San Diego's $575 million plan to expand the Convention Center into one of the biggest venues on the West Coast fell into disarray Tuesday as the City Council decided not to appeal a court decision that overturned the project's funding scheme.
Now that the old plan for the expansion has been halted for the time being, it could create an opportunity for an alternate plan — floated by the San Diego Chargers and JMI Realty — to build a combination convention facility and sports stadium across the railroad tracks from the Convention Center.
Mayor Kevin Faulconer, who has spent several weeks in discussions with hotel owners and local businesses, as well as Chargers officials and JMI executives, said he is still open to going ahead with the first expansion plan, if alternative financing can be found.
But Faulconer added that he's also willing to scrap the old plan and pursue other alternatives, such as building a separate facility based on the Chargers' plan.
"I am open to all options," he said.
Under the old plan, the Convention Center planned to add about 225,000 square feet of contiguous exhibit space along with 101,000 square feet of meeting space and an 80,000-square-foot ballroom.
To fund the expansion, the City Council in January 2012 authorized bonds of up to $575 million and set up a Convention Center Facilities District composed of local hotels, which would pay an estimated $36.5 million a year through a special tax designed to cover the bond servicing costs and other expenses.
In a special vote among members of the district, the hoteliers voted overwhelmingly to support the tax, which involved boosting their room charges from 1 percent to 3 percent. But critics of the project filed suit, saying that such a tax should have been put before San Diego voters instead.
Although San Diego Superior Court Judge Ronald Prager ruled in favor of the financing scheme Aug. 1, the California Court of Appeals overturned his decision, saying that to have such a tax violated both the state Constitution and the San Diego City Charter, which requires that two-thirds of registered voters must approve special taxes.
“We conclude that the (facilities) election was invalid under the California Constitution because such landowners and lessees … (do not) comprise a proper electorate," the appellate ruling read.
In a meeting Tuesday that was closed to the public because it involved an active lawsuit, the City Council chose not to appeal the ruling to the state Supreme Court. City Attorney Jan Goldsmith, who had previously warned about the legality of the funding mechanism, told the City Council that an appeal would be a lengthy process with an uncertain outcome.
In the meantime, Faulconer has met with several sources interested in the project, including Chargers CEO Dean Spanos, team attorney Mark Fabiani and JMI executives, who have proposed a retractable-roof stadium that could house events ranging from conventions to major basketball tournaments.
Councilmember David Alvarez, who was the sole opponent of the Convention Center's funding mechanism in 2012, said the idea of combining a stadium and convention facility is "very attractive to me, especially if it goes further into East Village, with the potential of revitalizing that part of the city and making it more usable by pedestrians."
Alvarez said that the city doesn't necessarily need to build the biggest contiguous convention center on the West Coast to remain competitive. "Building a nearby facility that could be used for multiple purposes makes a lot more sense than building a stadium centered around 10 football games a year."
Proponents of the Convention Center expansion plan have said that it is necessary to keep major conventions such as Comic-Con International, which is by far the biggest group that the center hosts each year.
But Comic-Con executives say that while adding more area to the convention center would be appreciated, it is not necessarily a make-or-break requirement for them, because they have been able to expand their events into nearby hotels, restaurants and other sites.
But Alvarez added that whatever is in store for future convention plans, "we need to engage San Diegans and get their buy-in, their support and their own ideas for what a new facility should look like."
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June 24, 2015 -- Reporter Carlos Rico checks out the new residential construction trends and products from the Pacific Coast Builders Conference held at the Convention Center.
June 5, 2013 -- Reporter Carlos Rico checks out this year's Pacific Coast Builders Conference at the San Diego Convention Center, one of the largest residential construction conventions on the West Coast. The conference offers workshops, educational seminars, industry keynote speeches, award ceremonies and a trade show.