DeMaio’s Convention Center Flubs: Fact Check

DeMaio’s Convention Center Flubs: Fact Check

Photo by Sam Hodgson

Carl DeMaio

 

Image: Huckster PropagandaStatement: “Very clear that we’re not going to use our general fund monies to subsidize an expansion at this point,” Carl DeMaio, a San Diego mayoral candidate, on the Convention Center expansion in an interview Feb. 10.

Determination: Huckster Propaganda

 

Image: FalseStatement: “There is a cap right now. Yes there is. There is a cap,” DeMaio on the city’s financial contribution to the expansion in the same interview.

Determination: False

 

Analysis: Mayoral candidate Carl DeMaio’s political career has been built in no small part on opposing tax, fee and other revenue increases to the San Diego treasury.

Yet, he backs a Convention Center expansion. The expansion’s financing plan relies on a tax increase on hotel-room stays to raise more than $1 billion over the next three decades.

I talked with DeMaio last week about his tax record and the discussion transitioned to his support for the Convention Center expansion. Here’s the exchange:

LD: Why the Convention Center tax increase?

CD: I support the Convention Center because it creates jobs and brings revenues into the city for our municipal services. What I told the industry is that you have to pay for it. Very clear that we’re not going to use our general fund monies to subsidize the expansion at this point. We don’t have it.

The Convention Center financing plan, however, does tap the day-to-day operating budget, or general fund. And in his many votes in favor of moving Convention Center financing forward, DeMaio never has expressed outright opposition to using any general fund dollars. (A similar statement on the general fund earned one of the half-dozen Huckster Propagandas we gave out last year.)

I pointed out to DeMaio that the general fund is on the hook for $3.5 million a year under the financing plan. He took the conversation in another direction.

LD: You are. $3.5 million a year.

CD: I have a cap right now on that. My goal is to eliminate the need for that funding. I’ve been very clear about that.

But there isn’t a cap. I told DeMaio that.

LD: You don’t have a cap. There’s no cap now.

CD: There is a cap right now. Yes there is. There is a cap.

LD: How is there a cap right now? They haven’t voted on it.

CD: Well, the commitment is that we’re going to have a cap on that deal.

The “cap” that we’re talking about would be a hard ceiling on the amount of money that could come from the general fund. It would limit taxpayer risk.

The other two groups involved in the financial plan — the Unified Port of San Diego and the city’s hoteliers — have a hard cap on the contributions they’ve arranged.

The city, however, doesn’t have that cap. That leaves taxpayers — not the port or tourists — at risk right now if there are any shortfalls.

A DeMaio staffer, Diana Palacios, defended both of the councilman’s statements.

The city isn’t using general fund dollars to finance the expansion, she said, because the bill will be covered by new revenue created by the project.

“These are new funds generated from the expansion itself,” Palacios wrote in an email to us.

We debunked this same “no general fund” argument in a December Fact Check of expansion point man Steve Cushman:

A city consultant says the expansion will generate roughly $13 million in additional tax revenue each year. Though the project would cost the general fund $3.5 million annually, Cushman argues the budget would still see a net increase of $9.5 million.

But that doesn’t mean the financing package doesn’t include general fund money. At the very least, the proposal would siphon $105 million in revenue that would otherwise flow into the same pot of money that pays for police, firefighters, parks and libraries.

If the projected revenues don’t materialize, city financial officials warn, San Diego would also be left on the hook to still pay for the project. The Convention Center expansion would cut into the general fund.

The city also has capped the spending of these dollars, Palacios argued, because a financial official said so at a January hearing. Similarly, a staff report from the same meeting references spending no more than $3.5 million a year.

Those are merely pledges. They aren’t the kind of hard cap that DeMaio has sought and that the other financial contributors to the expansion have attained.

Both the port and hoteliers have had their contributions capped through formal votes. The city hasn’t.

That’s important because there’s also precedent for the city’s share increasing without warning. Back in October, backers said they needed $3 million a year. That figure increased to $3.5 million a month later.

DeMaio also has failed in two separate attempts to limit taxpayer risk.

In December, he voted to move the expansion forward, provided that city officials put options for a taxpayer cap in writing by January. That didn’t happen.

In January, DeMaio tried a different approach. He wanted any excess dollars from the visitor tax increase to pay back the city’s contribution to the expansion. That effort also was unsuccessful. But DeMaio once again voted in favor of the expansion.

And even DeMaio backs off calling the current situation a “cap” during the interview. Instead, he refers to it as a “commitment … we’re going to have a cap on that deal.”

To review, DeMaio has been highly involved in Convention Center financing decisions, including several votes in favor of the project moving forward.

It’s reasonable to assume that he knew his first statement about the general fund was false and he used it to try to square his political identity with his support for expansion. That one’s Huckster Propaganda. The second statement is just False. There have been assurances that a cap will be there, but to date DeMaio’s attempts to get any sort of firm taxpayer limit have failed.

If you disagree with our determination or analysis, please express your thoughts in the comments section of this blog post. Explain your reasoning.

You can also e-mail new Fact Check suggestions to factcheck@voiceofsandiego.org. What claim should we explore next?

Liam Dillon is a news reporter for voiceofsandiego.org. He covers San Diego City Hall, the 2012 mayor’s race and big building projects. What should he write about next?

Please contact him directly at liam.dillon@voiceofsandiego.org or 619.550.5663.

