General Background on the San Diego Convention Center Expansion Scam

Protest Against San Diego Convention Center Project Labor Agreement

On November 15, 2012, workers protested the city’s backroom deal for a union-only Project Labor Agreement on the construction of the San Diego Convention Center Expansion Phase III.

Will You Accept Responsibility to Make Your Government Accountable to You?

Politicians, special interest groups, and rich businessmen have proposed various complicated schemes over the past several years in their quest to build and pay for a second expansion of the San Diego Convention Center.

Ordinary citizens of San Diego cannot follow or understand what is happening. This is a failure of democracy.

An outsider watching the proceedings to build the Convention Center expansion might conclude that rich old white businessmen and their friends own the Convention Center, and their private “San Diego Convention Center Corporation” runs the facility for their profit.

Actually, the convention center is on public land, the government collects taxes to fund construction and maintenance, the government borrows money for construction by selling bonds, contracts for construction and services are bid publicly, and decisions are made mostly by elected or appointed public officials. It’s YOUR facility.

This web site (www.sandiegoconventioncenterscam.com) is a resource for YOU. It provides you with a centralized source of critical information, with links to original source documents. It’s a check and balance to the government obfuscation and the publicly-funded promotional campaign to win popular support for the proposed convention center expansion.

Festering Controversies Concerning the Convention Center Expansion (Nine as of January 17, 2013; more to come)

SD Convention Center 51. Is there a legitimate public need for this expansion at a time of economic uncertainty and significant budget deficits and public debt at all levels of government? How should that “need” be identified and measured? Was proper consideration given to information from credible parties that are skeptical of the project?  Is this an appropriate time for local governments to sell bonds and take on what will ultimately be more than $1 billion in debt service?

2. Who will pay the $520 million (or more) for construction, along with the additional $500 million or more in interest payments?

3. How will the $520 million be obtained? Is the bizarre government entity formed to collect tax money legal or appropriate?

4. What was the murky procedure used by the city to select the company to design and build the convention center expansion? Was it fair to all bidders? Did it ensure the best quality construction at the best price for taxpayers?

5. How did trade unions win a Project Labor Agreement monopoly on construction of the convention center expansion? How did hotel and hospitality unions win a Memorandum of Understanding for organizing additional workers at the convention center? How did these labor concessions relate to the decision of union leaders to drop their extensive environmental objections and their lawsuits against the city’s unusual taxation scheme?

6. Does the Project Labor Agreement violate a city ordinance approved by voters?

7. Are the many environmental problems with the proposed project, as identified by the unions, still relevant, even though the unions have now abandoned their concerns?

8. Did a local government mistreat private property owners to get their land?

9. Among so many parties involved in this project, who is ultimately in charge?

Paying for the San Diego Convention Center Expansion

SD Convention Center 7The original construction of the Convention Center was approved by voters in 1983 and completed in November 1989 at a cost of $165 million for the Unified Port of San Diego, which owned the land. The Port paid for the facility in cash, thereby avoiding interest payments to wealthy Wall Street investors. (What a quaint notion!)

Twelve years later, an expansion of the Convention Center that roughly doubled the size of the facility was completed in September 2001 at a cost of $216 million for the City of San Diego. In June 1998, 62% of voters in San Diego approved Proposition A, which authorized the city to borrow money for construction by selling up to $210 million in bonds to investors.  The Unified Port of San Diego also agreed to contribute $4.5 million annually for 18 years for this first expansion.

After an attempt in 2011 to transfer the debt to a now-defunct redevelopment agency, the city is still paying off that debt, which today is about $200 million.

Construction for this proposed second expansion is estimated to cost at least $520 million, or more than $1 billion when interest is added to the principal amount of borrowed money.

Strange and Unaccountable Government Authorities

Here’s the current plot devised to pay for this massive construction project.

According to a resolution approved by the San Diego City Council on December 6, 2011, the city will borrow an amount not to exceed $575 million by selling bonds to investors. In addition, the city will pay back the principal and interest (and incurred financial transaction fees) to bond investors by creating a special government entity – the Convention Center Facilities District No. 2012-1 - to collect taxes from owners of property where hotels are located. The City of San Jose created a similar district, and a judge ruled in a “validation lawsuit” filed by the city that the plan was legal.

