Ballot initiative for convention center expansion, homelessness launched

A long-stalled effort to expand San Diego’s convention center was revived Monday with the announcement of an initiative to raise the city’s hotel room tax.

  • The measure, targeted for the November ballot, would raise $6.4 billion over 42 years, with the revenues raised divvied up among the expansion project, homelessness initiatives and road repairs.
  • The bulk of the revenues would go for an expansion project, but $2 billion would be set aside for homeless services and permanent housing.
  • An estimated $600 million would be spent on repairing roads
  • The hotel tax, now at 12.5 percent (including a 2 percent tourism marketing surcharge), would be raised by 1.25 to 3.25 percentage points, depending on how close hotels are to the downtown convention center.
  • The coalition supporting the initiative effort includes hotel owners, business leaders, labor unions and homeless advocates.

Convention center/homeless initiative: Here’s the full story

A coalition of San Diego tourism, business and organized labor leaders announced Monday that they are launching a citizens’ initiative to significantly increase the hotel room tax to fund an expanded convention center, homeless solutions and road repairs.

The proposed measure, which backers hope to qualify for the November ballot, seeks to revive a long-stalled effort to enlarge the bayfront center years after a court ruling nullified a hotelier-approved tax hike to finance the project.

They also hope to accomplish what Mayor Kevin Faulconer could not last year when he was unable to persuade the City Council to hold a special election to consider a similar tax proposal for the expansion and homelessness. Hoteliers and tourism leaders have argued for years that the city is losing out on hundreds of millions of dollars in business because the current center is not big enough to accommodate larger, more lucrative conventions.

What is notably different from Faulconer's earlier proposal is that some $2 billion would be dedicated for homeless funding, which well exceeds the more than $900 million the mayor’s plan would have authorized. An estimated $600 million would be dedicated for road repairs.

Advocates point out that funding for homelessness would get a big boost during the first five years, when 41 percent of the money collected, or $140 million, would go exclusively to addressing the city’s growing homeless population.

Now with a united front that includes the crucial backing of the labor unions, as well as some homeless advocates, supporters of what is being dubbed Yes for a Better San Diego are hoping the plan will resonate with voters.

“When you look at an unprecedented coalition of people coming together about a common topic, it took something that was this severe,” hotelier Robert Gleason of Evans Hotels said of the homeless issue. “And if everyone kept looking at their own parochial interests, it wouldn’t solve what is really a regional crisis.”

The city’s building trades also saw the value in supporting the measure, although no promise was made of a project labor agreement, said Carol Kim, of the San Diego County Building Trades Council, which is backing the effort. Such labor pacts effectively guarantee union-level wages and benefits.

“The thing that actually took the longest in this was not the labor issues per se, but what took the longest as we were negotiating this was the discussion of the homelessness dollars and how we were going to protect them,” she said.

Kim noted that in the mayor’s original proposal, the homeless money was contingent on the convention center expansion being built but “this time around we made sure that the homeless revenue was protected specifically to that revenue stream.”

Faulconer, in an e-mailed statement, said he applauded the initiative, saying it “aligns with the vision that I laid out last year, so it's great to see this groundswell of community support for a comprehensive solution.”

The group hopes to launch a signature-gathering drive within the next month. More than 71,600 valid signatures will be needed to qualify the measure for what will be a very crowded November ballot. The goal is to collect 112,000 signatures by late May or early June.

What will it do?

Under the measure, which has yet to be publicly released, voters will be asked to raise the city’s transient occupancy tax by 1.25 to 3.25 percentage points. The highest rates would be paid by those staying in downtown hotels, closest to the convention center, while Mission Valley properties would be subject to the 2.25 percent rate. Guests at hotels in the northern and southern periphery of the city that benefit least from a convention center expansion, would see the lowest room rate.

The proposed rate hikes are a quarter percentage point higher than the original proposal because of the realization more money needed to be raised to address homelessness, Gleason noted.

Hotel guests currently pay a 10.5 percent room tax, although there is an additional levy of 2 percent for hotels of 70 rooms or more to pay for tourism marketing.

