Faced with a potential $20-million cost overrun, the San Diego Unified Port District on Tuesday voted to rebid the waterfront convention center project--despite warnings that doing so could result in a 10-month delay and the loss of tens of millions of dollars in convention business.
The port commissioners unanimously rejected six construction bids that came in last month more than 20% above their $101.5-million budget, and directed the convention center’s architects to begin preparing minor design changes aimed at cutting the project’s cost. Port Commissioner Bill Rick abstained from the vote because his engineering firm has done work for one of the bidders.
Port officials acknowledged that the rebidding could postpone the convention center’s target opening date from mid-1988 to the spring of 1989--a delay that the San Diego Convention and Visitors Bureau (ConVis) estimates could cost more than $60 million in lost convention business. The proposed design alterations are expected to be completed in about four months; the rebidding process itself will require two additional months, and the construction period could be lengthened from 26 to 30 months if the added time results in significant savings.
Tuesday’s decision was a major setback to local tourism industry officials and downtown business leaders, who had lobbied vigorously for the Port District to proceed immediately with construction of the 1.4-million-square-foot center despite the higher-than-expected cost. While they agreed that rebidding could cut construction costs, those officials emphasized that the resulting delay in the center’s opening would force the cancellation of already-booked conventions, offsetting any initial savings.
The commissioners admitted that they were distressed by the prospect of lost convention business and yet another delay in a troubled project already six months behind schedule, but they ultimately followed a special task force’s proposal that the project be rebid. Last week, the San Diego City Council also unanimously recommended that the project be rebid.
Although port officials did not estimate Tuesday how much could be saved through rebidding, a separate task force appointed by acting San Diego Mayor Ed Struiksma suggested earlier this month that rebidding could save about $10 million.
“It’s an unfortunate situation, but we’ve got to keep testing this thing against what we perceive the public interest to be,” Rick said. “And the public interest demands that we admit that there was confusion, that there was haste . . . when bids went out the first time. This does mean a delay, but it also probably means less cost.”
Because of numerous design changes during the final stages of last month’s bidding process--bids were solicited when the design specifications were only 60% complete--some officials have speculated that the firms that bid may have inflated their figures as a safeguard against unexpected expenses or construction problems. If that theory is correct, a second round of bidding, which port attorney Alan Perry said will be “a cleaner and simpler process” than the first, could result in lower construction price estimates.
Additional savings may be achieved through the port’s recommended minor design changes, including items such as revision of an exterior elevator, modification of exhaust stacks, removal of inactive louvres and the use of standard cement rather than special colored cement.
While those changes are considered relatively minor in terms of the project’s overall scope, the alterations could be costly for the convention center’s architects, who, under their contract with the port, must redesign the plans at their own expense. Ward Deems, the local architect who heads the project’s three-firm architectural team, said he was uncertain how much the changes would cost in terms of staff time and other expenses. But he added: “Whatever it is . . . it’s way too much. We’re profitless on this project as it is.”
In their vote, the commissioners specified that the new bids will not be solicited until excavation on the 11-acre Navy Field site is complete and city building inspection consultants have finished their review of the project. Following months of delay caused by severe water drainage problems, port officials have given HuntCor Inc., the Phoenix-based firm handling the excavation, an ultimatum to complete the digging by June 4, Perry said. The city’s review also may be completed by that time, port officials said.
Earlier Tuesday, more than two dozen people testified about the project during a special port meeting at a Harbor Island hotel, most of them encouraging the commissioners to immediately proceed with construction.
Reiterating the tourism industry’s concerns about the financial impact of a delay, ConVis chairman Allan Frostrom warned that even a four-month postponement would result in the loss of 25 conventions and $40 million in convention business. An eight-month delay would cost about $63 million, while a one-year postponement would produce a loss of more than $88 million, including nearly $6 million in potential city taxes, Frostrom added.
“Very frankly, San Diego is developing a major credibility problem in the convention market,” Frostrom said. Other cities, he noted, “are losing no time in telling (convention bookers) that San Diego cannot get its act together.”
“Whether the action you take is to accept the existing bid or to request new bids, that decision must be decisive and unequivocal,” Frostrom said. “It must say to the convention market: San Diego is going forward. A convention center will be built. It will be completed, come hell or high water, by whatever date you pick.”
Other speakers warned that delaying the center’s opening could financially harm downtown businesses and the more than 80,000 San Diegans who work in tourist-related industries. A handful of hotel maids, bellhops, cabdrivers and restaurant workers attended Tuesday’s meeting, loudly applauding those who spoke in favor of the center’s immediate construction.
“These hourly workers . . . are the ones who really benefit from a convention center,” said Steve Weathers, the son of a cabdriver.
Those who favored rebidding the project included Gary Aguirre, one of three local lawyers who filed a lawsuit against the port aimed at ensuring that public funds would not be used to cover the millions of dollars in projected cost overruns. Aguirre on Tuesday repeated his contention that the commissioners had no choice but to seek new bids because the specifications submitted to last month’s bidders were invalid.
“There is no question that the existing bid packages . . . are void,” said Aguirre, who charged in the lawsuit that the contract specifications violated state competitive bidding statutes. “Any contract that is issued is unenforceable.”
Port attorneys disputed Aguirre’s contention that the original bids were flawed, but Perry assured the lawyer Tuesday that the new bid packages “will be lawful in all regards.” Aguirre has said previously that the lawsuit probably would be dropped if the port rebid the project.
Mayoral candidate Maureen O’Connor, a former port commissioner, also reminded the commissioners that the center’s current estimated $160-million final price tag is far above the $95-million figure cited by proponents in the November, 1983, election in which San Diegans approved the center in an advisory vote.
“By not rebidding, you are leaving taxpayers’ money on the table,” O’Connor said. “Rebidding it, in my opinion, is not going to cause substantial delays but will save money.”
However, Jim Durbin, president of the San Diego Hotel-Motel Assn., encouraged the commissioners not to “let the convention center be held hostage (by) political maneuvering or legal threats.”
Various downtown boosters and business leaders also recommended that the project proceed immediately.
Larry Monserrate, executive director of the Gaslamp Quarter Council, predicted that the convention center will dramatically enhance downtown redevelopment in general, and the Gaslamp Quarter in particular.
“A significant delay would have a negative effect on merchants,” added Dorothy Hom of the Central City Assn.
“There are people like myself who are small players . . . who came in and invested their money (based on the expectation) that this center would be built,” added Richard Thomasson, a downtown restaurant owner.
Consultant Sonny Sturn recalled the many delays that slowed construction of the Horton Plaza downtown shopping center, adding that he hopes that the convention center project does not meet a similar fate.
Referring to the founder of modern San Diego, Sturn said: “Alonzo Horton waited 11 years to see Horton Plaza get built. Let’s hope he doesn’t have to wait another 11 years to see a convention center built.”
The port commissioners, however, said Tuesday that they will receive weekly progress reports on the rebidding process in an effort to ensure that the delay will be measured in months, not years.