Opinion

Chargers Go Nuclear

 

For many weeks, the Chargers and the boosters hoping to expand the Convention Center have been headed for a collision with each other.

Today, it finally happened.

For the first time, the football team openly questioned the legality of the preliminary plans to fund the Convention Center and signaled a willingness to go to great lengths to rebuff Mayor Jerry Sanders and dramatically revise a project he has methodically advanced for many years.

It was a day full of major proclamations from the team. Chargers Special Counsel Mark Fabiani also acknowledged that the Chargers will likely confront San Diego voters with a straight proposition: If you want the team to stay, a tax hike will have to occur to fund a big part of the construction of a new stadium.

He said voters should be offered the choice to do this instead of allowing hotel owners to unilaterally raise taxes without a vote of the people for the Convention Center project.

The volley started on KPBS’ Midday Edition. Fabiani and Convention Center Vice President Steven Johnson debated Fabiani’s suggestion that the Convention Center plans be scrapped for a combined Convention Center and stadium at a site a few blocks from the existing Convention Center.

Johnson and hotel owners flatly reject a combined football stadium and Convention Center for many reasons, but most importantly because of the fact that the proposed site for the new stadium is several blocks away from the existing Convention Center. It may add more space, but it would not be contiguous and wouldn’t, therefore, solve the problem the expansion is trying to deal with in the first place.

Here was Mike McDowell, the hoteliers lead on this issue, in a previous interview with us (the whole thing is worth a read):

The (Convention Center) task force specifically dealt with this question. We dealt with it from a user perspective. We asked the potential convention planners what their priority would be. They told us and we have recommended that the expansion be contiguous. Nobody wants to sit at the little kid table.

Is there a role that a new stadium downtown adjacent to or in the vicinity of the Convention Center could play in a select few major national conventions? Absolutely. It would be a valuable asset.

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Toward the end of the discussion on KPBS, Fabiani asserted that the people of San Diego should decide what project they want, not the hoteliers.

This immediately brought up a question for me: The only money identified for either project is an increase to the hotel-room tax rate. And, believing that voters would never approve such a hike, hoteliers have devised a way to raise the tax, apparently avoiding state laws that require voter approval.

I asked Fabiani how he could imagine the hoteliers not having near complete control over funds they’re making available with this maneuver. The response was shocking:

(1). There is no doubt that a voter passed-referendum would have the power to both reverse prior actions by the city/hoteliers and re-allocate tax revenue as the voters see fit — if, of course, you can convince people that you are right.

(2). In the view of our election law lawyers, Proposition 26 makes it questionable — at best — whether this particular tax can be raised by a vote of hoteliers on their own, without a vote of the people. This is an aspect of the convention center expansion debate that is usually glossed over.

Let’s translate this.

The first point is quite an assertion. With it, Fabiani’s saying that if the hoteliers decide to increase hotel-room taxes themselves, the Chargers could put up a ballot initiative that would either abolish the move or reallocate the money to their project. The implications of this, if it’s at all based in reality, are broad.

In 2008, after the city’s voters twice rejected increases to the city’s hotel-room tax, the hoteliers increased it without a vote of the people by creating an entity similar to a business improvement district. The money was meant to promote themselves and San Diego as a destination. It’s this model that was the foundation for the new financing plan for the Convention Center expansion — the hoteliers were preparing to increase the tax again and fund construction.

Once again, the hoteliers would have sole control over the money generated from what is essentially another increase to the hotel-room tax rate.

If the Chargers were somehow correct that the citizens could reallocate taxes from a business improvement district to something else, citizens could also reallocate money from that first increase to the hotel-room tax. Imagine that, a tax increase not approved by voters but then reallocated by voters to services like libraries, police, fire and infrastructure.

It does not seem possible.

But the second part of his statement is a direct assault on the idea that hoteliers can legally increase taxes without a vote of the people. This is an issue readers of these pages should be very familiar with.

Fabiani’s attack and others’ arise from Proposition 26, which passed in November. Supported by the California Chamber of Commerce, the measure’s potential implications for San Diego’s Convention Center hopes surprised many locals. It basically said that anything that looks like a tax increase couldn’t be labeled a fee to avoid a vote of the people.

Just last week, hotel union workers raised this concern and forced the city to delay its push to renew the 2 percent hotel room tax that already exists and that had provided a windfall for the Convention and Visitors Bureau.

But the Chargers’ assault on the legality of the measure is sure to bring the issue to a much broader audience and raise the possibility even higher that it will be challenged in court.

