A financing plan to pay for the $550 million expansion of the San Diego Convention Center approved by the City Council in a 7-0 vote Oct. 10 would pave the way to establishing a special assessment district to tax both downtown and outlying hotels.

Under the proposal passed unanimously with Councilwoman Marti Emerald absent, the assessments on hotels would generate $28 million to $33 million annually that would make up most of an estimated annual debt payment of $40 million on lease revenue bonds to be issued for the project.

The expansion to the existing center would add some 422,000 square feet to bring the total exhibition space at the center to about 2.2 million square feet. The center was first opened in 1989, and expanded in 2001.

“This vote is a critical step forward on an investment that will make San Diego much more competitive in the convention industry,” Mayor Jerry Sanders said.

Despite efforts by the San Diego Chargers to link the expanded convention center with a new football stadium in the East Village area, the council noted that taxes collected within the proposed assessment district would not be used to finance a stadium, estimated to cost about $800 million.

Under the proposal, the affected hotels would vote on the new Convention Center Facilities District, with a two-thirds majority vote required for adoption.

Assessments would increase the current 12.5 percent hotel tax by various rates depending on the proximity to the convention center, with downtown hotels paying an additional 3 percent, and Mission Valley and Mission Bay paying 2 percent, and 1 percent for all others.