Allegis Development Services, Inc

Allegis project featured in San Diego Business Journal

SAN DIEGO BUSINESS JOURNAL

Chargers’ Option Play Not in City’s Game Plan
Sport: Team’s Proposal Ties Convention Center to Stadium

By Lou Hirsh

San Diego, September 16, 2013 (www.sdbj.com) – With the California Coastal Commission set to review the proposed $520 million expansion of the city’s convention center, the San Diego Chargers wan to change the playbook for boosting the region’s capability to host big events.

The Chargers, in a letter to the coastal panel, hae called for an alternative plan that would put a multiple-use facility in East Village, east of Petco Park, and combine event spaces with a new stadium for the Chargers.  The team envisions a project that would cost about $1.2 billion, targeting the site where it previously put forward a stadium-only proposal.

Such a move is vehemently opposed by expansion backers, including city officials and two prominent local business groups, who don’t want the long-delayed center expansion weighed down by the challenges of garnering public approval for investing in a football stadium.

Chargers representatives contend the city has not sufficiently considered alternatives for increasing conference space that are not directly contiguous to the waterfront convention center.  The team, which has not released any conceptual renderings, envisions a pedestrian- and transit-friendly complex that could also help the city snag major political conventions, concerts, Super Bowls and NCAA Final Four basketball games.  The team’s venue design consultant suggested a “flexible building” with a movable roof and seating to accommodate outdoor sports and indoor trade shows.

The convention center expansion plan, in the works for the past several years, has been approved by the Unified Port of San Diego, the City Council and local hoteliers.  San Diego hotels would foot the bulk of project costs through fees assessed on room bills.  The plan calls for adding about 220,000 square feet of exhibit hall space, 101,000 square feet of meeting rooms and 78,000 square feet of ballroom space.  The project also includes a rooftop park and plaza, retail areas and a relocated water transportation center.

The Coastal Commission, which has final say on waterfront projects, is expected to review the expansion proposal at its next three-day session in San Diego, scheduled for Oct. 9-11.  The Chargers have asked the coastal panel to consider its alternative, which the team contends would work better from an environmental and business standpoint.

“Indeed, from a development perspective the plan before the commission fails to capitalize on San Diego’s greatest assets and literally cuts the downtown off from its waterfront,” Chargers special counsel Mark Fabiani said in an Aug. 30 letter to the coastal panel.  “We believe this is both unnecessary and an inferior development choice.”

Comic-Con Being Courted

The lobbying of the coastal panel drew an immediate and unified response from San Diego city and business group leaders, who deem the project as submitted crucial to serving large national groups currently bypassing the local market in favor of bigger venues for their conventions.

“This plan is the result of an exhaustive process that has included input from countless stakeholders, most importantly the public,” said Todd Gloria, San Diego’s interim mayor, adding that there is an “overwhelming consensus” that the expansion is the best way to create jobs and other economic benefits fort the region.  “As it currently stands, our convention center is forced to turn away a year’s worth of business annually because there simply isn’t enough capacity.”

Gloria’s views were backed by the San Diego REgional chamber of Commerce, whose CEO is former mayor Jerry Sanders, and the San Diego Regional Economic Development Corp., led by CEO Mark Cafferty, who called the existing expansion plan “a top priority for San Deigo’s business community.”

Sanders said expansion represents as many as 11,000 new jobs for the region, including 7,000 permanent jobs, based on studies done by consultants during his mayoral term.

In a statement issued by Gloria’s office, Comic-Con International organizers also weighed in on the matter.  Spokesman David Glanzer said the proposed expansion would help the facility secure larger conventions and give it the ability to host several smaller concurrent events to benefit the local economy.

Comic-Con has been in San Diego since its debut in 1970 and now draws 130,000 visitors to the convention center over three days each summer.  Comic-Con has committed to San Diego through 2016, but organizers have been lobbied in recent years by several cities looking to steal it away, including Los Angeles, Anaheim, San Francisco and Las Vegas.

Hotel Expansion In Balance

Next door to the convention center, contingent on the expansion project proceeding as proposed, the Hilton San Diego Bayfront hotel has received approvals for a privately financed, $200 million expansion that would add a second tower with 500 rooms, along with meeting spaces to be built atop an existing parking structure.  The expansion would bring the Hilton’s room count to 1,690 — the most in San Diego County.

The Hilton project is being overseen by locally based Allegis Development Services Inc.  Construction of the hotel expansion would begin about six to eight months after the start of the convention center project, so the two facilities can open simultaneously, Allegis founder and President Kipland Howard said.  However, a hotel expansion of that magnitude would likely not happen anytime soon under the scenario put forth in the Chargers’ proposal.

“It probably would not make the same sense to build 500 new hotel rooms at once if an expansion of convention space takes place eight blocks away,” said Howard, noting the symbiotic relationship between the center and its closest large hotels.

Favoring Further Review

In a phone interview, Fabiani said the Coastal Commission is unlikely to give a formal review to the Chargers’ plan at its October meeting, but the team is hoping that the concerns it raises will spur the panel to send the project back to local officials for further review.

The team has been discussing financing options with Colony Capital LLC of Santa Monica, a private investment firm, and design options with sports-venue consulting firm Populous.  Both companies also submitted letters to the coastal panel, asking it to consider a multi-use facility.

Fabiani said the $1.2 billion cost of its proposal could be financed with a contribution of $400 million from the Chargers and the National Football League, and $600 million that otherwise would have gone to the convention center expansion.  Remaining construction and operating expenses could be supported by the sale or lease of the city-owned Qualcomm Stadium and Sports Arena sites.

While the convention center backers have targeted an opening for the expansion in late 2016 or early 2017, the start of construction will be impacted by the results of two pending private lawsuits challenging the financing mechanism on the grounds that it was not approved by voters.

The team would likely favor a public vote on the hotel room assessments contained in the current convention center financing plan, Fabiani said.