San Diego Officials Approve Plan to Acquire Land for Convention Center Expansion

Both the San Diego City Council and the Board of Port Commissioners voted in favor of an agreement for securing the land necessary to expand the San Diego Convention Center. The complex plan, hammered out over months of contentious negotiations, was polished off last week and put up for a vote yesterday. 

Essentially, the agreement stipulates how the city will gain control of the site in question if voters approve a measure on the November ballot to fund the project. If the measure passes, the local hotel room tax would increase from 12.5 percent to as much as 15.75 percent, which would pay for the $850 million facility expansion, as well as other specified projects in the area.

"This agreement removes the final hurdle to securing the land we need to modernize and expand the economic engine that is the San Diego Convention Center," said San Diego Mayor Kevin L. Faulconer. "This project is absolutely essential for growing our regional economy, adding local jobs and generating new revenue that can be used to improve our neighborhoods. I want to thank the City Council and Port Commissioners for approving this settlement and recognizing how important the expansion is to San Diego's future."

Through the deal, which Rafael Castellanos, chair of the board of the Port Commissioners, called "smart and sensible," the port would purchase the existing lease on the space from developers Fifth Avenue Landing for $33 million -- a significant increase over the reported $14 million the port could have paid several years ago. Fifth Avenue Landing had been planning to build a hotel on the land; negotiations over the plot intensified and grew increasingly contentious over the past few years. 

The Port of San Diego will make an initial, nonrefundable $5 million payment toward the purchase price. If the November measure doesn't pass, the land will remain in the hands of Fifth Avenue Landing, and the city of San Diego will reimburse the port for the $5 million.

If San Diego voters approve the measure, the city will lease that land from the port through 2042, with the option to extend the lease for up to 66 years -- for $28 million -- if the convention center project's timelines are met. Fifth Avenue Landing would be permitted to propose a smaller hotel development to complement the expansion.

A number of questions continue to loom, however -- including whether the November measure needs to pass with two-thirds approval or a simple majority. If it passes with a simple majority, the case is likely to go to court, according to local reports.

Meanwhile existing litigation between the city and Fifth Avenue Landing has been resolved by the approval of the negotiated plan.

The expansion plan has long been in the works, but has been mired in a combination of legal and financial uncertainty since 2012. An environmental lawsuit filed in 2012 was resolved in January 2017, paving the way for the latest agreement.

"The San Diego Convention Center Corporation appreciates the city of San Diego and the Port of San Diego working collaboratively on the Fifth Avenue Landing project along San Diego's waterfront," said Convention Center Corp. chairman Gil Cabrera in a statement. "Expanding our facility will allow us to maintain a competitive edge, meet customer demand for hosting large conventions and stay competitive in the marketplace."