On August 2, 2011, the San Diego City Council hired the law firm of Orrick Herrington & Sutcliffe LLP to provide counsel in the formation of a Convention Center Financing District. Here’s a November 11, 2011 memo from the Orrick, Herrington & Sutcliffe LLP law firm answering some questions about the tax proposal. Note that the tax is levied on “the real property containing the hotel” and not on the hotel customer. The hotel does not have to pass-through the tax to occupants. Hotel occupants are not considered citizens of this district when they are leasing hotel rooms!

As approved at its December 6, 2011 meeting and ratified at its December 28, 2011 meeting, the San Diego City Council formed the Convention Center Facilities District No. 2012-1 and declared the need to incur up to $575 million in debt to fund the San Diego Convention Center Phase III Expansion Project. In addition, the city council also authorized a special election in which applicable landowners within the District would receive a ballot in the mail to approve the levy of the special tax and authorize borrowing up to $575 million for construction of the convention center expansion by selling bonds to investors. Staff estimated tax revenue of $36.5 million in fiscal year 2017.

Subsequently, the Office of the Independent Budget Analyst for the City of San Diego produced a report dated January 20, 2012 on how much in additional Transient Occupancy Tax revenue the city would obtain if the Convention Center was expanded.

At a January 24, 2012 meeting, the San Diego City Council held a public hearing and approved the special district and the tax levy. The tax levy was approved by 92% of the vote.

On April 10, 2012, a San Diego County Superior Court judge rejected a lawsuit filed by UNITE HERE Local Union No. 30 on February 24, 2012 and allowed the City of San Diego to file a “validation lawsuit” to determine the legality of the tax plan. The San Diego City Attorney then filed the validation lawsuit for the Convention Center Facilities District special tax and other authorizations on May 10, 2012. The case is called City of San Diego v. All Persons Interested in the Matter of the validity of the proceedings forming Convention Center Facilities District No. 2012-1, et al.

Under the terms of a November 8, 2012 settlement agreement with the City of San Diego, unions dropped all of their lawsuits regarding the Convention Center Facilities District and the tax plan.

Is it strange that the government entity that is collecting taxes for the project (Convention Center Facilities District No. 2012-1) does not have governing authorities selected by the designated electors of the district? Not only is this local government a strange example of taxation, but it is a strange example of a local government funding a public project without having any sort of authority, responsibility, or accountability for the project construction and maintenance.

You’re Already Paying for It!

SD Convention Center 9As authorized by the city council on November 8, 2012, the Convention Center Expansion Financing Authority will be selling $54.4 million in Special Tax Bond and Revenue Anticipation Notes, supposedly in February after the California Coastal Commission approves the project, to pay for $40 million in pre-construction work and $13.5 to buy marina property.

The Convention Center Expansion Financing Authority had a rating in May 2012 from Standard & Poor’s of A+.

It’s likely that millions of dollars have been spent already on the convention center expansion. For example, Resolution R-307710, which approves a Construction Manager at-Risk contract with Clark Hunt (a Joint Venture) includes $1,000,000 additional spending from the General Fund that is eventually supposed to be paid back through new bond sales. If an accounting firm was hired to untangle and compile all of the hidden costs (agency expenses and bureaucratic time) to promote and advance the convention center expansion, the public cost would probably be much higher. But no one with any power is going to commission such an investigation.

Shenanigans Surrounding the Financing of Construction for the Convention Center Expansion

Here’s just one example of the funding schemes going on. Former San Diego City Councilwoman Donna Frye presciently expressed her suspicions about the financing of the convention center expansion in her April 16, 2012 Voice of San Diego commentary entitled Will the Real City of San Diego Please Stand Up?

1. Frye noted that on April 10, 2012, the city council authorized borrowing $159 million through the sale of bonds to investors, in order to get money to pay off its existing bonds sold in 1998 to pay for construction of the first Convention Center expansion, completed in 2001.

2. At the same meeting, the city council approved an updated schedule of $226 million in payments expected from the Centre City Development Corporation (a redevelopment agency) to reimburse the city for payments on those same bonds.

3. A year earlier, at its March 29, 2011 meeting, the city council had entered into an agreement with the now-defunct Redevelopment Agency that obligated the agency to make annual payments through 2043 to “reimburse” the city for the principal and interest on the bonds.

4. Frye continued, “Because the Convention Center was not a redevelopment project to begin with, and in order to allow the Redevelopment Agency to use Centre City Project Area tax increment money to pay the city $226 million, both the city and the agency had to make certain findings showing that this deal was permitted (e.g., blight, financial distress, etc.).”

