Big businesses wait for wedge of San Diego convention center pie

Who owns the San Diego Bay?

— Ann Jarmusch, architecture critic of the San Diego Union-Tribune, calls the proposed convention center expansion "a disaster that robs the public of access to the waterfront. If Proposition A passes and the $216 million expansion project is built as planned by the San Diego Unified Port District, residents can wave farewell to most of the city's waterfront south of G Street.

"We won't be able to see San Diego Bay, smell it, or feel its breezes because of all the buildings between the downtown and the bay. Nor would we be proud of the expensive new building that would alarmingly contribute to a trend to wall off the bay.

"We are going to have to live with a monumental hulk of uninspired architecture and major design mistakes, many of them impeding public access to the waterfront.

"The architectural message we get from the proposed expansion is that San Diego doesn't care about design quality in its public works nor the impact of huge tourist facilities on a relatively small downtown and a ravaged urban waterfront."

San Diego television stations tell another story. In a series of commercials, the smiling faces of a much-beloved Catholic monsignor and a studious-looking, bearded young man identified as head of a "taxpayers association" assure the public that the proposal is "good for all of us" and will be built "without a penny to taxpayers."

Other than the paid spots and their glowing reviews, no word, either pro or con, about the proposal that has appeared up until the week before the election on local TV news broadcasts, except for an appearance two weeks ago by fallen ex-mayor Roger Hedgecock, a proponent of the expansion, on kusi, which gave $25,000 to the pro-Proposition A campaign war chest.

Nor have any of the five San Diego TV stations, which hold federal licenses that are supposed to require them to operate in the "public interest," offered any time to debate the only local proposition on the June ballot, a measure that if passed would obligate city taxpayers to make at least $400 million of debt payments over the next 30 years.

Instead, the nbc-owned station ran hours' worth of coverage promoting Seinfeld, the network's lucrative sitcom, and one station, owned by the powerful Tribune Co. in Chicago, doesn't even have a newscast.

To the question of whether it is fair to allow one side of a campaign to purchase hundreds of thousands of dollars of commercial air time and not provide at least some form of information from other perspectives, knsd general manager Neil Derrough says he's not required to provide any sort of coverage. "If people aren't able to raise any money to buy their own spots, then that usually says something," Derrough said in an interview two weeks ago. "At this point I don't feel that there's any reason to do anything. We're not in the business of giving free time away."

Thus, in San Diego, as elsewhere in today's American politics, money buys power. And if the Union-Tribune's Jarmusch is to be believed, it may soon buy what remains of the downtown waterfront -- if Proposition A passes. According to the campaign statements filed by both sides on the convention center issue, the haves have way more money than the have-nots. For the record, it is noted that the anti-Prop A forces have enjoyed the financial support of James Holman, this newspaper's editor and publisher. He has contributed $20,500 over the past seven weeks. Total contributions to the No on A group, Citizens Against Corporate Welfare, total $21,062. The balance was given in small amounts by retirees throughout the city.

Proponents of Prop A, on the other hand, have raised $782,239.88 on their way to their promised goal of $800,000 and perhaps well beyond. Three hundred seven thousand dollars has come from outside of San Diego, from a variety of corporations and industry groups, ranging from the $3 billion Alliant Food Service distributor of Santa Ana to Anheuser-Busch, owner of Sea World, to ges Exposition Services of Las Vegas, to the Newport Meat Company of Irvine, to Pacific Telesis of San Francisco, to Pardee Construction Co. of Los Angeles, to Promus Hotel Corp. of Memphis, to Southern Wine and Spirits of Cerritos.

Local corporations behind the pro-A forces include kusi, the television station owned by Michael McKinnon, which gave $25,000; San Diego Gas & Electric, which gave $25,500; Cox Cable, which holds a city-sanctioned cable TV monopoly; the Excel Legacy Corporation, a local real estate investment trust; and Coast Distributing Co., the local Budweiser distributor owned by one-time Republican congressional aide and politico Leon Parma.

