The San Diego City Council and the Board of Port Commissioners each voted in support of a three-party settlement agreement this Tuesday to secure long term control of the land needed to expand and modernize the San Diego Convention Center using voter-approved funding.
The agreement, which allows the City to gain control of the site if a measure to fund the Convention Center expansion is approved by voters in November, sets up San Diego to complete its long-standing goal of growing the regional economy with a modern convention facility that attracts more tourism spending.
“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 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.”
The settlement agreement between the City, Port of San Diego, and Fifth Avenue Landing LLC (FAL), which has long held a lease on the property needed for the next phase of Convention Center expansion, calls for two alternatives to proceed. The scenarios are based on whether voters approve a citizens’ initiative to fund the expansion that is planned for the November ballot.
If the citizens’ initiative passes: The Port will purchase the existing leasehold from FAL for approximately $33 million (ahead of the fall election, the Port will make an initial non-refundable payment of approximately $5 million toward that amount). Also, if the initiative passes, the City will purchase a new leasehold from the Port with an 18-year extension through 2042 – with the ability to extend for a full 66 years if Convention Center expansion construction timelines are met – for a price of $28 million, funded with revenue from the citizens’ initiative. These transactions will be made in three concurrent installments over the course of 2019.
If the citizens’ initiative does not pass: the City does not make the $28 million payment to the Port, and the Port does not purchase the leasehold from FAL. Also, it the initiative does not pass, the City reimburses the Port for its approximately $5 million down payment to FAL, paid with money set aside in the City’s public liability fund for resolving litigation. And FAL can continue to seek Port approval of a hotel project at the site.
“The Convention Center Expansion is an essential project for regional prosperity, and the Port of San Diego is proud to support it. I am pleased that we were able to facilitate a deal with a long-time, good-standing Port tenant and a greatly valued Port member city to make it possible to expand the Convention Center,” said Board of Port Commissioners Chairman, Rafael Castellanos. “This is a smart and sensible deal that ensures that our waterfront land will benefit the public as much as possible.”