5. So the findings stated that, “There are no other reasonable means available to the community (i.e., the City) for financing costs associated with the Convention Center expansion for which the Agency proposes to pay” and “…the City does not have the resources to support the payments for the financing of the Convention Center Expansion Phase II in the Project Area over the life of these bonds.”

6. Frye then asked the following questions:

    • Is the city too broke to pay the debt service on its existing 1998 Convention Center bonds, or have things changed so dramatically that those payments can now easily be made from the city’s general fund, as they were from 1998 to 2010?
    • Are bondholders or rating agencies aware of the city’s statements about its inability to pay its existing Convention Center bonds?
    • How does the city “deem it necessary,” as it did on [January 24, 2012], to incur up to $575 million more in bond debt for a new Convention Center expansion, when it questions its own ability to afford its bond payments on the last one? (The $575 million does not include the interest payments on the debt service, which pushes the real cost to well over $1 billion.)
    • What happens if the state denies reimbursement to the city for the $226 million obligation placed on the Centre City Development Corporation in 2011 to pay off the bonds sold to fund the first Convention Center expansion?

Frye was truly astute in her commentary. Eight months later, in a letter dated December 18, 2012, the California Department of Finance informed the City of San Diego that it could not charge its redevelopment agency for the Convention Center bond payments, and therefore the state would not reimburse the city for the money committed from the redevelopment agency to the city under the 2011 agreement. New Mayor Bob Filner then warned that the city would have a potential budget deficit of $37 million in part because the state would not reimburse the city for the Convention Center bond repayments imposed on the Centre City Development Corporation in 2011.

Confused About Who Controls the Convention Center? Don’t Be Ashamed

The San Diego Convention Center is operated through a tangled collaboration of private interests, quasi-government entities, and public agencies. Cynics would claim this is deliberate. It’s easy to pass the buck – and hide the buck – when necessary.

Involved in the plan to expand the convention center are the following public and private entities:

1. Jerry Sanders, chair – Mayor of the City of San Diego
2. Jay M. Goldstone, vice-chair – Chief Operating Officer for the City of San Diego – he’s also Chair of the Board of Directors of the Municipal Securities Rulemaking Board (MSRB).
3. Wayne Darbeau, secretary – President and CEO, Port of San Diego
4. Lou Smith, member – 2012 chairman of the San Diego Unified Port District

The Convention Center Expansion Financing Authority had $200 million in debt service in June 2012 for repayment of money borrowed from investors through bond sales to fund construction of the first expansion of the Convention Center (completed in 2001).

  • The strange and questionably-legal Convention Center Facilities District No. 2012-1, a special district authorized by the San Diego Municipal Code to collect funding from hotels in the City of San Diego to fund the bulk of the Convention Center Expansion Phase 3. This district will levy taxes on landowners who own property in the City of San Diego upon which hotels with 30 or more rooms are located. This funding mechanism is modeled on a similar financing provision authorized under the Mello-Roos Community Facilities Act of 1982 (the “Mello-Roos Act”).
  • The Centre City Development Corporation, which functioned as a redevelopment agency for Downtown San Diego until the state eliminated redevelopment agencies in 2012. The San Diego City Council forced the CCDC in 2011 to assume $228.6 million in bond debt service for the San Diego Convention Center’s Phase II Expansion, despite a 7-0 vote of the board in opposition to the scheme.
  • The San Diego Convention and Visitors Bureau (ConVis), affiliated with the San Diego Tourism Authority, which has a multi-million dollar long-term contract with the San Diego Convention Center Corporation for sales, marketing, and promotion services.  March 20, 2012 meeting. It gets to appoint one board member to the San Diego Convention Center Corporation (SDCCC).
  • The San Diego County Hotel-Motel Association, a private interest group that gets to appoint one board member to the San Diego Convention Center Corporation (SDCCC).
  • Owners of the San Diego Hilton Bayfront Hotel, adjacent to the Convention Center, whose proposed hotel expansion project was included in the environmental reports prepared by the United Port of San Diego under the California Environmental Quality Act (CEQA) for the Convention Center expansion.
  • The California Coastal Commission, which has authority under state law to approve or reject the Convention Center expansion as an amendment to the Port Master Plan.
  • Fifth Avenue Landing, LLC, a “super-yacht marina” owned by Arthur E. Engel and Raymond A. Carpenter. The United Port of San Diego is obtaining this property with a “lease purchase” to accommodate the Convention Center expansion.
  • Clark-Hunt, a “joint venture” of two large national construction companies (Clark Construction and Hunt Construction) that won the Construction Manager at-Risk design-build contract for the Convention Center expansion. They are working with Fentress Architects, in association with John Portman & Associates and Civitas Inc., which won a design contract for the Convention Center expansion.
Subjective Award of Massive Design-Build Contract Reeks of Cronyism

