Port of Contention

San Diego city councilmember Carl DeMaio has some questions for the Port of San Diego before he’s ready to endorse the city’s convention center expansion. In a June 30 memo issued by his office, the District 5 councilmember asked the Port to “play a more pro-active and equitable role” in financing the project, which would add over 400,000 square feet to the 2.6 million square-foot structure. The estimated cost of the expansion is more than one billion dollars.

“I remain cautiously optimistic and generally supportive of the convention center expansion concept under two conditions,” began the memo.

Those two conditions: that “market and cost-benefit analyses” demonstrate a “sufficient net benefit of the expansion”; and that the project be financed without any further subsidies from San Diego’s general fund. Currently, the City pays out approximately $4 million annually to run the convention center. If the project moves forward, the annual payment is estimated to increase tenfold.

For that reason, DeMaio is asking for financial information to see whether the Port can absorb some construction costs while the City gets its finances together.

For instance, phase two of the expansion project the Port is responsible for paying $4.5 million a year on the debt until 2028; the City would pay $9.2 million a year.

“Does the port’s annual contribution toward the…debt service continue throughout the life of the debt, or will the city at some point be responsible for a greater share of the annual payment?” asked DeMaio in the memo.

The councilmember also asks how much money the port makes from convention center parking revenues and from hotel and retail leases.

Lastly, DeMaio asked that the concept’s designers look at scratching the 250-room hotel included in the expansion and doubling it to 500 rooms as a way to increase revenues.

“The convention center could serve as an example of successful strategic collaboration between the city and the port,” concluded the memo. “I want to ensure that the port appropriately continues its collaboration and support for this regional economic asset.”