None of these corporations, nor those on the list that follows, have before been identified with the convention center financing plan. Many have motives and agendas well beyond that of simple passage of the convention center expansion. None appear on the glitzy television spots or full-color brochures of the Yes-on-A campaign. But together they form a network of power so strong that they have achieved a stranglehold on local airwaves and opinion-makers. Whether or not it succeeds next Tuesday -- the same bunch of special interests can be counted on soon to be back for more.

Special Interests Line Up Behind Proposition A

Below are some of the special interests who are bankrolling the

Yes-on-A campaign and the amount each has contributed as of May 16.

San Diego Padres


Owned by John Moores and Larry Lucchino, two relatively recent San Diego transplants, the Padres are lobbying hard for a new $400 million stadium near the would-be site of the convention center expansion. A long-time friend of Bill Clinton and large political giver who was forced to testify to the Whitewater grand jury regarding his employment of Webb Hubbell (the former Clinton insider convicted of defrauding his former law partners), Moores has threatened to take his team to another city if a sufficient subsidy to build a new stadium can't be worked out. Although Moores is still in secret negotiations with the city council over the terms of the deal, one key is use property taxes paid by hoped-for construction of downtown hotels and office buildings near the proposed ballpark. Room taxes paid by those staying in the hotels would also provide part of the city's subsidy to Moores. Of course, if used to pay for a baseball stadium, the taxes wouldn't go into the city's general fund to pay for libraries, roads, parks, and other services for ordinary citizens. Defeat of the convention center proposal would thus deal a direct blow to Moores's financial interests.

San Diego Gas & Electric


The utility giant has more to gain from the convention center expansion than merely the extra electricity demand it would generate. sdg&e owns 11.5 acres in the path of the proposed downtown ballpark site between 7th and 11th and J and Harbor Drive, directly across from the proposed convention center expansion. "Our goal is to get the best return for our investment there," company spokesman Doug Kline told the Union-Tribune last month. "We are supportive of the Padres and happy to discuss this property with them." The paper also reported that deputy City Manager Bruce Herring said he and other top city officials expect to meet with (sdg&e) chairman Stephen Baum shortly to "commence negotiations," and that the company might trade some of the land for stadium-naming rights.

Michael Shames, who runs the nonprofit utility-watchdog group ucan, has another theory. "It's intriguing that sdg&e, a public utility, would give money, because the convention center and having more tourists come to town has very little bearing on electrical service issues. My sense is what we're seeing here is power politics, whereby the mayor scratched sdg&e's back by supporting its merger [with Southern California Gas], and now this [contribution] is payback. The city council supported the merger despite its own expert's testimony that indicated it would not benefit San Diego. Ultimately the agreement reached between sdg&e and the city was overturned by the Republican-controlled [California] Public Utilities Commission."

San Diego Chargers


Alex Spanos, the Stockton-based developer who owns the Chargers, has been a chief beneficiary of the city council's largesse. Mayor Golding and the council awarded his team the controversial ticket guarantee and the $78 million Qualcomm Stadium upgrade, along with effectively booting the Padres out of Qualcomm by turning over revenue sources like advertising fees exclusively to the football team. The city council also spent about $20 million on a state-of-the-art team training facility.

Today the team is said to want more than $20 million of additional improvements to the stadium, which are bound to raise questions of concealed cost overruns and require support by Mayor Golding and the city council. City insiders see a deal in the making. Chargers chief financial officer Jeanne Bonk sits on the board of the San Diego Taxpayers Association, the business lobbying group that once endorsed the controversial Chargers ticket guarantee as "a good deal, a fair deal, a very tough negotiated deal." This year, the taxpayers association is in the vanguard of the support for the convention center expansion. Other board members include Nancy Chase, a political consultant to the Yes-on-A campaign; David Nuffer, chairman of the San Diego Convention and Visitors Bureau; April Boling, treasurer of the Yes-on-A campaign; and Steven Cushman, chairman of the San Diego Convention Center Corporation board.