Remember the good old days when California’s state and local governments advertised for contracts under clear guidelines and awarded contracts to the lowest responsible bidder? As stated at the beginning of the California Public Contract Code, it is important to protect the public from misuse of public funds, provide all qualified bidders with a fair opportunity to enter the bidding process, thereby stimulating competition in a manner conducive to sound fiscal practices, and eliminate favoritism, fraud, and corruption in the awarding of public contracts.

Under the standard or traditional model of public works construction in California, projects are built using a design-bid-build process in which design is handled separately from the actual construction. But the City of San Diego is authorized by law to use an alternative method of construction procurement called “design-build” for some projects, particularly large and complex ones. A 2010 memo from the Engineering and Capital Improvements Department explains how the City of San Diego chooses design-build entities using a multi-step process of evaluating qualifications and awards based on a somewhat subjective scoring system. The process often includes a Request for Qualifications (RFQ) followed by a Request for Proposal (RFP).

How did this happen? On November 3, 1998, 68.23% of San Diego voters approved Proposition F, which added Section 94.2 to the charter of the City of San Diego. That section authorizes the city to award public works design-build contracts to one entity based on predetermined selection criteria. That provision states the following:

…the City is not prohibited from awarding contracts for the combined design and construction of public works pursuant to a process of competitive negotiation, provided the process of competitive negotiation is conducted as may otherwise be required by this Charter or the Municipal Code. The City Council shall establish by ordinance guidelines for the award, use and evaluation of such design-build contracts, and may set an amount below which the City Manager may award such contracts.

After meetings with the San Diego City Attorney, city staff, and representatives of the local construction industry, the city council then adopted Ordinance Number O-18696, which added Section 22.34 (Alternative Procurement of Design-Build Contracts for Qualifying Complex Public Facilities) to the San Diego Municipal Code. This provision lists guidelines for the use, award, and evaluation of design-build contracts for public works projects.

In February 2003, the San Diego City Manager provided the Natural Resources and Culture Commission with Report 03-036 on city contracting using the design-build procurement method. Then city staff sought to use another alternative bidding method. In October 2003, the San Diego City Manager provided the Rules Committee with Report 03-209 recommending that the city ask voters to authorize the award of design-build public works contracts using the Construction Manager at-Risk procurement method. On March 2, 2004, 50.1% of San Diego voters approved Proposition B, which added Section 94.4 to the charter of the City of San Diego to authorize the Construction Manager at-Risk procurement method.

The city followed a two-stage process to select the design-build contractor, the first being an RFQ and the second being an RFP (Request for Proposals). A selection committee managed the entire process and made a recommendation to the San Diego Convention Center Corporation (SDCCC) to vote on approval of the contract. SDCCC selected Charles Black, the founder and president of CB Urban Development, to serve as project manager for the proposed expansion, assisting the SDCCC executive management team and the San Diego Unified Port District staff to manage the 18-24 month Entitlement, Environmental Impact Review and California Environmental Quality Act process.

In August 2012, Black joined Gafcon Inc. “to launch and lead the firm’s new public-private partnership services as managing director.”

On October 1, 2012, the San Diego City Council awarded a Construction Manager at-Risk design-build contract for the San Diego Convention Center Phase III to a joint venture of Clark Construction and Hunt Construction.

While many experts in the construction industry point out that Construction Manager at-Risk, design-build contracts, and best value bidding criteria have potential to save money for taxpayers and reduce hassle for government agencies, the most significant danger from this approach is that it gives an opportunity for people to manipulate the scoring criteria in order to obtain a desired outcome for contract awards.

Union “Greenmail” – Making a Disgusting Deal with Extortionists

It was known for years that the San Diego County Building and Construction Trades Council planned to use CEQA to delay construction of the convention center expansion until it obtained a union monopoly on construction with a Project Labor Agreement. The plans were documented in a March 2011 article It’s Out in the Open: Project Labor Agreement a Costly Possibility for San Diego Convention Center Expansion.

