San Diego Union-Tribune (Sunday)
A CLOSER LOOK AT THE TOPICS THAT SURROUND SAN DIEGO’S MEASURE C
How did we get here?
The roots of the ballot measure date to the administration of former Mayor Jerry Sanders. A decade ago, he pushed for a larger convention center, arguing that the city was losing bigger conventions — and by extension, millions of dollars in spending by outof-towners — to other cities, an argument that persists today.
Sanders’ mistake, though, was believing that a tax increase approved by hoteliers in 2012 to finance the expansion eliminated the need to go to the voters. A court ruling two years later found that the tax hike was unconstitutional, forcing city and business leaders to return to the drawing board.
Faulconer faced some miscalculations of his own three years ago when he thought he could persuade the City Council to approve a special election for a ballot proposal that at the time did not have wide support of the labor unions and homeless advocates. By then, the notion of combining the expansion project with funding for homeless services and road repairs in a single hotel-tax-hike measure had taken hold and was the basis for the citizens’ initiative effort launched in early 2018.
“If we had just said we want to expand the convention center, I don’t believe that’s enough of a compelling argument to get 66 percent of the citizens to say we should do it,” said Joe Terzi, who will soon be retiring as CEO of the San Diego Tourism Authority. “That’s because many of them don’t understand the value of the center, and it doesn’t affect them directly. But it’s not fair to say it was just a political stunt to include the homeless funding because the industry has been saying for years we need to figure out this homeless issue, and it was starting to have a real impact on tourism.”
How much will hotel room taxes go up?
Measure C calls for boosting the city’s existing hotel room tax of 10.5 percent by 1.25 to 3.25 percentage points, depending on the proximity of hotels to the convention center. If approved, it would mark the first time the tax has been raised in nearly 26 years.
San Diego hotels of 70 or more rooms already levy an additional 2 percent surcharge on guests’ bills to pay for tourism marketing, so the tax increase would end up boosting the city’s effective room rate of 12.5 percent to 15.75 percent for downtown hotels; 14.75 percent for properties in a larger area generally bounded by state Route 56 on the north and state Route 54 on the south; and 13.75 percent for hotels in the northern and southern peripheries of the city.
The tax increase, if approved, would likely become effective May 1 and would be collected for 42 years once long-term bonds are issued for the expansion project. Because that is unlikely to happen right away, the duration of the tax hike could be closer to 45 years.
How will the tax revenue be divvied up?
The majority of the estimated $6.8 billion in revenue generated by the tax hike — 59 percent, or $4 billion — would be dedicated to an expansion of the convention center, plus ongoing expenses for modernization, promotion and operations, according to the city’s Department of Finance. In a move to jump-start spending on homelessness, the measure would allocate some 41 percent of the tax revenue, or $147 million, during the first five years for homeless programs. After that, the percentage drops to 31 percent, yielding an estimated $2.1 billion over the expected 45-year life of the tax hike.
Homeless funds, defined in broad parameters within the measure, can be spent on a number of initiatives, from the creation of affordable and transitional housing to temporary housing, beds, homelessness prevention and job training.
Money dedicated for road repairs would be zero during the first five years that the measure is in place but would rise to 10 percent thereafter, yielding more than $650 million.
A cap of $850 million is authorized for convention center bonds, although the initiative allows the City Council to increase the bond indebtedness following a public hearing. The most recent cost estimate for expanding the center’s ballroom, exhibit hall and meeting space was $685 million, not including land acquisition costs, but that was three years ago. An analysis in December by the city’s Independent Budget Analyst pointed out that if the funds designated for the convention center fall short of the actual cost, “design elements would need to be scaled back to make expansion feasible.”
Who decides how the homeless money will be spent?
While some opponents of the measure have criticized it for not providing any guarantees on how the homeless money would be spent, its supporters point to language in the initiative that calls for creating a seven-member Citizens Oversight Committee appointed by the mayor to advise city leaders on fiveyear spending plans drafted by future city councils. Annual independent audits would also be required.
“That was an intentional decision to not create that kind of rigidity in this measure,” said Carol Kim, political director for the San Diego County Building and Construction Trades Council and also a board member of the San Diego Convention Center Corp. “For example, there was no way we could have known in 2002 that in 2016 we’d have a (hepatitis) A crisis. So we wanted to make sure there was a lot of flexibility so the experts and policymakers could be responsive.”
Would the added tax revenue solve homelessness in San Diego?
The city’s Community Action Plan on Homelessness, created last year by the New York-based Corporation for Supportive Housing, calls for spending about $2 billion over 10 years. By contrast, it would take at least 42 years for Measure C to raise the same amount.
According to a recent report from the Office of the City Auditor, San Diego spent $102 million on homeless-related programs and services in 2019. Measure C would generate an average of $29.4 million annually in its first five years. To meet the cost outlined in its action plan, the city would have to increase its spending on homeless programs by $194 million annually for 10 years, a sum far greater than what would be generated by Measure C, Mcconnell argues.
“Measure C is a massive tax and bond measure that mainly funds a convention center expansion,” he said. “But it is being sold to voters as a solution to homelessness even though it does not guarantee even one unit of housing or services for homeless veterans, seniors or even families.” Admittedly, some of the items in the homeless plan are quite expensive, such as the proposed 2,800 units of supportive housing that would cost about $963 million over 10 years, quickly eroding any revenues generated by the hotel tax hike. Other items, though, are far less costly, such as the annual $2.5 million called for in the plan that would help 767 individuals and families avoid homelessness. Another $18 million annually would provide rapid rehousing rental assistance with services for 802 individuals and families.
Deacon Jim Vargas, president and CEO of Father Joe’s Villages, agrees that Measure C won’t raise enough to meet all the city’s needs to solve homelessness, but points out that it would augment other funding sources that together could have a substantial impact.
Key among those is a $900 million housing bond that has been proposed for the November ballot to help create 7,500 new affordable housing units. And at the state level, Gov. Gavin Newsom is proposing $750 million in homeless services in next year’s budget on top of the $650 million in this year’s budget, and San Diego will vie for a share of the money.
“To say Measure C doesn’t solve the issue may be true, but that doesn’t mean it’s not a good measure,” he said. “It’s additional dollars (that are) severely needed in this community.”
Why does the convention center need to be expanded for a second time?
Last enlarged in 2001, the 30-year-old bayfront center would grow from more than 818,000 square feet to 1.2 million, including 220,150 square feet of additional exhibit hall space.
For years, tourism and convention center officials have argued that they have had to turn away larger, more lucrative meetings because the center is not large enough to accommodate their space needs. They also have raised the specter of losing San Diego’s single largest convention — Comic-con — to a rival city with a larger venue.
Among top U.S. convention centers, San Diego, they say, is ranked 22nd in terms of exhibit hall space, lagging behind competitors from San Francisco to Or