San Diego Finally Secures Hundreds of Millions for a Convention Center Expansion; But It Isn’t Expanding the Convention Center

After 20 years of failed signature gathering efforts, court battles and legally questionable efforts to raise hotel-room taxes, the city of San Diego has finally secured hundreds of millions of dollars for a long-planned expansion of the San Diego Convention Center. 

But city officials are not going to do it.  

Measure C promised to fund an expansion of the Convention Center, homeless services and road repairs. To date, the city has collected more than $29 million from Measure C but has kept the money in an account until it got official news from the courts. 

Now that the city is free to spend those dollars, Mayor Todd Gloria says the Convention Center expansion isn’t happening – at least not yet. Instead, the city will focus on updating and modernizing the current facility.  

Gloria said in a statement that the city cannot pursue any expansion until 2026. That’s because Fifth Avenue LLC, a company that rents the land adjacent to the center, sued the city back in 2017 for halting their plans to build a hotel there. 

But that’s not all. An expansion is going to cost a lot more now. 

“The Measure C money isn’t going to be enough to do what we need to do, it’s not going to be the full-blown project that was approved back then,” said Jessica Anderson, chief operating officer at the Chamber of Commerce and member of the board of directors for the Convention Center Corp. 

Anderson estimates that an expansion would cost $1 billion. That’s nearly double what the city estimated in 2017. The Independent Budget Analyst Office’s original price tag was $685 million. 

“In the intervening years, the pandemic reshaped the events industry and construction costs have risen significantly,” said Rachel Laing, a spokesperson for the mayor.   

She said the city, the Convention Center Corp., and tourism industry partners, would “work together to update the expansion and modernization plan, secure financing, and deliver a project that meets the evolving needs of the convention market.” 

Before the city can move forward with the expansion, it needs to wait for Fifth Avenue LLC’s lease to end. The city agreed to settle with the company if Measure C didn’t pass – which at the time it didn’t get the two-thirds vote needed for a special tax. In 2018, the city had to pay the company $5.3 million and walk away from the lease. As part of the settlement, there can’t be any movement on expansion. Fifth Avenue LLC pursued their latest hotel project back in 2020, but the port of San Diego quickly shut them down.   

The City Council also needs to introduce an ordinance that outlines timelines for the tax collection, and how it will be spent on Measure C’s priorities. It’s unclear when the ordinance will come to the Council.  

The city began collecting the hotel-room tax in May. The tax is higher the closer it is to the Convention Center, in three different zones. The city has collected more than $12 million from hotels closest to the center, more than $15 million from those further away and more than $614,000 from those furthest away.  

Fifty-nine percent of the money generated from Measure C will go toward the convention center for fiscal year 2026.  

But a lot has also changed in the last five years. Construction is more expensive, hotel room rates have increased, and the convention center has a backlog of repairs totaling $400 million.  

“We are encouraged by the decision and optimistic about what it means for the future, while recognizing there are still procedural steps ahead,” said Rip Rippetoe, president and CEO for the San Diego Convention Center Corp.  

He added that initial improvements to the convention center would include updates to the center’s electrical infrastructure and heating and air systems.  

There are also different permits required for the expansion. The CEQA and Coastal Commission approvals for the development are over a decade old, and will likely have to be revisited and reapproved.  

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