It’s not every day that the San Diego City Council votes on a $1 billion tax increase.
Monday was one of those days.
The City Council formally signed off on a hotel-room tax hike to pay for the majority of the proposed Convention Center expansion. Two weeks ago, the city’s hoteliers approved the tax, which will increase the levy on hotel guests by 1 percent to 3 percent depending on a hotel’s proximity to the Convention Center. The tax eventually is projected to raise about $35 million a year, or $1 billion over the next three decades.
The council also approved filing a lawsuit to determine if the tax increase is legal. Hotel-room tax hikes typically require public votes, and the city has instead used a novel financing plan to avoid that vote.
Like last month’s hotelier vote, Monday’s council decision wasn’t in doubt. The vote was 7-1 with Councilman David Alvarez, who has consistently voted against the financial plan, the lone no.
Here are three takeaways from Monday’s hearing:
The Important Decisions: Monday’s vote became more of a formality once the council decided back in March to give hoteliers more control over center operations. The hoteliers used their vote over the tax hike as leverage in that deal.
Three key upcoming decisions are much more uncertain.
• A judge will decide on the legality of the hotel-room tax hike. Expansion boosters hope everything will be decided by the end of 2012, but City Attorney Jan Goldsmith has said he expects the case to take a year.
• The City Council will decide on the expansion’s overall financing plan after the project’s environmental review is finished. The council’s decision is expected in September. This vote will solidify the Unified Port of San Diego’s $3 million annual contribution to the project, the city budget’s $3.5 million annual payment and determine the budget’s risk.
Various council members have said their votes along the way to move the project along don’t automatically translate into support at the end. Hoteliers are expecting the council’s ultimate approval, though.
“You asked us to lead,” said Mike McDowell, the hotel industry’s lead negotiator on the expansion, during the hearing. “You asked us to be out in front on this issue and to demonstrate that we can get this done. We did that. We did that. We ask you to lead going forward.”
• The powerful state Coastal Commission needs to approve the project as well. It will assess the project’s environmental impact and affect on public access to the waterfront. Local labor organizations and the Chargers, who are angling for a downtown stadium, are dubious the commission will sign off.
The Council President vs. Labor
Right before the vote, Council President Tony Young threw a barb at organized labor. Labor has been the most vocal group opposed to the expansion’s financing plan and has sent reams of legal letters saying the expansion should go to a public vote.
From the dais, Young indicated that labor would be less concerned about a public vote if some of its demands about the project were met.
After the meeting, Young elaborated that he believed labor wouldn’t be agitating for a public vote if the council decided to build the project through a union-friendly deal known as a project labor agreement.
“I think people need to be a little more forthright,” Young said.
Lorena Gonzalez, who heads the San Diego Imperial-Counties Labor Council, said she’s been clear with city officials about what her organization needs to support the project. She wants a local-hire deal, a commitment to keep the center itself under public control and a discussion about tourism job quality with the hotel industry.
“If they don’t believe us, then they should ask the voters,” Gonzalez said.
Gonzalez added that she believed the local-hire deal and public control of the center eventually will happen. But she said that the third was the least likely.
That Young publicly called out labor during Monday’s hearing escalates the spat between Gonzalez’s group and the council’s Democratic majority. The Labor Council recently graded all the council members on what it called the “Working Families Report Card” and only two scored higher than a “D.” Young received an “F.”
He didn’t agree with the score.
“I don’t grade myself on what labor says about me,” Young said.
Congressman Bob Filner appeared in council chambers Monday to speak about the Convention Center. Young greeted him warmly.
“We are honored to have a sitting Congress member here in the chambers today, Congress member Bob Filner,” Young said. “Mr. Filner, welcome.”
Filner, who is running for mayor and is the lone major candidate opposed to the expansion plans, thanked Young. And then Filner proceeded to rip the deal for the next three minutes. As he’s done times before, Filner called the plan, “the most blatant giveaway I have seen in my many decades of dealing with City Council.” He’s agitating for a public vote.
He named his mayoral opponent, Councilman Carl DeMaio, numerous times. DeMaio smiled at Filner in response.
When it came for DeMaio’s turn to speak during the hearing, he continued to try to walk the line between his taxpayer watchdog persona and his support for the expansion and the tax increase it requires.
DeMaio said that he’d continue to push for a hard cap on the city budget’s contribution to the expansion and work to reduce the budget’s share to zero.
“There I think we have a little bit more work to do,” DeMaio said.
He said he had “cautious optimism” that it would happen by the time the project was approved.
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. What should he write about next?
Please contact him directly at firstname.lastname@example.org or 619.550.5663.
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