Sure enough, it happened. In several hundred pages of submitted letters and exhibits, the San Diego County Building and Construction Trades Council and UNITE-HERE Local Union No. 30 in San Diego identified numerous problems with the United Port of San Diego’s draft environmental impact report and final environmental impact report for the convention center expansion.

See the May 2012 union comments for the draft Environmental Impact report on the San Diego convention center expansion and the September 2012 union comments for the final Environmental Impact Report on the San Diego convention center expansion.

Read an account of the outrageous incidents that occurred at the September 19, 2012 meeting of the United Port of San Diego Board of Port Commissioners, where union leaders and their law firms brazenly pulled a “document dump” in front of the city’s civic leadership: Unions Threaten Environmental Litigation to Block San Diego Convention Center.

Yet all these environmental problems disappeared (except for some minor environmental mitigation in three settlement agreements between these unions and the City of San Diego) once contractors were required to sign a project labor agreement with unions as a condition of working on the project and unions won a memorandum of understanding expanding the unionization of the convention center workforce.
Press Conference for Scam DealThroughout all of this, the city’s civic leadership pretended it wasn’t happening. Then, Mayor Jerry Sanders (who was about to leave office) held a press conference on November 8, 2012 with the county’s top union official Lorena Gonzalez (who was planning a campaign for a California State Assembly seat) essentially to announce that the union environmental extortion “greenmail” was effective. The unions made “deals” with the City of San Diego and the prime contractor (a joint venture of Clark Construction Group and Hunt Construction Group) for the San Diego Convention Center Expansion, Phase 3.

Here are the deals:

News coverage of the deals:

San Diego Voters Enacted a City Ordinance Prohibiting Project Labor Agreements, but Someone Advanced a Scheme to Exploit an Alleged Loophole in the Law 

In June 2012, 58% of San Diego voters approved Proposition A. Proposition A enacted an ordinance to prohibit the City of San Diego from entering into contracts that require construction companies to sign project labor agreements with unions as a condition of work.

Somehow, the city selected a design-build contractor (Clark Construction, in a joint venture with Hunt Construction) that just happened to “independently” negotiate and sign its own special project labor agreement with the unions, thus evading Proposition A by making it look like it was a simple business decision to give unions a monopoly on the construction. Clark Construction has a record of signing project labor agreements behind the scenes when union special interests are twisting the arms of public officials and business leaders.

Significant Environmental Issues (Identified by Unions) Remain with the Project

At least one lawsuit has been filed because the United Port of San Diego’s Environmental Impact Report was inadequate. This is no surprise, because unions hired a team of lawyers and experts to nitpick the report and find dozens of problems, some of them quite fundamental.

It’s ironic that just when the unions dropped their concerns about how an assumed future rise in sea levels (caused by global warming) would submerge the convention center expansion in sea water, the Port and other local officials acknowledged that not enough had been done to consider a future rise in sea levels. KPBS news (in San Diego) reported on November 15, 2012 that Flood Maps Raise Questions About Convention Center Expansion.

As shown in comments starting on page 35 of this document, unions were aware of this danger and included it in their objections to the draft Environmental Impact Report. But the unions did not include mitigation to address sea level rise in their settlement agreements, as reported in San Diego Union Officials Ignored Global Warming-Related Sea Level Rise in Environmental Settlements for San Diego Convention Center Expansion, Despite Identifying It as Major Deficiency Under CEQA.

Few People in San Diego Are Willing to Criticize the Convention Center Expansion

Politicians, business leaders, community groups, and the news media crow about the convention center as a powerful “economic engine” and warn that comic book fanatics might gather in Las Vegas if the convention center isn’t expanded. But ordinary people are muttering that insider deals seem to be going on. They don’t trust the relentless public relations machine that pops out the platitudes without any critical analysis from outside independent sources. They distrust the proposed financing structure with its incomprehensible web of money and authority transfers. Along with YOU, people suspect that they’ll end up paying the bill for this construction project, while the One Percent grow even richer off of it.

San Diego is a city of 1.3 million, but a relatively small group of organizations and individuals control many of the decisions for the future of the city. And for most of these people, the $520 million San Diego convention center expansion represents civic pride and an opportunity to make a lot of money. People who dare to criticize the plan too aggressively risk compromising their professional and social status among the city’s political and business elite.

