The Morning Report
Get the news and information you need to take on the day.
First things first: The only thing that actually happened in the stadium saga Tuesday was that the Chargers announced they are supporting the so-called Citizen’s Plan for San Diego, the hotel-room tax hike and land-use plan put together by attorney Cory Briggs and JMI Realty.
But that’s a big deal!
Refresh your understanding of the genius (and problems) in the plan here. It’s something that has unexpectedly united the former head of downtown redevelopment, Fred Maas with longtime civic activist Donna Frye, Briggs and former Padres owner John Moores.
This new alliance is about to face off with Mayor Kevin Faulconer and whatever network he assembles.
Or will it?
Here are some things to know:
The mayor and Chargers are now openly fighting.
For a couple weeks, there has been a sort of cold war going on under the surface, as the mayor pushed the Chargers to go with his Mission Valley plan for a new stadium and the team made it clear it still preferred downtown.
It came out in this piece from Liam Dillon. The mayor’s chief of staff, Stephen Puetz, not one to speak on the record to reporters much, threw shade at the plan to pay for a downtown stadium that was created by a respected stadium guru the city has itself used.
Puetz said the plan was not reputable. He said it would require voter approval at a two-thirds threshold, which he claimed would be impossible.
The mayor had said he was open to a downtown stadium. But he clearly opposed what was the only plan for a downtown stadium.
More interesting now is to see if the mayor follows through on his pledge from January’s State of the City speech. In that address, Faulconer said he would put on the ballot a plan to expand the Convention Center on its current plot. It would be a tax increase that would require a two-thirds vote.
Somehow that two-thirds vote is not an impossible threshold.
If the mayor follows through with that for the June ballot (it would be crazy to see all these on the November ballot) then he will be literally trying to kill the Chargers plan.
This, only a few weeks after they were all smiles when the team was sent back to negotiate with San Diego and it was a new day.
Will the Citizens Plan require a two-thirds vote?
That’s the big question. In their response to the Chargers’ announcement, Faulconer and County Supervisor Ron Roberts say it can’t pass voter approval.
“But it is abundantly clear that a ballot measure that raises taxes for a stadium must be approved by two-thirds of San Diego’s voters,” their statement reads.
It’s not abundantly clear. It’s the law.
What’s not clear exactly is whether that law applies here.
Here’s the deal: In California, tax hikes that fund a specific purpose, like, say, a new Convention Center, require the support of two-thirds of voters to be implemented.
If you want a tax hike that just generally gives the money to government, it only requires a simple majority of voters.
The Citizens Plan is a tax hike — an increase to the transient occupancy tax. The city levies a 10.5 percent tax on hotel room bills. The initiative would raise that to 15.5 percent. The money goes to city. And that should mean it only requires a simple majority of voter support to implement.
The initiative also allows hotels to deduct the tax down from 15.5 percent tax when they send the money to the city. If hotels invest in tourism marketing, they can cut the levy down 2 percent.
If they invest in an annex to the Convention Center, they can cut it another 2 percent. It’s a bit more complicated than that but basically that’s how it works.
Briggs and supporters say these investments are completely voluntary. They’re just offers on the table. If they aren’t used, the full 15.5 percent is charged and the money goes to city. But this is untested. If someone challenges it in court, they’ll have to prove it was a shady way to earmark what the tax would pay for — triggering the two-thirds requirement.
The Chargers have obviously decided it’s worth the bet. It will be interesting to see who stands up to make this argument. The city attorney has been silent.
Someone may argue that the money is obviously going to fund a stadium. But that’s why the Chargers and JMI Realty — the main company supporting an annex to the Convention Center — will argue that there is actually no public money going to a stadium.
They’ll say that the public money, through this tax-deduction mechanism in the Citizens Plan, will pay for the Convention Center annex. That will merely, sort of, hold up the stadium, which will cost about the same amount the Chargers, the NFL and their corporate sponsors might be willing to pay.
The big question that remains, aside from whether the mayor will pursue the competing vision and tax hike for the Convention Center, is whether the Chargers will pursue an initiative on top of the Citizens Plan — or complementary to it, I should say.
In other words, will voters have to approve both the Citizens Plan and a stadium plan?
The Chargers’ special counsel, Mark Fabiani, said it was unclear.
“We are still evaluating the various options and working closely in doing so with Frye/Briggs coalition and with JMI. At this point I can’t answer your question,” he wrote in an email.
But in one of his multiple radio appearances, Maas implied there would be an initiative that more clearly laid out the stadium design and other issues.
So stay tuned.
Not a lot actually happened Tuesday except that an unprecedented coalition of big shots, a reviled (but often successful) public interest lawyer and a longtime community activist politicians have joined with the former owner of the Padres and his allies to challenge the mayor and existing downtown power structure in a fascinating way.