Recent decisions scramble future expansion plans

Andy Cohen

The $520 million plan to expand the San Diego Convention Center is virtually dead after the San Diego City Council voted 7-0 on Aug. 26 not to appeal a court ruling that found the financing plan unconstitutional. That decision places the expansion plan — considered to some business and civic leaders as a vital key to economic development in San Diego and crucial to keeping the iconic Comic-Con — back to square one.

The controversial financing scheme was formulated according to the Mello-Roos Community Facilities Act, which allowed for the creation of “community facilities districts,” providing communities the ability to get around the restrictive Proposition 13 in order to essentially raise taxes on themselves to fund projects deemed beneficial to the community as a whole, such as schools, parks, streets and other infrastructure projects.

The Convention Center funding plan took that concept a bit further, allowing property owners — specifically hotel owners — to vote to tax themselves in order to provide the resources to service the debt on the Convention Center expansion, a tax they would in turn pass on to their hotel guests in the form of a room tax or fee.

In 2013, San Diego Superior Court Judge Ronald Prager agreed with the city’s interpretation of the law, finding that the Mello-Roos Act did, in fact, allow for property owners within a community facilities district to vote to assess fees on themselves in order to pay for projects they wanted.

But in a ruling issued Aug. 1, a three-judge appellate court panel overturned Prager’s ruling in a 3-0 decision, finding that according to the state constitution, all registered voters within the district must be allowed to participate in any election concerning their communities, and that the vote could not be limited only to affected property owners. The panel also determined that according to state law, non-resident property owners could not participate in the election.

The City Council, which had initially favored the Convention Center plan, chose not to appeal the ruling.

“The District Court’s decision is a blow to our plans to create jobs, keep Comic-Con and expand our convention business,” said City Council President Todd Gloria in a statement released to the media. “While I disagree with the ruling, pursuing further litigation is not likely to achieve results for San Diego. I remain a stalwart supporter of the expansion of our Convention Center for its economic and civic benefits. The City Council will be a full participant in revised financing plans to ensure a project is completed.”

“Expanding the Convention Center is one of the most important actions we can take to grow our local economy and create thousands of new jobs for San Diegans,” said Mayor Kevin Faulconer in a statement. “This is an opportunity to put this litigation behind us and move forward with a successful plan.”

Faulconer indicated that all options are now back on the table, including the concept of a non-contiguous expansion that could include a new football stadium for the San Diego Chargers.

“I am pleased that my Council colleagues recognized that an appeal is not in the best interest of the city,” said City Councilmember David Alvarez, who had opposed the original expansion plan.  “We have a new opportunity to move forward with a better project, including a potential stadium site, and engage San Diegans in a citywide dialogue about how to build the best facility possible.”

Proponents of the expansion plan have lauded the potential for economic growth in the region that they believe a bigger, more modernized convention center will bring. City officials plowed ahead full steam with the controversial funding mechanism in 2012, perfectly aware of a possible adverse ruling against the plan in court. With no alternative in case of what opponents had always viewed as the inevitable negative outcome, the city now finds itself back at square one with no definitive ideas on how to move forward.

Both Faulconer and Alvarez cited the need for transparency as the city heads back to the drawing board, including public participation in any revised design and funding.

—Andy Cohen is a former NFL scout turned freelance writer based in San Diego, with an eye toward local, state, and national political issues.  Follow him on Twitter at @AndyCohenSD.