How tightly connected is this group? For example, here is a December 19, 2012 profile in the Voice of San Diego of a San Diego civic leader, described in the headline as a “Man of Influence.” No kidding. He is past president of a major regional hotel association [the San Diego County Hotel-Motel Association] and the San Diego Convention Center Corporation, and a past board member of the San Diego Regional Chamber of Commerce and the Convention Center and Visitors Bureau. He is also a major donor to various local politicians. (Note: he is opposed to the planned tax financing method to fund the convention center expansion.)

In January 2009, Mayor Jerry Sanders created the Mayor’s Citizen Task Force on the Convention Center Project with a mission to “evaluate and recommend to Mayor Sanders the necessary steps required to ensure San Diego’s ability to protect and expand local jobs and retain and enhance its current market position in the convention and meeting industry.” This project appears to have been arranged and managed through the San Diego Convention Center Corporation. Here are Mayor Sanders’ appointees to the task force:

SD Convention Center 10The final report from the Mayor’s Citizens Task Force  – approved on a 15-1 vote – included a few critical remarks from the public, including someone who contended that “no viable market exists for an expanded convention center for the foreseeable future” and someone who asked that “additional individuals and organizations be identified who might take a more balanced position and be asked to present to the Task Force.”

At the end, under the header “Convention Center Critic on San Diego,” the report references “the most vocal critic of publicly funded convention centers, Dr. Heywood Sanders of the University of Texas at San Antonio.” As stated in the report, “…when asked by Task Force members about San Diego Convention Center’s relative performance against its competitors, characterized San Diego as a “conundrum,” because it did not fit his profile of failed or failing convention centers across the country.” The report also notes that in 2004, Professor Sanders identified Las Vegas and Orlando as two cities that have successfully expanded their convention business, with New Orleans, Anaheim, and San Diego as a second tier of cities that seem to be able to expand their convention business.

As reported in an August 29, 2009 Voice of San Diego article Prof: I Was ‘Thoroughly Mischaracterized,’ Professor Sanders did not appreciate how his comments were disparaged and twisted out of context. Convention Center spokesman Steve Johnson responded with “He’s a whack job” and “dismissed Sanders’ criticisms of his portrayal and the task force’s conclusions, saying Sanders had his chance to answer questions from the task force and chose not to.”

Powerful politicians, agency appointees, and business interests have financial resources and professional staff to roll over opponents with that public relations message. Notice the lack of critical voices in the presentations to the Mayor’s Citizen Task Force meant to review and evaluate the feasibility of an expansion to the current Convention Center and related developments or enhancements. For example, were there any credible, informed skeptics of the San Diego Convention Center Project at the San Diego Convention Center Corporation’s July 17, 2009 Public Information Forum, featuring these Project Team Members?

  • Brad Gessner, general manger, San Diego Convention Center Corporation
  • Steven Johnson, vice president public affairs, San Diego Convention Center Corporation
  • Charles Black, project manager – CB Urban Development
  • Tom Delaney, manager, Design Team Selection Process
  • Shahriar Afshar, Real Estate Dept. – SD Unified Port District
  • Leslie Wade, facilitator – Wade Communications, Inc.

One problem with the analysis of large civic projects such as sports and entertainment facilities and convention centers is that there is no viable market for independent experts to produce economic studies showing they are an unwise investment of public resources. Activist opposition to these projects is often centered on neighborhood groups and taxpayer associations that can’t provide $100,000 grants to consultants, think tanks, and professors to perform the necessary research and provide a professional critical perspective.

Justification for the Convention Center Expansion came primarily from these documents:

  1. AECOM: Market, Feasibility & Impact Analysis for the Proposed San Diego Convention Center Expansion (May 26, 2009)
  2. Convention Center Expansion Hotel Projects presentation by Piper Jaffray Hospitality Finance Group (an investment bank) (June 15, 2009)
  3. Meeting Presentations and Documents Provided to the Mayor’s Citizen Task Force on the San Diego Convention Center Project (February through August 2010)
  4. Mayor’s Citizen Task Force on the San Diego Convention Center Project – Final Report (September 2009)
  5. AECOM: Refined Analysis of Additional Business Capture Derived from a Potential Expansion of the San Diego Convention Center (November 15, 2010)

Occasionally there are glimpses of the truth as special interests make their cases to get some of the largess. Murtaza H. Baxamusa, an official for a union-owned housing project and the former Deputy Director of the union-oriented think tank Center on Policy Initiatives in San Diego, published a report in January 2012 entitled Where are the Jobs? Employment Impact of the Proposed Convention Center Phase III Expansion Project. He examines the original 2009 AECOM consultants’ claim of “7,000 new jobs” resulting from the expansion and concludes that it would actually create about 4,500 permanent jobs, many of them in low-wage occupations in the hotel and food service industries. He also claims that “the expenditure of $550 million on construction is expected to create 3,800 construction jobs paying prevailing wages. However, due to the temporary and transient nature of construction industry, about a third of the jobs are likely to be uninsured.”