Another direct financial beneficiary of convention center expansion is television station kusi. A closely related corporation, McKinnon Broadcasting Company, owns an entire city block worth $4.2 million at 450 Second Avenue, virtually across the street from the convention center and the next-door Marriott Hotel and Marina. County records show that McKinnon Broadcasting, run by Michael Dean McKinnon, owner and general manager of kusi, purchased the property from an outfit called Coast Cable Partners in December 1996, just as the controversy over whether to build the expansion without a public vote was breaking out. Further development of the area with an expanded convention center and a new baseball park would add millions of dollars to the value of the Second Avenue parcel, which is currently a parking lot.

McKinnon is the son of Clinton McKinnon, a former newspaper publisher who was once the city's top Democrat. No stranger to political intrigue and wheeling and dealing, die-hard Republican Mike McKinnon was elected to the Texas state legislature in 1972 at age 30. He purchased kusi in 1990 from then-bankrupt United States International University for the distress price of $17 million. The independent station, with its lucrative lineup of Baywatch and Jerry Springer shows, is now said to be worth upwards of $100 million. Since buying the station, McKinnon has run an iron-fisted operation, directly controlling the newsroom by hiring and firing a series of newsreaders and morning personalities.

Solar Turbines


Yet another high-stakes player in the waterfront real estate game is Solar Turbines, a subsidiary of the giant Caterpillar Co., which has long yearned to convert its bayside factory, the publicly owned ground under which it leases from the port district, into more lucrative commercial development. Last September Union-Tribune columnist Neil Morgan reported that recently retired Solar president Morris Sievert said, "He thinks it's a waste of prime harbor-front property to keep Solar there. In 1974 he offered the Port a deal to move it, but 'There was zero interest. The commissioners loved Solar right there on the bay.'

"Years later Glen Barton, as Solar president, proposed a residential development on the site with Caterpillar funding. Says Sievert: 'Mayor O'Connor and Ron Roberts immediately shot that down, ostensibly because no local engineers or architects were involved. Now we can be sure Solar will be there for, I believe, another 25 years. So much for San Diego's vision of the future.' " With a friendlier port commission, including Golding insider and veteran city hall lobbyist Mike McDade, a chief spokesman for the convention center expansion, Solar thinks it has a big chance to resurface the commercial-use proposal. A favorable climate renegotiation would net the company at least $200 million in lease concessions that might not otherwise be granted.

Hyatt Regency San Diego


San Diego Marriott Hotel and Marina


It is no surprise that two hotels controlled by Douglas Manchester are the biggest single donors to Proposition A. Close friend and generous patron (both politically and charitably) of ex-mayor Roger Hedgecock and Monsignor Joe Carroll -- who are appearing in paid broadcast commercials for the Yes-on-A campaign -- Manchester would be the biggest winner if the expansion proposal passes. His hotels include the Hyatt Regency and the Marriott, the most direct beneficiaries of expansion. The former insurance salesman was a small-time developer when he first pitched the Marriott to the San Diego port commissioners in the 1970s.

There was no plan to build a convention center next door until the spring of 1983, when Hedgecock, newly elected in a special election to replace Pete Wilson, threw his weight behind his friend Manchester's proposal to have the port build the center next to the Marriott. Hedgecock told voters in an advisory election that the project would cost $95 million; it turned out to be closer to $215 million. Hedgecock was forced to resign after being convicted in a campaign contribution scandal; he became a radio talk show host. Using his new pulpit, he joined with Manchester in writing a self-published book touting Manchester's controversial and ultimately futile pet project to turn Miramar Naval Air Station into the region's commercial airport. Manchester and Carroll also go way back. Each summer, the hotel magnate, who now spends much of his time in his adopted hometown of McCall, Idaho, is a major patron of Carroll's St. Vincent de Paul's big society fundraiser. Last year's event, which raised $150,000, was held at Manchester's Hyatt Regency.

