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City explores options on convention center costs

Public funding is not an option for San Diego to expand its convention center, so a task force on the issue explored ways for convention attendees to foot most of the bill.

It is a common tactic, but one that some travel experts say ends up being counterproductive.

“If we’re looking at two cities to hold our convention in, all things being equal, if one’s got high taxes for attendees, that puts that city lower,” said Caleb Tiller, director of marketing and communications for the National Business Travel Association. “We put that into our planning.”

Cheryl Kendrick -- co-chair of the task force Mayor Jerry Sanders assembled to look at options for expanding the Convention Center -- said in a report on expansion possibilities released Monday, that the task force was not recommending any one course of action for funding and expansion.

Members only gathered information on how other cities and municipalities without public funding managed to build or expand.

According to their Web sites, tax and fee increases on amenities travelers use -- such as hotel rooms and rental cars -- were largely how cities like Orlando and Las Vegas expanded their convention centers.

“These are possible revenue sources; there are so many different possibilities,” Kendrick said. “I think the task force’s role was not to assess but to simply gather them.”

However, Kendrick did say that the city wants those who use the convention center to foot most, if not all, of the bill.

Sanders has made it clear that he won’t contribute San Diego general fund dollars to the project, and with the state’s financial problems, it's highly unlikely any money could come from Sacramento.

But Tiller said ultimately it’s the city itself that benefits from having conventioneers in town, and raising fees and taxes could prevent organizations from choosing San Diego as a convention destination.

“If the very last thing you do when you leave a convention is check out of your hotel and you see a huge tax on the bill, or you see a huge tax when you return your rental car, that leaves a bad taste in (your) mouth,” he said.

The NBTA keeps records of the cities with the highest and lowest taxes and fees for travelers.

As of right now, San Diego is fairing well, as the 14th lowest for taxes and fees out of 50 cities.

The NBTA held its annual convention in San Diego last week, as they had in 2005 and as they plan to do in 2013.

“San Diego is a great convention city,” Tiller said.

Tiller also pointed out that it's not only travelers who end up dealing with higher fees. He said his organization's members have spoken to a lot of company leaders who say they pay for more hotel rooms and rental cars than many people realize.

Sometimes they need to put up clients in a hotel, or help relocate a new worker. They end up paying these fees as well.

“You actually end up hurting the local economy without having insight into it,” he said.

Kendrick said the next step in convention center expansion is largely in the hands of its board of directors.

The board members have until late fall to decide if they would like to move forward, and then funding options will need to be discussed with stakeholders like the Port of San Diego, City Council, Centre City Development Corp. and mayor’s office.

If the city does choose to rely on tax and fee increases, there are several mechanisms to consider: either a standard tax hike, which could require voter approval; the expansion of a tourism marketing district, whose members would vote on increases; raising fees at tourist attractions like SeaWorld; or raising parking fees.

Kendrick said it could end up being any combination of those options as well.

Expanding the convention center is expected to cost close to $1 billion.

The city is looking into expansion due to increased competition for convention business, with other cities opening new or expanding old centers.

Send your comments to elizabeth.malloy@sddt.com

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