The report states that “Murtaza H. Baxamusa, Ph.D., AICP is the Director of Planning and Development at the Family Housing Corporation, San Diego Building Trades; and an adjunct faculty at the Sol Price School of Public Policy, University of Southern California. The views in this report are solely those of the author and do not represent the organizations.” Obviously this report was funded by a party interested in advancing the case for a Project Labor Agreement on construction of the convention center expansion and in expanded unionization of the convention center workforce. But are the claims valid about erroneous economic assumptions to justify the expansion?

Don Bauder, a writer for the San Diego Reader who is frequently critical of downtown business interests, has dared to report that the economic assumptions for the San Diego Convention Center expansion are inaccurate. See below.

More San Diego Convention Center Lies - San Diego Reader - September 5, 2012

So in 2009, San Diego uncharacteristically invited a scholar to address the committee whom Erie identifies as “the ranking expert in the field”: Heywood Sanders. Steve Erie, political scientist at UCSD, called the Convention Center committee “a stacked deck…it’s conclusion was forgone.” That expert immediately told two officials of the convention center that its statistics were “seriously inflated,” recalls Erie, who overheard the conversation…The downtown boosters permitted Heywood Sanders to talk for a brief period. One committee member sneeringly asked if the professor had ever been inside a convention center. Steve Johnson, the public relations director for the center, called Heywood Sanders “a whack job.”

Auditor Confirms It: Convention Center Attendance Figures Misleading - San Diego Reader - August 21, 2012

This article reveals that the City Auditor investigated a December 16, 2011 complaint alleging that “the San Diego Convention Center Corporation (SDCCC) has been misstating the number of hotel room accommodations for conventions in their public reports.” According to a memo dated August 21, 2012, the San Diego City Auditor found “the allegation that the SDCCC [San Diego Convention Center Corporation] has misstated the actual hotel-room night totals to be substantiated.”

The Convention Center Liars - San Diego Reader - December 14, 2011

This article reports that Heywood Sanders, a professor of public administration at the University of Texas at San Antonio and best-known critical analyst of the convention center business, “discovered vast discrepancies in San Diego Convention Center numbers,” including the exaggeration of hotel room stays, tax receipts, and other statistics.

Professor Tells How Convention Center Stats Grossly Mislead - San Diego Reader - August 30, 2009

Heywood Sanders, professor at the University of Texas at San Antonio, and the ranking national authority on convention centers, has read the draft report by the mayor’s task force purportedly studying convention center expansion, and concludes is it full of dubious statements based on distorted statistics. He says that the heralded growth of convention center business is based almost entirely on the growth of Comic-Con.

Cities Competing Over Convention Centers: Who Decided to Run This Race Over a Cliff?

All over the country, fiscally-struggling cities are pouring scarce public resources into building and expanding convention centers to get an advantage over other cities in competing for convention business. The conventional wisdom is “we must add more space or trade shows will go to other cities.” Advocates for the convention center expansion classify San Diego in a “competitive set” of convention destinations that includes Los Angeles, Anaheim, Phoenix, Atlanta, San Francisco, Orlando, New Orleans, Las Vegas, and Chicago.

The ballot argument in support of Proposition A (June 1998) claimed that “Our Convention Center cannot accommodate larger conventions, which are being lost to convention centers in Los Angeles, San Francisco, Anaheim and Las Vegas.” Some things never change!

Ultimately, can there be any winners in this competition? How about competing based on quality rather than quantity?

What is needed is a chart of the top 100 cities in the United States ranked in terms of convention space, with the amount of current available exhibit hall and meeting room space listed in a column, the amount of exhibit hall and meeting room space now under construction listed in a second column, and the amount of exhibit hall and meeting room space proposed for construction listed in a third column.

Does This Convention Center Benefit YOU as an Ordinary San Diego Citizen?