The room rate hike, said Gleason, would raise an estimated $6.4 billion over the course of 42 years, with the majority going to the convention expansion, estimated to cost as much as $685 million. Not only would the tax revenues cover the interest on monthly bond payments to finance the construction, but they would also be used to modernize the existing center, operate and maintain it and market the enlarged center to attract new meetings business, Gleason explained.

Monday’s announcement follows months of closed-door meetings and negotiations among stakeholders who were instructed to not talk publicly about the substance of the planned initiative.

A key component of the measure is funding to address one of the city’s most vexing issues — the rising homeless population.

While homeless advocates and social justice groups were part of the early discussions about a multi-pronged initiative, some dropped out after feeling the measure fell far short of adequately addressing the homeless problem.

It is expected that the funding raised for homelessness could be used for services as well as permanent housing.

Dueling homeless efforts

Bob McElroy, president of the Alpha Project, said he supported the initiative because it would create a steady stream of income for his organization and other groups that help the homeless.

“We’ve never had a consistent funding stream,” he said, noting that even the three large tented shelters the city has created to help about 700 homeless people are only funded through July.

The money, if used smartly, could go a long way, said McElroy, noting that just last week he looked at a 159-unit building that could be bought for $7 million.

“It’s just pennies on the dollar what new construction would cost, but we don’t have the money for it,” he said. “If we did, I could do this in two months.”

Meanwhile, others have launched efforts of their own, including Councilman David Alvarez, who is proposing to amend the City Charter to direct any growth in transient occupancy tax revenues over the next 20 years to fund homelessness services, shelters and permanent housing solutions. It is among a number of ballot measures the City Council’s Rules Committee will consider on Wednesday.

In an e-mail Monday, Alvarez said the initiative was the wrong approach to helping the homeless.

“San Diego has a homelessness crisis, not a convention center crisis,” he wrote. “The goal of this ballot measure is to expand a convention center. The goal of expanding a convention center is to increase profits for wealthy hotel owners. Our focus needs to be reducing homelessness in our city, not raising taxes to make the rich richer.”

There is yet a third measure, which comes from Stephen Russell, who heads the Housing Federation and is backing a $900 million bond measure to build affordable housing that he hopes the City Council will agree to place on the ballot.

Russell said he does not see the two initiatives as competing with one another, calling them “highly complementary.”

The two would work together, he said, because the Housing Federation proposal, which would raise the property tax, would only build houses while the citizens’ initiative could fund services to help the homeless living in the new units, an important component for solving homelessness in the long-term, he said.

Even if the initiative succeeds in qualifying for the ballot, many obstacles remain, not the least of which is gaining the approval of voters, who have been historically resistant to tax hikes, even if they’re imposed on visitors. While a recent Supreme Court ruling appears to make it easier to pass tax increases for special purposes with just a simple majority, backers say they will run their campaign with the goal of garnering a two-thirds majority of the voters.

Also a major hurdle is gaining control of the site, located on the bay side of the convention center. Plans for a $300 million hotel project that would occupy much of that land is currently headed to a hearing before San Diego Port commissioners this spring.

The development team, which includes longtime Port of San Diego tenants Ray Carpenter and Art Engel, controls the state tidelands site via a lease that is not due to expire until 2024. Amid escalating tensions between the city and the developers, Fifth Avenue Landing filed a lawsuit last year asking for a court order that would effectively bar the city and the Convention Center Corp. from continuing to pursue an expansion of the center on land it says they do not control.

Until two years ago, the Convention Center Corp. had control over the five-acre site but opted to back out of a deal it struck in 2010 to acquire the leasehold at a cost of $13.5 million after funding for the expansion fell apart.

If voters were to pass the hotel hike measure, the city would be able to rely on a previous approval by the California Coastal Commission of a then $520 million expansion. Attorney Cory Briggs later filed suit challenging the approval, claiming it violated state environmental laws, but a judge rejected his suit, and Briggs has since appealed.

lori.weisberg@sduniontribune.com

(619) 293-2251

Twitter: @loriweisberg

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