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Determination: Huckster Propaganda
Analysis: Ballots are due today in the election to raise hotel-room taxes by $1 billion over the next three decades to finance the majority of San Diego’s proposed Convention Center expansion. The city’s hoteliers are the ones casting the ballots and the process has attracted a good deal of scrutiny.
At a televised mayoral debate last week, KPBS reporter Katie Orr asked candidate Carl DeMaio, a city councilman, why he supported this hotelier vote for the expansion. The Convention Center’s initial construction and a previous expansion, she noted, were approved by public votes.
DeMaio replied that the prior Convention Center deals were paid for with public money through hotel-room taxes while hoteliers will finance this one. Later on in the debate, he stated this point more explicitly.
“This expansion will be done by private investment from the hoteliers,” DeMaio said.
The city, however, plans to finance the project entirely with public money, through an effective increase in the same hotel-room taxes that paid for a previous expansion. No private investment is proposed. And DeMaio should know that. He’s voted for the expansion’s financing plan every step of the way so far.
Let’s quickly breakdown the current proposal. There are three sources of money for the project:
• $3.5 million annually for the next 30 years from the city’s day-to-day operating budget. This is money that otherwise could pay for regular city services, such as fire and police. But expansion supporters argue the project will generate more than enough new tax revenue to cover the city’s portion and provide a healthy profit.
• $3 million annually for the next 20 years from the Unified Port of San Diego.
• $35.7 million annually, eventually, for the next three decades from the hotel-room tax increase. This is the abnormal part of the deal. Typically, these kinds of tax-increase elections go before the public. In 2004, city voters twice rejected hotel-room tax increases for various purposes. This time, expansion backers were worried the public wouldn’t pass it again.
So instead, they developed a plan that allows the hotel industry to decide if it will tax its guests to finance the expansion. City Attorney Jan Goldsmith has said he’s not sure if this process is legal and will ask a court to sign off on it immediately after the plan is complete.
The whole financing plan would be much cleaner and definitely legal, Goldsmith said, if the public voted on it.
It’s this third part of the deal, the hotelier vote, that DeMaio was referring to at the debate. DeMaio’s campaign manager Ryan Clumpner amplified this point in a statement to us:
Privately owned hotels are voting to pay for the Convention Center expansion using funds that they will generate themselves. Those funds can only be used for the purposes of the Convention Center expansion. We can split hairs over semantics, but Carl DeMaio’s point remains that private businesses are producing funds that cannot be diverted for any other public purpose.
However, the tax functions the same as regular hotel-room taxes collected by the city. The lodging industry has called these kinds of charges “effective” hotel-room taxes. Goldsmith used all capital letters in describing the deal for emphasis: “To be clear, this IS a tax.”
And everyone involved in the deal admits this charge will be a line item next to the city’s existing hotel-room tax on visitor bills.
If hotel owners simply wanted to pool money together to build a facility, as DeMaio is suggesting, they could do that on their own without a vote involving the city. Instead, the hoteliers want to pass a tax, which would uniformly raise their fees across the board even for the hotels that don’t want it.
In short, San Diego visitors, residents and port tenants will pay for the expansion, not hotel owners.
Our definition for Huckster Propaganda is that a statement is not only inaccurate but it’s reasonable to expect the person knew it and made the claim to gain an advantage.
As a councilman, DeMaio is intimately involved with details of the expansion’s financing plan. It’s reasonable for him to expect to know its components. Two months ago he earned a Huckster Propaganda and a False for different statements about expansion financing.
Supporting this tax hike also doesn’t fit well in DeMaio’s anti-tax narrative, an approach so well-honed he has opposed a nickel increase to fines for overdue library books.
DeMaio’s statement about private investment not only was wrong, but also played to his taxpayer watchdog narrative.
If you disagree with our determination or analysis, please express your thoughts in the comments section of this blog post. Explain your reasoning.
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Liam Dillon is a news reporter for Voice of San Diego. He covers San Diego City Hall, the 2012 mayor’s race and big building projects.
Please contact him directly at email@example.com or 619.550.5663.
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