Tax increase is key to convention center expansion deal

SAN DIEGO -- Expanding the San Diego Convention Center just got one step closer to reality, thanks to a $33 million deal that now hinges on a voter-approved hotel tax increase.

The City of San Diego, Port of San Diego and Fifth Avenue Landing -- longtime port tenants who control a coveted 5-acre parcel of land on the bay -- came together Thursday to announce they've agreed on a deal that would allow the city to build another 400,000 square feet onto the convention center in the area.

Fifth Avenue Landing had long planned to build a $300 million hotel project on their bayfront lot, but now the City and Port may be able to use the site for their convention center expansion, at the cost of a $33.2 million pact with the developers.

But that all hinges on voters approving an increase in the city's hotel room tax from 12.5 percent to nearly 16 percent -- a citizen's initiative that is planned to go on the ballot in November. If the tax increase passes, the funds will help pay for the city's deal with Fifth Avenue Landing, and the convention center expansion will move forward. If the initiative fails, the group loses out on their $33 million payment, but can return to their original hotel development plan with the support of City and Port authorities.

But Mayor Kevin Faulconer is optimistic the expansion will move forward: "I know that voters in San Diego know how important this is and the benefits this will bring. It's incredibly important for our economy -- the jobs -- and it's not just for a few years. This is going to be an economic engine for decades to come."

Voters will have their say on the tax -- and on a slew of runoff elections -- in the November midterms.