Initial Convention Center Development
The Port of San Diego, as an economic catalyst, fuels the San Diego regional economy with an impact of $10.6 billion. Over the last 25 years, the Port has invested more than $300 million directly to help make the Convention Center, an economic engine for the region, a reality. The Port funded the entire cost of over $200 million to develop the first phase of the center. This included approximately $165 million up front as well as approximately $50 million in other infrastructure and site preparation costs.
In return for the Port's $300 million investment, the Port receives revenue from parking under the Convention Center. The Convention Center does not pay market rent to the Port for the original site and Phase II expansion: It leases the site for $1 annually.
Convention Center Phase 2 Expansion Financing Arrangements
The Port advanced funds for the Convention Center's iconic Sail Pavillion (a $10 million interest-free loan) and participated in the second phase of the center at a cost of $90 million.
The Port District's 1998 Support Agreement with the City of San Diego requires 20 annual payments of $4.5 million. The final payment will be complete on June 30, 2014.
Proposed Convention Center Phase 3 Expansion
In December 2008, the Port entered into a Memorandum of Understanding with the San Diego Convention Center Corporation and Fifth Avenue Landing for the San Diego Convention Center Corporation to explore the feasibility of a hotel and a third phase expansion on the Fifth Avenue Landing site adjacent to Embarcadero Marina Park South, bayward of the existing Convention Center.
In 2008, the San Diego Convention Center Corporation entered into a purchase and sale agreement with the Port's tenant, Fifth Avenue Landing, to purchase its leasehold interest in 5 acres of land bayward of the Convention Center and Convention Way, adjacent to Embarcadero Marina Park South.
In April 2010, subject to the recommendation to the Mayor from the Task Force, direction from the City, and the Port District's consent, the San Diego Convention Center Corporation purchased the Fifth Avenue Landing leasehold for $13.5 million and has started a process with the Port to obtain entitlements for the proposed Phase 3 expansion project.
The Port Master Plan has very specific requirements for development of the hotel. The San Diego Convention Convention Center Corporation is investigating the possibility of expanding the hotel from 250 to 500 rooms and an expansion of the San Diego Convention Center. Any project to increase the size of the hotel and expand the Convention Center will require a new Environmental Impact Report and amendment to the Port Master Plan, which is subject to approval of the California Coastal Commission.
On April 6, 2010, the Board of Port Commissioners granted its consent to the San Diego Convention Center Corporation to acquire Fifth Avenue Landing's leasehold that was needed to pursue entitlements for the Convention Center's expansion.
The Board approved a resolution consenting to a $12.5 million Deed of Trust secured by the leasehold interest. Additionally, the Board granted an amended lease to the San Diego Convention Center Corporation that expires June 30, 2024.
An ordinance granting a new 20-year lease, with two five-year options to extend, to Fifth Avenue Landing for a water transportation center and land improvements was also approved.
Collectively, these actions provide a framework for the Convention Center to work with the Port to design and entitle the expansion project, including its environmental review.
The Mayor's Citizen Task Force estimated that the expansion is expected to generate $698 million of economic activity annually in addition to the $1.3 billion a year the Convention Center already generates.