San Diego Economic Development Committee Meeting - April 20, 2017

The Economic Development and Intergovernmental Relations Committee of the San Diego City Council met on April 20, 2017, to discuss three agenda items: the FY18 Tourism Marketing District (TMD) budget and a supplemental funding request, a mid-year update on convention center sales and marketing, and a presentation on the Blue Tech cluster by the Maritime Alliance. The committee approved the TMD item unanimously and heard updates on the other two items.

Consent Calendar

• The committee unanimously approved the record of action from the March 9, 2017 meeting.

Public Comments & Testimony

• Martha Welch (public speaker) spoke twice: first, she expressed confusion and criticism regarding MTS (Metropolitan Transit System) signage, uniforms, and use of funds, and questioned the TMD program. In her second comment, she opposed the TMD's use of funds, called for an audit, and specifically objected to the proposed Chinese market initiative, claiming it would increase noise and affect the airport.

Discussion Items

• Tourism Marketing District (TMD) FY18 Report and Supplemental Funding Request

  • Meredith Dibdin Brown (Economic Development Department) and Brian Hughes (SDTMD Corporation) presented the FY18 TMD budget of $40 million, with $37 million from assessments and $3 million from carryover. They requested a $3 million supplemental draw from the $29 million litigation reserve for three projects: Chinese market marketing, LA leisure market recovery, and Balboa Park promotion.
  • Councilmember David Alvarez questioned the ROI methodology, the opportunity/catastrophe line item, the Balboa Park program's ROI, and legal defensibility. He requested a city attorney opinion on the litigation reserve adequacy and additional information on the Balboa Park ROI before full council.
  • Councilmember Barbara Bree expressed support for the diversity of events and the focus on the Chinese and LA markets, but asked about the number of applicants turned down, the airport authority collaboration, and the integration of social media in LA marketing.
  • Chair Zap also raised questions about the TV advertising budget and the loss of SeaWorld co-op funding.
  • The committee voted unanimously to approve the item as moved by Alvarez and seconded by Bree, with the request for city attorney advice and additional ROI details on Balboa Park.

• Mid-Year Sales and Marketing Update – San Diego Convention Center

  • Gil Cabrera (Vice Chair, SD Convention Center Corp), Rip Ripto (President/CEO), and Joe Terzi (President/CEO, San Diego Tourism Authority) provided an update. They reported record-breaking room night bookings in FY15 and FY16, with FY17 slightly behind pace but expected to exceed the 860,000 room night goal. Lost business due to lack of space increased to 71% in 2017, indicating strong demand for an expanded center. The team projected an additional 300,000–400,000 room nights annually with expansion.
  • Councilmembers discussed the lost business analysis, holiday booking possibilities, and the potential impact of a TOT tax increase. The chair noted the information was useful for the contemplated expansion measure.

• Blue Tech Cluster Report – Maritime Alliance

  • Michael Jones (President, Maritime Alliance) and Greg Murphy presented the Blue Tech industry overview, highlighting San Diego’s $14 billion direct revenue and 46,000 jobs in the sector. They outlined recent initiatives: the Oceanology International North America conference (first in the U.S.), a U.S. Maritime Technology Export Initiative trade mission to Europe, and a planned ocean STEM career pathway program.
  • Several board members provided testimonials on how the Maritime Alliance helped them form international partnerships and attract customers.
  • Councilmember Bree emphasized the importance of rebranding San Diego beyond tourism to include ocean technology, and asked about challenges. The presenters cited lack of recognition and funding as key barriers.
  • Chair Zap committed to updating the Regional Maritime Vision and working with the alliance to find funding for a new economic impact study.

Key Outcomes

• Vote: The committee unanimously approved the TMD FY18 budget and supplemental funding request, contingent on a city attorney opinion on the litigation reserve and additional ROI information on the Balboa Park program before full council consideration.
• Directives: The city attorney’s office will provide confidential advice on the litigation reserve adequacy. The committee will receive updated ROI projections for the Balboa Park program.
• Next Steps: The TMD item will be forwarded to the full City Council. The committee will work with the Maritime Alliance to update the Regional Maritime Vision and explore funding for a new economic impact study of the Blue Tech sector.