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Liam Dillon

Liam Dillon

Liam Dillon is senior reporter and assistant editor for Voice of San Diego. He leads VOSD’s investigations and writes about how regular people interact with local government. What should he write about next? Please contact him directly at liam.dillon@voiceofsandiego.org or 619.550.5663.

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24 comments
bob dorn
bob dorn subscriber

Thank you, and kudos to Liam Dillon.

dorndiego
dorndiego

Thank you, and kudos to Liam Dillon.

Hank Pfeffer
Hank Pfeffer subscriber

since all mayoral candidates are in somebody's pocket, it looks like character should be an important issue. or perhaps the lack of character.

Hank Pfeffer
Hank Pfeffer

since all mayoral candidates are in somebody's pocket, it looks like character should be an important issue. or perhaps the lack of character.

Don Wood
Don Wood subscriber

We've all seen how much city official's "pledges" are worth. Around 1981, in order to convince the city's employees to pull out of Social Security and Medicare, then mayor Pete Wilson "pledged" that the city would provide workers with free lifetime healthcare when they retired. When the workers tried to cash Pete's check, the city said it was worthless. Ditto for DeMaio's claims about the convention center expansion tax. Carl is against all tax increases, except when they will benefit his political campaign contributors. Workers pensions and healthcare have to go, but corporate and special interests welfare paid for with taxpayer money is just fine in his book.

Don Wood
Don Wood

We've all seen how much city official's "pledges" are worth. Around 1981, in order to convince the city's employees to pull out of Social Security and Medicare, then mayor Pete Wilson "pledged" that the city would provide workers with free lifetime healthcare when they retired. When the workers tried to cash Pete's check, the city said it was worthless. Ditto for DeMaio's claims about the convention center expansion tax. Carl is against all tax increases, except when they will benefit his political campaign contributors. Workers pensions and healthcare have to go, but corporate and special interests welfare paid for with taxpayer money is just fine in his book.

Steven Greer
Steven Greer subscriber

When has he ever told the truth?

The_Gunny
The_Gunny

And the Political Sociopath strikes again.

Emmett McMahon
Emmett McMahon subscriber

I have said in the past that I did not trust Mr DeMaio. I watched him on TV and looked at a couple of photos of him and my system kind of told me that I don't want him as a friend. Something about him was not trustworthy. It was like when you are first introduced to someone and you are trying to decide if you want them as a friend. He did not pass that "test". I do not trust him to be the Mayor of our city.

EKM
EKM

I have said in the past that I did not trust Mr DeMaio. I watched him on TV and looked at a couple of photos of him and my system kind of told me that I don't want him as a friend. Something about him was not trustworthy. It was like when you are first introduced to someone and you are trying to decide if you want them as a friend. He did not pass that "test". I do not trust him to be the Mayor of our city.

Lucas OConnor
Lucas OConnor subscriber

If DeMaio actually thinks there's already a cap, why does he keep asking for a cap?

lucasoconnor
lucasoconnor

If DeMaio actually thinks there's already a cap, why does he keep asking for a cap?

Dale Peterson
Dale Peterson subscribermember

And, "taxpayer safeguards" take another hit. What is so challenging about broadcasting--"Here is what we want to do, here is how we are going to pay for it, and here is why it is good for all of San Diego?" Just more and more of the first and last one. Marginal transparency on the middle one.

Dale Peterson
Dale Peterson

And, "taxpayer safeguards" take another hit. What is so challenging about broadcasting--"Here is what we want to do, here is how we are going to pay for it, and here is why it is good for all of San Diego?" Just more and more of the first and last one. Marginal transparency on the middle one.

susanf
susanf subscribermember

omarpassons has an excellent idea: instead of caving to every special interest group that wants something for nothing, the city council should begin by protecting the interests of the residents. let the hoteliers absorb more of the risk. if they won't, the deal goes down. simple, really.

susanf
susanf

omarpassons has an excellent idea: instead of caving to every special interest group that wants something for nothing, the city council should begin by protecting the interests of the residents. let the hoteliers absorb more of the risk. if they won't, the deal goes down. simple, really.

Omar Passons
Omar Passons subscribermember

d revenue stream. There are those that think we have no exposure, but as the article correctly pointed out, if the TOT is ever below $3.5MM that money would, as it stands now, come out of the general fund. Right now, at this stage, we don't have the money to gamble on this deal working out. So one option is to knowingly strike a deal that pays less than we might get to make sure the City gets its money first, even if the hoteliers have to cough up some cash to make it happen. In the event people start liking that new Convention Center L.A. has planned better than ours or there is some major global shift in convention-going, the General Fund of the City does not need to be left holding the bag.

omarpassons
omarpassons

d revenue stream. There are those that think we have no exposure, but as the article correctly pointed out, if the TOT is ever below $3.5MM that money would, as it stands now, come out of the general fund. Right now, at this stage, we don't have the money to gamble on this deal working out. So one option is to knowingly strike a deal that pays less than we might get to make sure the City gets its money first, even if the hoteliers have to cough up some cash to make it happen. In the event people start liking that new Convention Center L.A. has planned better than ours or there is some major global shift in convention-going, the General Fund of the City does not need to be left holding the bag.

Jon Osborn
Jon Osborn subscriber

Perhaps DeMaio should read VOSD. Then he would have seen the "Cushman debunking."

Jon Osborn
Jon Osborn

Perhaps DeMaio should read VOSD. Then he would have seen the "Cushman debunking."