[San Diego County] Who pays for convention center repairs?

The city of San Diego formally weighed in this week on a county grand jury report that raised questions about the operation of the convention center but came no closer to resolving the still vexing question of how to pay for mounting repair bills for the aging facility.

Under review was a May grand jury report that took a deeper look at the center’s governance and operation, focusing throughout on the financial challenges the Convention Center Corp. faces. The tab for major fixes, among them replacing the building’s iconic sails pavilion, totals more than $32 million.

While the grand jury concluded that an agreement between the city and corporation governing operation of the center needs to more clearly spell out who is responsible for financial obligations, the City Council disagreed. The pact contemplates that the center should be able to fund major projects using excess revenue when available, the council pointed out in its response, which was crafted by the city’s Office of the Independent Budget Analyst. Moreover, the agreement mandates that the corporation ask the council each year for money to help fund repairs.

As the bayfront building has aged, convention officials have said their revenues and the city’s yearly allocation of $3.4 million fall short of the funds needed to address growing repair expenses. The corporation board had requested an additional $4 million for the current budget year, but that request was turned down.

“There’s sort of a disagreement between the two entities right now,” said board member Gil Cabrera. “I don’t think you can squeeze enough out of a $33.8 million operating budget to cover these expenditures. This year it’s $4 million and in 2017 it’s going to be more like $17 million because of the sails pavilion.”

The center has explored the idea of raising more than $22 million in naming rights over the next 20 years and is also working with the city on an application for up to a $25 million loan from a state infrastructure revolving fund. Such a loan, even if it was secured, would require a yearly debt payment of close to $1 million.

Councilman David Alvarez acknowledged the difference of opinion between the city and the Convention Center Corp. and asked that the issue be settled as to who is responsible for covering the higher cost repairs. It remains murky in the operating agreement, he said.

“What I read here (in the grand jury response) is the city is absolutely not responsible for the capital improvement projects. I need this to be clarified,” Alvarez said.

The report does note that oversight of the center’s infrastructure needs should be a responsibility shared among the city, the corporation and the Port of San Diego. Toward that end, the city agreed that sources of funding for capital improvements will be addressed when a separate agreement with the port is updated, the council said.

The grand jury also recommended exploring alternative ways of managing the center, including the possibility of outsourcing it to a private operator.

September 15, 2015

San Diego Union-Tribune

By Lori Weisberg