05.17.2015

DeMaio Raises Questions Over Management of Convention Center

Carl DeMaio penned this op-ed which was published by the Voice of San Diego on May 15, 2015.

“The first we knew of this was three days before the default,” exclaimed Council President Sherri Lightner. “I’m shocked,” said Councilwoman Lorie Zapf. “I’m still trying to collect my thoughts,” added Councilman Chris Cate.

What took them by surprise?

During a May 7 City Council hearing, the public learned the city had defaulted on its existing agreement to secure the only parcel of land left to allow for a contiguous expansion of the Convention Center.

This is a big deal.

Recall that the expansion of the Convention Center – and the decision to acquire this important land currently under lease by Fifth Avenue Landing – was made in a public meeting in 2012. Notice was given, a healthy public debate ensued and our elected representatives (myself included) voted to approve the deal.

This month’s disturbing turn of events raises all kinds of serious questions, not only regarding the expansion, but about the overall state of management at the Convention Center.

Who made the decision?

Accountability in government demands that we know who makes a decision, and that we alert the public in advance so they can weigh in. In the case of the default on the Convention Center expansion land, no one has claimed responsibility for making the decision.

In fact, Convention Center Chairman Steve Cushman, who also serves as Mayor Kevin Faulconer’s point person on the expansion, appeared on my radio show on Tuesday and claimed, “No decision was made.”

Excuse me? Somehow the city defaulted on a $13 million transaction and lost its rights to land for the all-important Convention Center expansion. We can debate whether it was a good or bad call, but most people would call that a “decision.”

Despite numerous City Council members and journalists asking who made the call, we still do not have a straight answer from either the Convention Center board or the mayor’s office. Board member Laurie Coskey let it slip that Faulconer was advised all along. Cushman now claims the Convention Center sent a letter to Council members April 30, but as noted above, they claim they never knew in advance.

Are city leaders too distracted by the Chargers’ stadium process that the Convention Center is at risk?

City leaders and local media are fixated on deliberations over the future of the Chargers in San Diego. I’m always happy when we focus on keeping any business in San Diego, but one could easily argue that we might have our priorities mixed up if we are too busy with the Chargers to monitor what’s happening with the Convention Center.

The Convention Center is arguably far more important an economic asset than a new football stadium. With a $1 billion economic impact every year, the Convention Center generates more than $20 million a year for our city’s budget.

Events at the Convention Center generate more than 800,000 hotel room nights per year. Compare that to the mere 21 events held at Qualcomm Stadium last year (10 Chargers games, two bowl games and three soccer games). Events at the stadium yield a fraction of the hotel rooms the Convention Center generates since the vast majority of stadium attendees are local.  

Why is the Convention Center asking city taxpayers to double their subsidy?

After springing news of the default on City Council, Convention Center board members had the audacity to ask taxpayers to double the annual subsidy to the Convention Center – from the traditional base subsidy of $3.5 million to $7.4 million.

Why all the raises for Convention Center staff?

The Convention Center board has its hand out for more taxpayer money, but this year they plan to give more than $800,000 in raises to Convention Center staff. Why? The unions demanded step increases and Convention Center managers want performance bonuses – despite the fact that Council President Sherri Lightner has raised concerns about the current performance measures at the center.

Why can’t the Port of San Diego kick in some money?

Instead of expecting the city to fork over an additional $3.9 million in subsidies, why not ask the port to contribute? In Fiscal Year 2014, the Port of San Diego quietly discontinued its $4 million annual contribution to the Convention Center.

This despite that fact that the port derives significant financial benefit from the Convention Center by laying claim to millions in rent payments from parking underneath the center and from hotels that rely on the center for business.

City leaders should demand the Port of San Diego step up and contribute.

What is the plan to fix the existing Convention Center?

The Convention Center faces $32.5 million in maintenance needs. The problems are getting so bad that center staff talk about the possibility that the sail pavilion might fall down. That claim may be a bit dramatic, but having reviewed the maintenance reports over the years, I can tell you the infrastructure problems at the Convention Center are real.

Convention Center managers banked on the expansion project to solve the maintenance problems – just roll the existing repairs into the cost for the expansion and voila, problem solved! Unfortunately, with the financing plan for the Convention Center struck down, those repair plans also fell apart, and the center must now devise a plan to fix its existing infrastructure.

While the Convention Center hopes to generate some cash in the next two years by selling naming rights, until the Convention Center presents a clear plan to finance the repairs to the public, it’s risky management for the city to throw $3.9 million in taxpayer money at the problem.

Why do we need another study on the expansion? And who is funding it?

Is it possible that some city leaders and Convention Center board members wanted to scuttle the expansion deal on purpose?

A few months ago, Faulconer and the Convention Center announced a $90,000 study on what kind of expansion is needed, with the choice between a contiguous expansion or the construction of more space off-site at an annex.

When the announcement was made, I was puzzled and called it a waste of taxpayer money. The issue of what kind of expansion to build has been studied and debated multiple times (as recently as five years ago with a study done by AECOM) and the answer has always been the same: Convention planners are only interested in contiguous space.

What could possibly change in five years? Politics, I fear.

JMI Realty owns land that it wants to develop as a Convention Center annex. Guess who’s footing $30,000 of the bill for the new study? That’s right – JMI. Must be nice to help pay for the study of whether the city should fund a project on your land versus your competitor’s land.

Fortunately, several City Council members raised concerns about the impartiality of this new expansion study. We’ll see in a few weeks whether these concerns are founded when the report comes out.

What are the next steps?

Until we get answers to these key questions, as well as a commitment that the kind of backroom decision-making we saw at the May 7 City Council meeting will not happen again, the public should have serious reservations about whether we can even trust the existing leadership at the Convention Center with public funds, let alone any kind of expansion project worth up to $500 million.

City leaders can claim ignorance and avoid responsibility for the default revelation, but now that these issues are out in the public, city leaders are the ones who ultimately should be held accountable for what’s happening – or not happening – at the Convention Center.