$520 million project moves forward
The last six weeks have been big ones for supporters of a proposed expansion of the San Diego Convention Center. The plan is closer to becoming a reality than it was in mid-March, but as it has moved forward, the politics involved have heated up.
The expansion will add 225,000 sq. ft. of exhibition space, bringing its total to about 1 million sq. ft. That will take the convention center from a well-regarded midsize event facility and “put us in the upper tier,” says San Diego Convention and Visitors Bureau President and CEO Joe Terzi. “The building itself is probably one of the best-run buildings in the country, and it’s in heavy demand.” Some events are starting to outgrow the facility, he explains. “Others would like to come here, but we can’t fit them in the existing building. It opens up a whole new group of customers.” More convention attendees will help to fill the nearly 9,000 hotel rooms in the immediate area around the convention center.
Last week, the city’s hotel operators overwhelmingly approved an increase to the room tax that guests pay, providing most of the funding for the $520 million project. Depending on the hotel’s proximity to the convention center, guests will pay an additional 1%–3% fee on top of the current 12.5% charge, generating an estimated $30 million per year.
In order for that to happen, first the San Diego City Council had to make a major change to the way the convention center does its business. At the request of Mayor Jerry Sanders, council members voted to transfer responsibility for the facility’s marketing and sales from the public, nonprofit agency that runs the center to the privately funded CVB. The move was supported by hotels, who wanted more say over the centers operations, but opposed by the labor and service unions that represent the convention center’s employees.
Having both a CVB and a separate convention center staff in charge of promoting San Diego as a convention destination was an unusual situation. Terzi says only about three of the 60 biggest convention centers in the country have a similar arrangement. It meant that often the CVB and convention center were both sending representatives to shows. “It was somewhat confusing to people,” Terzi says. “We think the messaging will be a lot clearer, and the service [that customers get] isn’t going to change. It’s really putting the sales and marketing for the building in an organization whose only task is to market San Diego…It allows us to consolidate those efforts [and] hopefully have fewer redundancies.”
The transition is now under way and will be completed by the start of the new fiscal year on July 1. Terzi says the CVB is working to retain and hire much of the convention center’s sales force. Following the council’s vote, longtime San Diego Convention Center Corporation CEO Carol Wallace refuted rumors that she was resigning, but she did say her future with the agency would be up for discussion with the corporation’s board when her contract expires on June 30, 2013. Vice President Steven Johnson’s job as spokesman for the center will be eliminated at the end of the year as a result of the marketing transfer.
One of the biggest remaining hurdles for the expansion is getting the California Coastal Commission, which oversees all waterfront developments, to sign off on the project. There is also a looming legal battle over the validity of the hotel tax vote. California law requires a public vote on tax increases, but the city maintains it only needed the approval of the affected property owners. “Funding is secured, which is a big deal,” Terzi says. “Now it’s the approval process.”
Image: San Diego Convention Center
For more on what San Diego has to offer as a meetings destination, read “72 Hours in San Diego” from the May issue of Smart Meetings.