The Convention Center’s aging rooftop sails pavilion is inching closer to a long-awaited costly overhaul, thanks to the expected approval later this month of a state loan of more than $25 million.
San Diego, port and convention center leaders this week signed off on loan , a prerequisite for gaining approval from the California Infrastructure Economic and Development Bank, whose board is expected to act June 28 on the San Diego request.
If approved, the 25-year loan will clear the way for long-needed repairs that had been deferred until the Convention Center Corp. could identify funding that it was unable to cover in its budget. The city, unwilling to cover the costs, tly applied with the center for a loan from the state’s infrastructure revolving fund.
If authorized by the state board, San Diego’s $25.5 million loan would be the largest since the first IBank loans were doled out in 2000. Recently approved loans have ranged from a few hundred thousand dollars to a $25 million safe-drinking-water project in the city of Santa Cruz.
Of the four separate projects targeted for the convention center funding, the 27-year-old sails pavilion, which suffers from torn fabric and deteriorating fasteners and cables, is clearly the most expensive. If the loan is approved, the center would be obligated to cover yearly payments of $1.6 million over the next 25 years, with repayment expected to start in November. The city, however, has agreed to backstop the center in the event it’s unable to make a yearly payment.
A day after the City Council agreed to repayment for the loan, the Convention Center Corp. board on Wednesday voted in favor of the financing plan. In a memo to his board, budget committee chairman Gil Cabrera pointed out that “due to the significant cost estimates associated with these projects, self-funding without financing would have put significant strain on the corporation’s financial reserves and cash balances.”
Also voting this week in favor of the financing arrangement was the San Diego Port Commission.
The loan, should it be approved by the state, would cover the following repairs:
▪ Sails Pavilion ($18 million). Remove and replace the entire roof structure. Also included is the replacement of the concrete floor and rooftop chillers.
▪ Escalator modernization ($3.7 million).
▪ Cooling tower replacement ($1.6 million). Remove and replace five existing cooling towers.
▪ Replacement of the west building’s existing fire alarm system ($1.9 million).
Cabrera said he expects construction work to begin in November or December, with completion of the sails pavilion project targeted for January of 2018. The last scheduled repair, the overhaul of the escalators, should be finished by November of 2018, he said.
The advantage of the state infrastructure loan is that it carries a below-market interest rate — 3.59 percent — and it is a quicker, more easily accessible source of funding than going for a separate bond issue, Cabrera said. Even after the completion of the repair projects, the center anticipates more than $28 million in additional improvements and repairs over the next decade.
“That’s something we’ll have to deal with from our operating budget or the city’s,” Cabrera said. “We’ll do our best to tackle as much as we can within our operating budget, but we will likely have to come back to the city for assistance.”
As repair bills mounted in recent years, the Convention Center Corp. board hired a consultant in 2014 to explore the possibility of securing revenues from naming rights. It was estimated that some $22 million could be generated over the next 20 years, but so far no companies have signed on.
Concerns about the center’s deferred maintenance were even raised in a county grand jury report released last year.
The grand jury concluded at the time that an agreement between the city and corporation needed to more clearly spell out who is responsible for financial obligations.
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Twitter: @loriweisberg
