Convention Center Land: Cheap or Overpriced?
Port’s appraisal says what the city wants to pay for the expansion land is ‘not supported’ by analysis.
The deal that will give the public control over the four acres of bay front land needed to expand the city’s Convention Center will cost $13.5 million.
That’s $8.8 million more than the Unified Port of San Diego thinks it’s worth, according to a land appraisal obtained Friday by voiceofsandiego.org.
The appraisal, done on behalf of the port district, came as part of the lease deal scheduled for approval Tuesday at the port’s monthly meeting. The district needs to approve the transfer of land from a developer to the Convention Center Corp., the city of San Diego-run nonprofit.
The Convention Center needs the land for a planned $753 million expansion contiguous to the current center. The expansion is designed to keep growing conventions like Comic-Con in town and add conventions bigger than can be accommodated now.
The appraisal, completed by the Los Angeles office of Cushman & Wakefield, values the property at $4.7 million and states that the city’s $13.5 million purchase price is “not supported” by the analysis. Port district policy requires an appraisal whenever a lease is transferred.
Port Commissioner Lee Burdick said she asked both city and Convention Center officials if they wanted to renegotiate the purchase price after the appraisal’s disclosure, but said the city believed it had a good deal. She said she didn’t plan to bring up the appraisal at Tuesday’s meeting.
“I don’t think it’s within the port’s realm of responsibility to determine if the city of San Diego is getting a good deal or a bad deal,” Burdick said. “I think that’s ultimately up to the public.”
Both city and Convention Center officials defended the price, saying the land’s location and economic benefits justify the price.
Bob Nelson, chairman of the Convention Center Corp.’s board, said the corporation did its own appraisal of the property and the values ranged from $5 million to $30 million. He declined to release the appraisal, saying it was exempt from disclosure because it was part of an on-going real estate negotiation.
The port district’s appraisal relies on the current approved use of the property, which has a 250-room hotel planned on it. The property would have a much larger value if it were entitled for an expanded Convention Center and a hotel as large as 500 rooms, Nelson said.
“That’s a very different prospect than a standalone hotel that has a lovely view of our loading docks,” Nelson said.
Further, Nelson said, the deal’s structure allows the city to walk away without paying the full purchase price. The city already has paid $1 million to the developers, Fifth Avenue Landing, to evaluate the land for a year. One million dollars of the $13.5 million remaining would be paid at closing. The city then would pay $500,000 annual installments for up to five years when the balance would come due.
That plan means the city won’t pay the full price unless it decides to expand the center.
“That’s why the deal is structured the way it is,” mayoral spokeswoman Rachel Laing said.
Lani Lutar, president of the San Diego County Taxpayers Association, said she needed to evaluate the deal further before expressing an opinion. She said she understands the idea of paying a premium to structure a purchase as the city did.
“Conceptually, I understand it,” Lutar said. “Whether the deal is good for taxpayers remains to be seen and the devil is in the details.”
Clarification: The original version of this post implied that the property was currently used for a 250-room hotel. It has been updated to indicate that’s what’s approved to be built there.
— LIAM DILLON