San Diego Union-Tribune (Sunday)
VOTERS WILL WEIGH IN ON HOTEL ROOM TAX INCREASE
Measure C would fund bigger convention center, aid homeless, repair roads
Nothing could go wrong.
For months, a robust coalition of business, labor and community leaders had been raising hundreds of thousands of dollars to get a measure on the ballot that would not only bankroll a long-sought expansion of the San Diego Convention Center, but also raise money to help the homeless and repair roads.
Then everything did go wrong. The measure, which called for an increase in the city’s hotel tax, fell short of the signatures needed to make the November 2018 ballot, and Mayor Kevin Faulconer’s urgent pleas to advance the initiative anyway were rebuffed by the City Council. Momen
tum eroded, and backers fretted that their pressing civic priorities were doomed.
Or so it seemed. Come March 3, voters will finally weigh in on the proposed room tax hike, which, if approved, would generate nearly $7 billion over more than four decades — enough money, its supporters say, to enlarge the convention center by 50 percent, help get homeless families and individuals off the streets, and repave 150 miles of roads every year.
The threshold for approval of Measure C is high — a two-thirds majority vote in a city long averse to tax hikes. But backers are taking no chances, having mounted since last year a nearly $3 million campaign in hopes of persuading the electorate to say yes to what they point out is a tax on visitors, not locals.
“Voters have never had a chance to weigh in on this before, and we are seeing tremendous momentum as people see that tourists will pay for this and that it will go for our biggest priorities,” said Faulconer, who has been pushing for an expansion of the convention center since his days as a councilman.
Supporters had hoped for no organized opposition, but longtime homeless advocate Michael Mcconnell has so far spent more than $370,000 of his own money to defeat the initiative, flooding mailboxes with his No on Measure C fliers. He contends that the initiative has too many loopholes, is too vague and raises too little money to have a meaningful impact.
“Who knows how much money can go into more plans and studies and consultants’ pockets instead of solving these problems?” he said. “This measure doesn’t say what goes toward reducing homelessness, and the definition of homeless people is so broad that they can siphon the money off to almost anything.”
What follows is a thorough look at the initiative — what it does and does not do, its financial underpinnings, and the arguments being made both for and against passage of Measure C.
lando that have either already expanded or are planning expansions.
Pro-measure C ads airing repeatedly on television claim that the convention center has already lost seven conventions because the center isn’t large enough. While the Tourism Authority was unable to produce letters confirming all seven lost bookings, it did offer a sampling of cancellation letters over the last five years from groups saying they were backing out because the planned expansion would not be happening soon enough.
The American Association for Cancer Research will hold its annual meeting in San Diego in April, but it notified the city in 2018 that it was terminating its agreement to return in 2023. Meanwhile, it has booked conventions for 2025 and 2027 in Los Angeles, banking on the completion by then of a planned expansion of its downtown center, said Pamela Ballinger, senior director of meetings and exhibits for the association.
“We were in San Diego in 2014 and we had about 18,000 people and 450 exhibitors, and this year we are anticipating 23,000 attendees, and our exhibitors are up to 505 and we have a waiting list for the first time,” she said. “If we have to relocate this meeting, it hurts us because we always see a jump in registration here, but it also hurts San Diego,” Ballinger added. “We’ll do well because it’s cancer research but we’d like to stay in San Diego.”
If San Diego expands center, will more conventions come?
The city’s longtime push for a larger center comes amid a growing arms race among cities investing heavily in bigger, better convention centers in hopes of filling more hotel rooms. Skeptics, like longtime convention center industry researcher Heywood Sanders, point out that the boom in convention center space is far outstripping the much slower growth in meeting attendance.
Data provided by the Center for Exhibition Industry Research shows overall attendance rising about 14 percent since 2000. Contrast that with the nearly 40 percent increase in exhibit hall space during that same period, Sanders said.
“You’re competing in an environment that is overbuilt,” said Sanders, a professor at the University of Texas at San Antonio and author of the book, “Convention Center Follies.”
“Having more room doesn’t necessarily yield more business, although that’s precisely the argument made in every city. We just need something more. More space, more hotel rooms,” Sanders added.
To a degree, it’s irrelevant how much more convention space there is nationally, because San Diego, said Terzi of the Tourism Authority, is one of the most sought-after convention destinations in the U.S.
“Do you want to be in Chicago in March or San Diego in March?” said Terzi. “Our occupancy right now is over 80 percent for citywide conventions, and the benchmark in the industry for what is considered maximum occupancy is 70 percent.”
In the years since the convention center was last expanded in 2001 — nearly doubling the building size — the average number of attendees per year grew from 737,000 pre-expansion to 839,000, according to the San Diego Convention Center Corp. Those figures, though, include consumer shows like the Bridal Bazaar that typically don’t result in overnight hotel stays. Officials instead prefer to look at attendance for just those conventions that do draw out-of-town visitors. That growth has been more robust, increasing from an annual average of 291,000 attendees pre-expansion to 532,000 since 2001.
San Diego is still on the hook for debt from that last expansion, owing more than $90 million that should be paid off by 2028, city officials say.
Can the city regain control of the bayfront expansion site?
Still an open question is control of the 5-acre leasehold where the expansion would be built.
Longtime port tenants Ray Carpenter and Art Engel, who currently control what is known as the Fifth Avenue Landing property, intended to build a $300 million hotel complex there, but had consented to back away from their project and turn over their leasehold in return for a $33 million payment should voters approve the hotel tax increase.
When the timing for the ballot measure was delayed until this year, that deal largely fell apart.
Said Carpenter in a recent interview, “If the city wants to buy it, they’d have to reopen negotiations. We plan to be in front of the Port District before the summer for approval of our (environmental impact report) for the hotel.”
Who opposes Measure C?
While the Republican Party has officially taken a stand against Measure C, Mcconnell has been the most active opponent and the only one who has raised substantial funds in an effort to defeat it.
Mcconnell has said he has nothing to gain from his campaign, and only wants to educate voters about what he sees as a deeply flawed initiative that could put the city on the hook of paying millions in a bond debt.
“The measure specifically states that the city can use other funds to pay off the bonds,” Mcconnell said. “They put that in there because they probably know there’s not enough money. There’s all sorts of loopholes that they don’t want to talk about.”
Former San Diego City Councilwoman Donna Frye also opposes Measure C. She says that if the average voter were asked what to do with $2 billion, that person would not say most of the money should be tied up for 42 years on the expansion of the convention center.
Frye also said the ballot does not tell voters about how much the debt service will be on the potential bonds, which she estimates could be as high as $1.4 billion.
“The thing for me and a lot of folks who actually read this stuff is how offensive it is to use homelessness as a means to expand and modernize the convention center, because really, that’s what this ballot measure is about,” she said.
Who supports Measure C?
The initiative has support from a broad array of groups, ranging from members of the tourism industry to homeless service providers.
Among the supporters are the San Diego and Imperial Counties Labor Council, San Diego County’s building trades unions, The San Diego County Democratic Party, San Diego County Hotel-motel Association, San Diego Police Officers Association, San Diego County Taxpayers Association, and the San Diego Regional Chamber of Commerce.