Weeks ahead of Comic-Con’s annual gathering, anticipated to attract over 135,000 attendees, a key cooling chiller at the San Diego Convention Center failed, leading to a nationwide search for a replacement.
After five days and more than $200,000 in expenses, a replacement chiller, approximately the size of an RV, was located, ensuring that Comic-Con 2023 could proceed as planned.
However, this incident is far from an isolated event, as operators of the waterfront facility warn that building failures are becoming increasingly common.
Recent incidents, including plumbing leaks during high-profile medical and tech conventions, underscore the center’s deteriorating condition. Just a few months ago, water leaked onto the exhibit floor during a meeting of orthopedic surgeons from around the globe.
With a portion of the center built in the late 1980s, the aging infrastructure is rapidly approaching a crisis point.
Once celebrated as a top venue for major conventions, the center’s reputation is now threatened, as its operators recently conveyed to elected leaders during a budget hearing.
Over the next five years, the San Diego Convention Center faces an astonishing $200 million in deferred repairs, with an additional $200 million needed over the next 20 years.
The future of the facility hangs in the balance without a clear consensus on how to fund these critical repairs, raising alarms among convention officials about the potential economic fallout on the regional economy.
Speaking to the City Council, Convention Center Corp. Chief Operating Officer Corey Albright emphasized the urgency of the situation, detailing the escalating service disruptions and repairs correlation to potential revenue losses.
“This facility’s failures can, and have, cost the city millions of dollars in taxes and economic impact,” Albright stated.
Immediate repair concerns include the replacement of a generator and the roof of the original part of the building, expected to cost around $10.3 million.
However, the most significant near-term project is the central plant that houses the facility’s entire heating and cooling system, estimated to cost a staggering $66 million.
Until now, the most apparent funding option has been a hotel tax hike approved by voters in 2020, which is currently under litigation but is already being levied by the city.
Known as Measure C, this tax increase was initially pitched as a way to finance a major expansion of the convention center, a project whose costs have ballooned beyond what can be generated through the additional revenue.
With the city of San Diego also grappling with a $350 million budget deficit this year, the timing of the convention center’s funding request is particularly challenging, leading to discussions of deep cuts across municipal services.
Convention center officials outlined four recent building failures during significant events, underlining the urgency of their case by referencing an estimated potential loss of $9 million in tax revenue from these conventions.
As awareness of the facility’s deteriorating state increases, future bookings could be impacted, they warned.
The convention center has scheduled 90 events over the coming year, with an anticipated ripple effect of $1.5 billion on the local economy, which includes $31.3 million in hotel and sales tax revenues.
“Clients frequently inquire about the city’s investment in its convention center, and our ability to provide assurance on that front directly influences their booking decisions,” Albright added.
Despite being a favored destination for organizations like the American Academy of Orthopaedic Surgeons, recent water leaks during their meetings led to some reservations about future events, as admitted by Paul Zemaitis, the academy’s director of live events.
While the organization is committed to returning in 2028 and 2029, they want assurances regarding the convention center’s improvements.
“The center has done their best during these incidents, but it affects not only the attendees but the exhibitors as well. We have offered to rally other clients to advocate for improvements with city officials,” Zemaitis remarked.
City Council members have discussed various funding options for the convention center, some with realistic potential, like launching another bond issue once the city concludes paying down a $12 million annual debt for prior expansions completed in 2001.
Councilmember Sean Elo-Rivera proposed that local hotel companies contribute directly to the convention center’s upgrades, criticizing them for relying on city resources while benefiting from events hosted at the center.
“This situation affects every booked hotel room and every packed restaurant. The functionality and appeal of the center are essential, yet the financial burden for essential upkeep continues to fall on the city and residents,” Elo-Rivera pointed out.
Currently, the convention center possesses cash reserves of $25.4 million, but these funds will dwindle quickly due to emergency repairs, with estimates projecting a balance of just over $5 million by the end of fiscal year 2027.
The city’s Office of the Independent Budget Analyst has suggested utilizing reserve funds in the short term while exploring the Measure C hotel tax increase as a longer-term funding source, which could generate roughly $48.6 million for convention center improvements next year.
The challenge lies in the fact that Measure C’s ballot measure was marketed primarily as a means to fund an expansion of the center alongside other priorities like homeless services and road repairs.
Councilmember Raul Campillo highlighted the urgency of addressing vital repairs to avoid compromising the safety of those using the facility and to prevent further damage to the center’s reputation.
“Delaying these repairs brings both short- and long-term costs. The reputation of the San Diego convention center hangs in the balance,” Campillo said eloquently.
As planning for the potential uses of Measure C funds is underway, clarity on how to access and utilize the funds remains uncertain, particularly without an established expansion project.
Attorney Michael Colantuono, representing Measure C’s backers, notes some degrees of flexibility in the allocation of hotel tax revenues but cautions against straying too far from the voters’ original intent.
“The measure allows the council to prioritize spending within a defined list of permitted uses, but significant caution is warranted to stay aligned with the voters’ expectations,” Colantuono explained.
Mayor Todd Gloria’s office is planning discussions with the Convention Center Corp. about moving forward to modernize the facility, given the increasing costs and changes in the convention business landscape since the pandemic.
Pursuing a design and financial plan will be imperative to upgrade the center while ensuring it remains an economic driving force for San Diego.
While San Diego remains a premier destination for convention organizers, particularly due to its climate and access, failing facilities raise concerns about the city’s overall appeal to future clients.
For example, recent inquiries from a group aiming to book a significant event in 2030 highlight these worries, as they requested information on upcoming renovation plans before committing.
If the convention center cannot provide satisfactory assurances, officials recognize they could face the risk of losing even major events to competing destinations.
Comic-Con International and Esri, a global mapping conference, have been loyal to the center but do not overlook the implications of ongoing facility issues.
With contracts in place for Comic-Con through 2027 and Esri through 2031, both organizations stress the importance of facility reliability.
Michele Cole, head of events for Esri, underscored the need for the city to support necessary upgrades.
“The convention center is a key economic driver for San Diego, and we expect that rejuvenation efforts keep pace with our events,” she emphasized.
David Glanzer, a spokesperson for Comic-Con, acknowledged the logistical challenges posed by aging infrastructure but expressed a commitment to remain in San Diego.
“We would be disappointed if expansion plans falter, yet it is essential to have the facility operating optimally. Any system failure during our event could have catastrophic outcomes.”
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