Hoteliers have long maintained that they believe the tax is legal. But in the face of challenges, they abruptly switched strategies last week, opting for a complicated increase to their property taxes, which they would somehow pass along directly to their customers in the form of a room tax.

This supposedly protects them from Proposition 26.

Maybe, but that brings up the Chargers’ apparent determination to do something they’ve been reluctant to for years: directly confront voters with the full cost of the stadium and a stark choice of raising your taxes, paying for a good part of a new stadium, or seeing your team leave.

“That’s definitely what it’s coming down to, I think,” Fabiani told me in a follow-up email. “Let’s get all the options out there and let voters — not hotel owners or convention center managers — decide.”

This is a big deal. For many years, the city’s leaders and team have tried to imagine everything imaginable that may pay for a stadium without daring to confront voters with the reality that no magic money tree exists that may bequeath them a stadium without sacrifice.

The mayor recently traveled to three cities across the country where new stadiums were recently built to learn how they were done. I made the point then that it might be smart for him to see how other cities were doing things but it wasn’t a mystery: All three increased taxes to some extent.

The fundamental difference, though, is that unlike these other cities, similar tax hikes in San Diego would require approval from two-thirds of voters. It’s this high threshold that compels the Chargers and hoteliers and everyone to come up with such bizarre ways to try to raise money.

It’s at the heart of one of San Diego’s most basic contradictions: the desire, even by staunch conservatives, to use public money for major efforts and yet still support strict restrictions on raising public money.

But confronting voters even with a two-thirds threshold to keep the team in San Diego has its benefits: 1) It provides cover for the team and city leaders. “Hey fans, here’s what it costs. You want to keep the team? This is what you have to do. You don’t? OK, then.” And 2) it is a fundamentally more healthy way to build things like stadiums. Rather than pretend like the costs can be hidden or pushed out into the future, you just are honest and clear.

It may set a much-needed precedent for honesty with the public. Building things costs money.

Then, of course, they’d have to deal with the reality of voters in this town. They were unwilling to raise taxes even at just a 50-percent threshold last year, when the mayor and many others campaigned hard for a half-cent sales tax increase to support the city’s general fund. None of the mayoral candidates supported a new fee for a stadium.

But the Chargers potentially have a fascinating argument: If the hoteliers were already going to raise hotel-room taxes by up to 3 percent for a new Convention Center, then voters should have a say in whether they want it to go to that or to something else, and potentially keep the team.

What they’ll have to deal with are the many voters who don’t think it should go to either.

I’m Scott Lewis, the CEO at voiceofsandiego.org. We depend on your donations to provide this service: consider offering one today.

You can contact me directly at scott.lewis@voiceofsandiego.org or 619.325.0527 and follow me on Twitter (it’s a blast!). Check out Thursday’s Twitter chatter about the Chargers stadium vs. the Convention Center.

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Scott Lewis

Scott Lewis

I'm Scott Lewis, the CEO of Voice of San Diego. Please contact me if you'd like at scott.lewis@voiceofsandiego.org or 619.325.0527 and follow me on Twitter (it's a blast!): @vosdscott.

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8 comments
Bob Jones
Bob Jones subscriber

Does it matter if one is kicked by a horse or a jackass?

rwj5125
rwj5125

Does it matter if one is kicked by a horse or a jackass?

David Cohen
David Cohen subscriber

Well, they came up only about 10% short in selling tickets to a home game by a team with a winning record.

fryefan
fryefan

Well, they came up only about 10% short in selling tickets to a home game by a team with a winning record.

Jim Jones
Jim Jones subscriber

It's time to fix the real problem. The problem is not that taxes are not high enough. The problem is that taxes are paying steak prices for hamburger services, and that has to stop.

Jim Jones
Jim Jones

It's time to fix the real problem. The problem is not that taxes are not high enough. The problem is that taxes are paying steak prices for hamburger services, and that has to stop.

Jim Jones
Jim Jones subscriber

Secondly, the people here are not "cheep", they are strapped. San Diego has a cost of living that is 131% of the average for a city in it's size class, it has high sales tax and numerous high fees and hidden taxes. Greedy unions, special interests and politicians continue to squeeze blood from this turnip. There just isn't anything left to squeeze.

Jim Jones
Jim Jones

Secondly, the people here are not "cheep", they are strapped. San Diego has a cost of living that is 131% of the average for a city in it's size class, it has high sales tax and numerous high fees and hidden taxes. Greedy unions, special interests and politicians continue to squeeze blood from this turnip. There just isn't anything left to squeeze.