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Billions of dollars of other people’s money are at the center of the intensifying battle between the Chargers, city hoteliers and unions.
They all seem to agree that tourists should pay more to visit San Diego, but disagree on how to spend any new money. Here’s what hangs in the balance: A new football stadium, an expanded Convention Center and funding for police, fire, libraries and other regular city services.
A lot has happened in the past couple of weeks. Much of it involves arcane concepts in uncharted legal territory. But the rest is nothing less than some good, old-fashioned political power plays.
We’ll round up what’s happened recently, what’s next and what’s at stake. We’ll start with why everyone wants tourists’ money.
Tourists Targeted
Visitors to San Diego used to pay very little to stay in the city’s hotels. The city’s regular hotel-room tax rate is 10.5 percent, which is the second lowest of any major California city. For the last seven years, the city has tried over and over again to hike it.
A hotel-room tax increase went before voters twice in 2004. The first came in the wake of the devastating Cedar Fire, and the new tax revenue would have gone to increased fire protection and tourism promotion among other services. Because the tax hike was dedicated to specific purposes two-thirds of city voters needed to sign off. The vote fell just short.
Later that year, the city tried a general increase to hotel-room taxes, which only required a majority vote. But hoteliers opposed the ballot measure and voters trounced it.
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A few years later, hoteliers figured out how to increase the hotel-room tax rate without a vote. Under a law that allows businesses to tax themselves, hoteliers approved a 2 percent hike in the tax rate at hotels larger than 70 rooms. The hoteliers use the money — about $26 million a year — for tourism and promotion. They control how it’s spent.
So San Diego tourists now pay 12.5 percent in taxes when they stay in most hotels.
The Grand Plans
The 2 percent tourism promotion charge has worked so well that hoteliers and Mayor Jerry Sanders decided to get really ambitious. As it stands the charge will expire at the end of next year. But hoteliers want to extend the 2 percent hike for another four decades, meaning more than $1 billion in tax revenue would go to tourism promotion over that time.
Sanders and Convention Center boosters, including many hoteliers, wanted to use the same model as the tourism promotion charge to pay for the majority of the $550 million Convention Center expansion. Hotel-room tax rates would increase even further and the resulting $28 million to $30 million a year would finance three-quarters of the expansion without the need for a public vote.
At large downtown hotels, tourists would pay 15.5 percent in taxes under these plans. And San Diego’s low tourism taxes would no longer be so low.
Power Plays
Plans to extend the tourism promotion charge and finance the Convention Center were moving along swimmingly until two weeks ago. That’s when both efforts ran straight into a brand new state law.
Last November, California voters passed Proposition 26, a ballot measure that tightened the definition of tax increases that voters needed to approve. The rules of the game that allowed hoteliers to increase the hotel-room tax themselves had changed.
The unions struck first.
Two weeks ago, the hotel workers union claimed extending the tourism promotion charge violated Prop. 26. They demanded a public vote and said the new revenue might be better off going directly to the city’s strained day-to-day operating budget instead of tourism promotion.
The City Council was about to make the second of several required votes on the billion-dollar extension when City Attorney Jan Goldsmith flinched. After months of condoning the extension’s legality, he asked the City Council for more time to make sure. The council postponed its vote.
A day later, Convention Center boosters revealed that they had switched their financing plan entirely. They changed to a different funding model that will produce the same revenue, but that they believe better protects them from Prop. 26. Now two-thirds of hoteliers will need to sign off on the expansion instead of the half needed before.
The Chargers smelled blood.
For a decade, the team has been looking all around the county for a place to build a new stadium. For the past two years, they’ve focused on downtown. But the state just kneecapped redevelopment, the Chargers preferred source of public funding for their $800 million project. More recently, the team has pushed for a domed stadium that could double as increased convention space. That set the proposed stadium and Convention Center expansion, located a few blocks apart, on a collision course.
The two collided this past week when Chargers special counsel Mark Fabiani announced he wanted the money targeted for the Convention Center expansion. Voters, Fabiani said, should decide if the city should increase taxes to expand the Convention Center or build a combined stadium and Convention Center.
A combined convention convention-stadium is anathema to Convention Center expansion backers. They argue the combined facility is impractical and have done everything they can to keep their project from going to a public vote.
What’s Next
The City Council is scheduled to have another hearing on the tourism promotion extension charge Tuesday. Goldsmith has given no indication that he will provide any new legal advice and his office didn’t respond to questions by a Friday deadline. A City Council committee forwarded the Convention Center expansion plan to the full council, but councilman and mayoral candidate Carl DeMaio has requested a deeper look at the Chargers’ proposal.
Sanders, who has been working on both the expansion and the stadium, has spoken in favor of continuing with the current Convention Center expansion plans. But he hasn’t taken a robust stance against the Chargers’ idea, either.
If the team gets its way, San Diegans could see a galactic fight at the ballot box next year over how much visitors should pay to finance the city’s services and big dreams. If the rhetoric is to be believed, the future of the Chargers in San Diego, big conventions like Comic-Con, thousands of jobs and billions in tax revenues would be at stake.
Editor’s Note: The original headline on this story read “Chargers, Hotels and Unions: They All Want Tourists’ Money.” We’ve tweaked it since the hotel union isn’t directly seeking the hotel-room charge.
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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