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Days after Mayor Kevin Faulconer pitched a hotel-room tax hike that aims to throw some cash at addressing San Diego’s homelessness crisis, some City Council Democrats are already pushing for a larger commitment.
One of them is negotiating with the mayor’s office and hoteliers.
The current version of Faulconer’s proposed November ballot measure prioritizes the San Diego Convention Center. More than 60 percent of the roughly $660 million projected in the first 10 years of collections would pay off a waterfront expansion of the facility and fund capital and maintenance projects.
The measure would direct about 18 percent each to homelessness services and street repairs over its first decade.
Here’s a visual of how the tax breakdown looks for now:
Faulconer has said he believes a waterfront Convention Center expansion is crucial and that the city must fast-track it given the rapidly increasing cost of the project. He saw an opportunity to get money — guaranteed every year for decades — to spend on homelessness and street repairs in a hotel-tax measure for the expansion.
This past year, the city budgeted about $2 million for homeless services. If the ballot measure passes, Faulconer says that amount would more than triple.
He’s said even more money could go to homelessness if the City Council opts to pursue a 2019 bond that could pull in up to $140 million.
But homeless advocates criticized the mayor’s proposal at a City Council committee hearing last Wednesday, saying it’ll do little to stem a growing problem.
Three Democratic City Council members also called on the mayor to do more.
City Council President Myrtle Cole and City Councilwoman Barbara Bry said they’d like to see a greater investment in homelessness solutions, particularly in the initial years after the measure passes.
City Councilman Chris Ward, who represents the central city neighborhoods where street homelessness has boomed most, asked about that possibility, too.
He’s pushing even more behind the scenes.
Ward confirmed he’s had multiple meetings with Faulconer’s team. He’s also talked with leaders at the San Diego Tourism Authority and San Diego Hotel-Motel Association.
Ward’s asked Faulconer and hoteliers if they could increase the hotel tax by more than 1 percent to 3 percent. He’s also mulling other scenarios.
Ward floated adding an another half percentage point or 1 percent increase for downtown hotels specifically for homelessness.
“I think we certainly need more funding for homelessness, and I think there might be some more appetite out there for a (hotel-tax) adjustment that will render more funds for homelessness,” Ward said.
What Ward’s proposing would add to the roughly $12.1 million the mayor’s office predicts will come in annually for homelessness under Faulconer’s proposal over the next decade.
It’s not clear how much traction Ward’s pitch will get.
Joe Terzi, CEO of the San Diego Tourism Authority, said hoteliers are cool to the idea of a heftier tax hike.
Just getting downtown hoteliers to accept a 15.5 percent hotel-tax rate was difficult, Terzi said. “What I told [Ward] is we don’t support any more than that.”
Felipe Monroig, Faulconer’s deputy chief of staff, said at the Wednesday hearing that the mayor is open to negotiations.
Monroig suggested there might be flexibility within the mayor’s proposal to “maximize funds.”
Still, Monroig told Ward, the mayor’s committed to the current taxing structure that hoteliers signed off on.
What Ward proposed wouldn’t be the only route to more homelessness cash in the early framework of the mayor’s measure.
Cole, the City Council president, called for a greater share of new hotel-tax dollars to go to homelessness. That’s one option. It’s not clear what would have to be sacrificed to free up more money.
Terzi said he thinks hoteliers might be open to that but said they’d defer to the mayor’s office.
Then there’s the possibility of pledging to invest excess cash that comes in to homelessness. The mayor’s office projects the tax hike could bring in $5 billion over 40 years. That is more than what’s needed to expand the Convention Center, or to supply the annual cash to homelessness and street repair projects that the mayor’s penciled in.
Faulconer hasn’t outlined where all that new money should go. He’s said some of it could bankroll Convention Center upgrades beyond the expansion and that some could flow to yet-to-be-detailed tourism uses.
There could be even more new cash available if the hotel-tax collections exceed initial projections.
One challenge for folks hoping for more money for homelessness now: Early projections suggest there won’t be excess money flowing in the initial years of the measure.
That means the surest path to more new money in the early years of the current version of the measure is the bond. If the City Council chooses, it could seek up to a $140 million bond in 2019.
Whatever city leaders choose, the path to two-thirds voter approval, the threshold required to pass this kind of tax increase, will be difficult – and one pollster says the homelessness piece doesn’t necessarily help the odds.
Polling firm Competitive Edge surveyed 800 potential city voters about a month ago and heard folks were most interested in seeing the city prioritize street repairs, homelessness and affordable housing.
Of those, 80 percent said they thought it was extremely important or very important for the city to address homelessness.
But San Diego voters, particularly conservative ones, tend to be hostile to tax increases. Competitive Edge CEO John Nienstedt said his years of polling haven’t shown those right-leaning voters are particularly interested in homelessness.
Nienstedt said he’d expect Democrats already open to tax hikes would be more predisposed to support the mayor’s tax measure with or without a homelessness component.
“We have a situation where the political reality is it’s very, very difficult to get to two-thirds for any tax-increase measure,” Nienstedt said. “I would say that just because we find that 80 percent say reducing homelessness is very or extremely important doesn’t mean it gives anyone room to say carte blanche it’s an easy tax to pass.”
Ward is grappling with the same political reality. He’s come away concluding city leaders should capitalize as much as possible on the special election.
“I think we should be using this to get as much as we can while the opportunity is presenting itself,” Ward said.