Diego, not on animosity toward billionaires or any particular one.
Finally, why downtown? Well, that was our plan when we also conceived of Petco Park in the 1990s. In fact, at the suggestion of John Moores, we zoned the East Village to accommodate a football stadium more than 50 percent larger than the proposed convadium. And if we want this facility to be more than a football stadium – a convention center and public amenity with synergistic proximity to other meeting spaces, hotels, restaurants, bars, etc., it HAS to be downtown.
Rob Quigley and other architects argue that this is not the place for a football stadium. They offer small-scale alternatives that will never generate the financing to move the bus yard that is in the way of their own plans, let alone generate the entertainment or economics of the convadium. No place is the perfect place for a stadium, a convention center or a convadium, but from the region’s perspective, downtown is the best place for that kind of intensity. Before us is a credible plan to turn a bus yard in a prime location into a gainful regional asset, and to free up Mission Valley for parks and educational or economic development. We need our design community to lead a discussion about how to fashion the facility so that it fits and enhances its downtown neighborhood and the surrounding communities – that’s what architects do all the time with all kinds of sites.
In Baltimore, Houston and Cleveland, people said that they never really believed that their football team would leave until the day they left. Those cities all spent way more to replace their teams than it would have cost to hold on to them. If we lose the Chargers to Los Angeles – while retaining our bus yard with the prized location and a crumbling historic and soon-to-be unused publicly owned football stadium – our elected leaders may assert a triumph of the people over corporate greed. But that’s wrong. If we fail to make the most of today’s opportunity, it will be a colossal failure of imagination and civic and political leadership. And a huge hit to the city we love.
Scott Peters is a congressman representing California’s 52nd District.