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Auditor Confirms It: Convention Center Attendance Figures Misleading

City Auditor Eduardo Luna today (Aug. 21) confirmed what the nation's ranking expert on convention centers, Prof. Heywood Sanders, told the Reader in December: the San Diego Convention Center has been publishing phony figures. In my column published December 14, called "The Convention Center Liars," Sanders, a professor at the University of Texas at San Antonio, and author of a seminal paper on egregious convention center overexpansion published by the Brookings Institution, pointed out that the San Diego center "has been systematically overstating hotel room nights, and therefore overstating hotel tax receipts, attendee spending, and the centers impact on the overall San Diego economy," as the column stated, attributing the statistical work and conclusions to Sanders.

Two days after the Reader column, Dec. 16, civic activist Mel Shapiro complained to the auditor's Fraud Outline about those abuses. Since then, "I have been in touch with [Luna]," says Shapiro. Luna had found Sanders's calculations true, but was giving the convention center a chance to see the report and comment.

The auditor's report states, "we found that the allegation that the [San Diego Convention Center] has misstated the actual hotel-room night totals to be substantiated. Specifically, we found that the Transient Occupancy Tax [hotel tax] and Total Tax Revenue statistics were based on attendance and spending per attendance averages (emphasis mine), as opposed to actual hotel room-night figures...a high percentage of the attendance and hotel-room night statistics were based on verbal conversations and/or historical client records with no documentary evidence supporting the published figure." When actual records for ten events were examined, attendance was actually slight understated, but hotel-room night figures were OVERSTATED by about 29%.

The center misstated hotel room-night figures in its annual reports and to a consulting firm, AECOM, whose statistics were instrumental in the hotel industry pushing for the convention center expansion, although the report does not mention AECOM's role in downtown boosters' proselytization for the expansion. The auditor recommends that "any post-event attendance or hotel room-night figure that does not have a source document from the client...be marked as an estimated figure." It also recommends that center forecasts and annual reports "that describe the calculations for direct attendee spending, hotel tax and total tax revenues and economic impact" should disclose assumptions and formulas.

Recently, Shapiro told me that Luna had sent his findings to the convention center for review. In his report today, the Convention Center basically agreed to make changes recommended by Luna.

Incidentally, Sanders talked to convention center backers when the expansion was being considered. He gave the shocking statistics about how in the last many years convention center space has billowed while convention center attendance has dropped sharply. Therefore, convention centers are slicing prices and manifesting financial strains. The public relations director of the convention center called Sanders, a Harvard PhD in government, "a whack job."

Enough said about convention center truthfulness. The bigger, unanswered question is how much the center's phony statistics, cited by AECOM, persuaded the downtown overlords to go ahead with the expansion, absorbing money that could be used in neighborhoods. AECOM is in the business of counseling cities to build or expand convention centers, despite the overwhelming evidence of a glut.

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City Auditor Eduardo Luna today (Aug. 21) confirmed what the nation's ranking expert on convention centers, Prof. Heywood Sanders, told the Reader in December: the San Diego Convention Center has been publishing phony figures. In my column published December 14, called "The Convention Center Liars," Sanders, a professor at the University of Texas at San Antonio, and author of a seminal paper on egregious convention center overexpansion published by the Brookings Institution, pointed out that the San Diego center "has been systematically overstating hotel room nights, and therefore overstating hotel tax receipts, attendee spending, and the centers impact on the overall San Diego economy," as the column stated, attributing the statistical work and conclusions to Sanders.

Two days after the Reader column, Dec. 16, civic activist Mel Shapiro complained to the auditor's Fraud Outline about those abuses. Since then, "I have been in touch with [Luna]," says Shapiro. Luna had found Sanders's calculations true, but was giving the convention center a chance to see the report and comment.

The auditor's report states, "we found that the allegation that the [San Diego Convention Center] has misstated the actual hotel-room night totals to be substantiated. Specifically, we found that the Transient Occupancy Tax [hotel tax] and Total Tax Revenue statistics were based on attendance and spending per attendance averages (emphasis mine), as opposed to actual hotel room-night figures...a high percentage of the attendance and hotel-room night statistics were based on verbal conversations and/or historical client records with no documentary evidence supporting the published figure." When actual records for ten events were examined, attendance was actually slight understated, but hotel-room night figures were OVERSTATED by about 29%.

The center misstated hotel room-night figures in its annual reports and to a consulting firm, AECOM, whose statistics were instrumental in the hotel industry pushing for the convention center expansion, although the report does not mention AECOM's role in downtown boosters' proselytization for the expansion. The auditor recommends that "any post-event attendance or hotel room-night figure that does not have a source document from the client...be marked as an estimated figure." It also recommends that center forecasts and annual reports "that describe the calculations for direct attendee spending, hotel tax and total tax revenues and economic impact" should disclose assumptions and formulas.

Recently, Shapiro told me that Luna had sent his findings to the convention center for review. In his report today, the Convention Center basically agreed to make changes recommended by Luna.

Incidentally, Sanders talked to convention center backers when the expansion was being considered. He gave the shocking statistics about how in the last many years convention center space has billowed while convention center attendance has dropped sharply. Therefore, convention centers are slicing prices and manifesting financial strains. The public relations director of the convention center called Sanders, a Harvard PhD in government, "a whack job."

Enough said about convention center truthfulness. The bigger, unanswered question is how much the center's phony statistics, cited by AECOM, persuaded the downtown overlords to go ahead with the expansion, absorbing money that could be used in neighborhoods. AECOM is in the business of counseling cities to build or expand convention centers, despite the overwhelming evidence of a glut.

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