What’s the purpose of this $520 million scheme? To make the “One Percent” or the “Crony Capitalists” even richer while “creating” some low-skill service jobs for a relatively transient population?

Consider the amount of time and money that governments of the people have already and spent and will spend on the San Diego Convention Center expansion.

Consider the amount of news coverage to date about it, eclipsing issues of grave importance.

Imagine those resources instead spent on addressing issues of traffic, safety, poverty, and homelessness, or even some of those resources being retained by you – the taxpayer – to make the expense of daily life a little easier to bear.

Consider that the number #1 reason cited to justify a $520 million expansion of the San Diego Convention Center is that failure to do so may jeopardize San Diego’s future in hosting an event centered around comic books.

And no one dares to suggest any of this is absurd.

Do you wonder why some people see the United States as a nation in decline?

###

4 comments

  1. I have not had a chance to review all the material here, but it rings true, based on my experience and history with our San Diego Convention Center. This is an awesome effort to open this taboo subject to media scrutiny. The media and the downtown hotels profit mightily from this subsidy, but most San Diegans have little or nothing to show for it.

    Even if a detail or two on this website is not totally correct (and I have no indication that such is the case), this is FAR more truthful than the lies that have surrounded the convention center juggernaut up until now.

    Don’t get me wrong — the business of conventions IS good for the city. But the degree of the taxpayer subsidies and political skullduggery surrounding this project make the whole giveaway suspect.

    Not covered in this website (yet) is the OPERATION of the Convention Center, a hugely inefficient, union-dominated mess approaching the crooked operations of the old New York dockworkers racket.

    IF port and city politicians gave a hoot about taxpayers, we’d have contracted out this operation long ago. But they don’t — not when it’s below the radar as far as the media is concerned.

    • Mr. Rider:

      Thank you for your encouraging words about http://www.SanDiegoConventionCenterScam.org. It’s an honor to be recognized by one of the inaugural inductees into our Scam Busters Hall of Fame.

      As you would expect, research for this massive public information project was difficult and time-consuming. New issues continually came to light. We wanted to hyperlink to primary source documents whenever possible.

      We hope people who see errors or omissions on this web site will inform us, so we can correct them.

      Also, we are withholding some of the most stunning information until we can release it for maximum public attention. There are a lot of people in San Diego disgruntled about this project for many reasons.

      Your claims in the mid-1990s about the proposed first expansion of the Convention Center were mocked by many, but you were correct, and we intend to vindicate you. A researcher will be contacting you directly to get your court filings and other public documents that were so prescient in warning San Diego citizens about it. We want to post them here, with analysis.

      Virtually NO ONE among ordinary San Diego citizens knows that the city owes $200 million in debt from the first Convention Center expansion project. Add the $575 million authorized now plus interest, and that is about $1.2 billion for the city’s children and grandchildren to pay off.

  2. Mark Stephenson says:

    I have reviewed this site and I would like to thank you for a professional, factual and substantiated presentation on this issue. Torrance is moving in the same direction as they have announced an intial exploratory analysis into a possible convention center. Your reasearch into the legal manipulations in order to get the PLAs implemented will be of immense value as I protest the continual misallocation of taxpayer resources to the collective bargaining elements here in Torrance/South Bay and CA. I am not sure where you live or reside but I have reviewed your Dayton Public Policy Institute material also and I sincerely appreciate your efforts in providing an in depth analysis of the different techniques that local politicians and unions use in order to inappropriately increase our taxes for their sole benefit. I would be keenly interested in having an opportunity to discuss some of your research in more detail as there is a budding group of us engineers/professional mid level managers that are moving into the local political arena to do battle against the information and procedural manipulation of our taxpayer funding requirements…….”Thank you for all of your time and effort in providing this public service.”

    • Administrator says:

      Mr. Stephenson:

      Thank you for your positive comments. My advice to any California cities looking to attract visitors is to focus on promoting and enhancing what is most characteristic about the city, rather than joining the herd for more convention centers, sports arenas, etc. I think about the Stockton Arena that opened in 2005 and consider all of the other options that bankrupt city could have used to promote its strengths, such as its beautiful but neglected historic downtown buildings.

      For more information about how unions exploit the California Environmental Quality Act (CEQA) to win labor agreements, see the web site http://www.phonyuniontreehuggers.com.

Leave a Reply

Your email address will not be published. Required fields are marked *