What was the City Council thinking by trying to overturn a legitimate election result?
It wasn’t thinking. It was showing that it is utterly incapable of reading economic tea leaves.
First, the politics: The council recently voted to overturn a legitimate election result, similar to what Donald Trump has been trying to do. It wants a Trumpian recalculation. The defeat —and it was a defeat — of Measure C to authorize a special tax to expand the San Diego Convention Center did not meet the then-required threshold of a two-thirds affirmative vote to pass.
But, in an effort to overturn that result (as required by law and twice enumerated in the official ballot language), the council decided not to certify the result, and instead directed the City Attorney, Mara Elliott, to be complicit.
Inevitable and costly court challenges will result. An end run to justify easier taxation is illegal.
In City Hall, nobody is minding the store. And nobody is doing the math either. An unholy trinity of politicians, lobbyists, consultants, hoteliers and developers has overridden the public interest.
Here is the math: Prior to the pandemic, convention centers nationwide were so overbuilt that many centers, including San Diego’s, were cutting prices by 50% and uniformly losing money.
Then came the pandemic. The convention center business plunged even more, along with business travel.
Look at the post-pandemic forecasts within the industry. The American Hotel & Lodging Association forecasts that “business travel, which comprises the largest source of hotel revenue,” and is now “almost non-existent,” will plummet 85% through April of this year, and “then only begin ticking up slightly.”
In fact, business travel “is not expected to return to 2019 levels until at least 2023 or 2024,” the trade group says in its annual report.
And that is optimistic, says Heywood Sanders, author of the 2014 seminal book, “Convention Center Follies.” In an interview, Sanders said the convention center business may never come back to prior levels.
What happened to convention attendance last year? “COVID evaporated it,” says Sanders, the scholar who has written for several years that convention center overbuilding and technological change would clobber the industry. “In my heart of hearts, I don’t know if it will ever come back.”
Prof. Sanders implores San Diego to “do the math.”
The downtown establishment recently republished earlier predictions that hotel tax revenue could go up $6.8 billion with a convention center expansion.
That is a very outdated, pre-COVID projection. If business travel plunged 85 percent through April of this year and won’t return to 2019 levels until 2023 or 2024, how in the world could an expansion generate $6.8 billion in additional tax revenues?
That obsolete $6.8 billion figure should never have been republished and smacks of blatant disregard for facts.
San Diego’s convention attendance has yet to recover from the 2008 recession, says Sanders. Through the years, he has been contemptuous of forecasts made by so-called consultants hired by the local establishment and has been wary of reporting by major San Diego media, which historically have joined in the push for expansion.
Sanders points out that our neighboring competitor, Los Angeles, was forecast to have 20 citywide events and 240,000 attendees this year. But the current schedule has already shrunk to only nine citywide events and 65,000 attendees.
Also, Los Angeles is also now offering $1 million discounts until the end of 2024.
Sanders’s book exposes the obvious. The establishment pays consultants to forecast many more conventions and greater attendance numbers if a center is built or expanded. But, it seldom happens.
In today’s conditions, it may never happen.
A post-pandemic, remote-learning, Zoom and AI world has not only dimmed the need for crowd-filled meetings, work spaces, and gathering places, but has already slashed anticipated convention center revenues.
The economic downturn, already masked by massive federal and state stimulus bills, could accelerate at a pace incompatible with municipal finances, pension funds, street maintenance, libraries, schools, parks, bridges, and the like.
Prof. Sanders sums it up bluntly: “We’re in a very different world now.”
Don Bauder retired in September 2018 as a columnist for the San Diego Reader. He lives in Salida, Colorado. Colleen O’Connor is a retired college professor and native San Diegan.