Busch Entertainment Corp. dba Sea World of California


The giant amusement park, which sits on extremely valuable public land next to Mission Bay, has at least two reasons to contribute to the Yes-on-A campaign. More tourists mean more business to the attraction, owned by a subsidiary of St. Louis brewing giant Anheuser-Busch. The park is also seeking city council approval of a lucrative lease extension and 16.5-acre expansion that has run into a sharks' nest of critics who claim that the deal is too sweet and thus unfair to local taxpayers. "There are three major problems we have with the deal," says Mission Bay activist Scott Andrews speaking for Sea World critics. "The first is it was negotiated in secret before the appraisal was even finished and has resulted in them paying only 3.8 percent gross revenues as lease payments. This is clearly a sweetheart deal that's under the going rate. Our second problem that we've discovered is that 86 percent of the runoff from their 75-acre parking lot flows untreated into the San Diego River and Mission Bay. Thirdly, the city says they are going to require a traffic study to be done by Sea World. They claim that their expanded park will attract another half million a year, which, coupled with the city's award of a public street to Anheuser-Busch, Perez Cove Way, will severely impact what is already terrible traffic that blocks access to the coast. The traffic study looks like it will be done after the fact."

Andrews also worries that Sea World's request to exceed the 30-foot height limit, which it is trying to qualify for the November ballot, means the company will attempt to build 16-story hotels and other disruptive attractions to wring even more money out of the city-owned property. Sea World's lease proposal is due to go to the full city council on Monday, June 8, just days after the June 2 election.

Turner Construction Co.


Turner, a giant New York builder, was awarded the contract to build the convention center expansion without competitive bidding. Instead, a small panel of city hall insiders, including then-city manager Jack McGrory, selected the firm, which was rubber stamped by the city council. The contract calls for establishment of a so-called "guaranteed maximum price" that the firm will not exceed but that hasn't been set yet. Thus, a city hall insider notes, the $216 million estimate of the cost of the expansion project "is an imaginary number." Once the final price has been set, the city council has the option of removing features from the project or adding to its cost. Veterans of the process say that the council would be hard-pressed to say no to cost overruns once the project was under way. They point to Turner's track record with other big projects, including expansion of Ohio's Cuyahoga County Jail, a project known as "Jail II." According to an account in the Cleveland Plain Dealer, a special county auditor there raised serious questions about how the company did business. "Almost from the beginning," the paper wrote, the auditor, James Stacy, "clashed with officials from Turner Construction Co., the senior firm in the TOZ [Turner-Ozanne-Zunt] partnership. At issue was what he considered Turner's failure to meet contract requirements and its incessant requests for additional fees." Stacy made his files available to the paper, which reported, "Those files show that before the Jail II project was a year old, Stacy began withholding payments to TOZ on the grounds that personnel supposedly assigned to the project were not actually on the site, as the contract required. He also complained that TOZ failed to provide a wide array of promised services, including safety monitoring and quality control. Subsequent memos refer to his having caught TOZ 'with its hand in the cookie jar.'"

The report continued: "So serious were TOZ's failures, in Stacy's view, that he accused the company of a 'total lack of concern for quality contract compliance and the public's best interests.' During one discussion about TOZ's claims, according to a Stacy memo dated May 1, 1990, Turner vice president Alfonso Sanchez said the company 'would be interested in securing my services as a consultant. I declined the offer,' Stacy wrote, adding that he did so again when Sanchez renewed it a few minutes later." The Plain Dealer also reported allegations that Turner had attempted to lobby county commissioners in an effort to increase its fees, quoting one of the commissioners as saying, "We were reluctant to interfere with what Stacy was doing, because he was trying to do our bidding" in holding down costs.

Waste Management


The trash-hauling giant went to court against then-District Attorney Ed Miller in 1992 after his office released a report saying that the company had ties to organized crime. Both Waste Management and its owner, WMX Technologies, denied Miller's charges that Waste Management "engages in practices designed to gain undue influence over government officials" and that the company's history "presents a combination of environmental and antitrust violations and public corruption cases which must be viewed with considerable concern." Miller won a lower court ruling against the firm's defamation suit. Conventions generate massive amounts of solid waste.

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