Proponents of a $550 million plan to expand San Diego’s Convention Center have made a major change to how they plan to pay for it.
The change gives the proposal more legal certainty, but requires greater support from the city’s hoteliers, said Steve Cushman, Mayor Jerry Sanders’ point man on the expansion.
It keeps San Diego tourists on the hook to pay increased taxes to raise $28 million to $30 million annually, or about three-quarters of what’s required to finance the expansion. And the expansion still isn’t expected to go before city voters.
But instead of using a financing structure called a tourism marketing district, Convention Center boosters have switched their plans. They’d use a different type of special district, which would require two-thirds of hoteliers to sign off on the room charge instead of 50 percent as was originally contemplated.
And that raises the hurdle for Convention Center boosters to clear.
“It creates a little bit of a new dynamic for me,” Cushman said.
A key advantage of the new structure is greater legal certainty, he added.
Last November state voters passed Proposition 26, which tightened the levying of charges without a public vote. Convention Center boosters have said the original expansion plan fit into one of Prop. 26’s exemptions, but the concept remains untested.
“The idea of using [a tourism marketing district] in light of Prop. 26 is unproven,” Cushman said. “Obviously my job is to bring certainty to the expansion of the Convention Center.”
Currently, anyone who stays in a San Diego hotel room pays a 10.5 percent tax on their bill. Visitors at most hotels pay an additional 2 percent charge that hoteliers want to extend for another 40 years. But that plan hit a Prop. 26 snag yesterday, too.
The Convention Center expansion would add 1 percent to 3 percent on top of the regular tax and tourism charge. That means the effective hotel-room tax rate would be 15.5 percent in some areas of the city.
Cushman said the expansion’s new financing structure would be similar to what’s known a Mello-Roos district, which levies a special tax on property owners to pay for public improvements and services. The city of San Jose recently used the structure to expand its Convention Center without legal challenge, he said.
A City Council committee will discuss the new plans next Wednesday.
Liam Dillon is a news reporter for voiceofsandiego.org. He covers San Diego City Hall, the 2012 mayor’s race and big building projects. What should he write about next?
Please contact him directly at firstname.lastname@example.org or 619.550.5663.
Like VOSD on Facebook.