The first phase of a five-year plan to undertake nearly $120 million worth of urgent repairs to San Diego’s aging convention center can now move forward, the City Council agreed this week.
For years, the city’s cash-strapped Convention Center Corp. did not have the funds to pay the mounting bill, and the annual city budget set aside only minimal funds for upkeep of the bayfront facility. That now has changed with the passage in 2020 of Measure C, the much litigated initiative that called for a hike in the city’s hotel room tax to pay for a convention center expansion, homelessness services and road repairs.
Now that the measure’s approval has been legally upheld by the courts, it’s anticipated that the hotel tax funds dedicated specifically to the convention center will total $45.4 million by the end of this fiscal year.
The council on Monday agreed to allocate $21.4 million of those funds this year for addressing deferred maintenance on the center. Of that sum, $7.5 million will be spent on a new roof for the western portion of the center, which opened in 1989. And more than $9.5 million will go toward the first phase of a central plant overhaul.
Over the next five years, more than $118 million will need to be spent on a host of repairs, the costliest being the overhaul of the central plant that houses the building’s entire heating and cooling systems.
Increasingly, the aging building has been experiencing system failures that include the boilers and chillers, electrical infrastructure, plumbing and roof leaks, the City Council was told. According to a 2022 report from an outside firm hired by the Convention Center Corp. to fully assess the condition of the 2.6 million square-foot building, there are nearly $244 million in repairs and capital improvements identified over a 25-year period. Accounting for inflation, that translates to more than $452 million, said Dominick Dowds, the city’s Deputy Director for engineering and capital projects.
While the principal goal of Measure C as it relates to the convention center was to substantially enlarge it, that expansion project seems less likely. Costs have soared since the original project was conceived more than a decade ago, and a sizable chunk of the hotel tax funds is now being used instead for repairs.
Hotelier Robert Gleason, who chairs the San Diego County Lodging Association, reminded the council to not forget that one of the chief objectives of Measure C, as promised to voters, was to finance an expanded center so that it could attract more and larger conventions.
“What’s being proposed today is deferred maintenance, and it’s disappointing it’s the first use of funds from Measure C,” Gleason said. “However, all that being said, the convention center has very significant deferred maintenance, and the city, under previous administrations and previous councils, has been underfunding those capital needs for many years.
“So we need to address the deferred maintenance, … but I’d ask you to keep an eye in upcoming budget conversions to make sure that Measure C funds are used as intended — not for deferred maintenance, not for operations, not for sales, not for marketing, but for new homelessness programs, and ultimately, for the expansion and modernization of the convention center in order to keep with public trust.”
In addition to higher construction costs, the convention center expansion is hamstrung by the city’s lack of control over a key waterfront parcel that would be needed to complete the project.
Fifth Avenue Landing currently holds a lease for that parcel, which expires in mid-2027. The city and San Diego Convention Center Corp. worked with Fifth Avenue Landing off and on for years to work out an agreement to regain control of the leasehold, and ultimately, a settlement agreement was reached in 2018, although it was conditioned on what was expected to be a November 2019 public vote. That didn’t happen until March of the following year, and it was believed at the time that Measure C had failed.
Council members were advised Monday that the agreement remains in place and prevents city officials from talking openly about the expansion project or taking steps to move forward with some kind of plan until next year.
Councilmember Stephen Whitburn acknowledged the city’s responsibility to still pursue an expanded center, but noted that the current repair needs can’t be ignored either.
“The public expects us to expand the convention center, so let’s make the needed upgrades and at the same time keep our eye on the ultimate prize, which is an expanded convention center that will keep San Diego in the top tier of convention destinations.”