By Ana Gomez Salcido and Sandra G. Leon
an Diego Mayor Kevin Faulconer has asked the City Council to place a proposed hotel room tax increase on the November ballot to fund expansion of the Convention Center, repair local streets, and deal with homelessness in the City.
Mayor Faulconer’s proposal outlines a staggered hotel tax increase that would add 1% to all hotel rooms in the City of San Diego, an additional 1% to hotels between SR56 and SR54, and another 1% for all hotels within downtown. The proposed tax increases would in place for up to 40 years.
“The Mayor is proposing a ballot measure to increase the lodging revenue that the City collects from tourists to fund the expansion through voter approved debt, and is proposing to leverage this opportunity to address two more of San Diego’s biggest issues – homelessness and repairing our roads,” states a report to the City Council issued by the Mayor last week.
The proposal outlines that anticipated revenues from the hotel taxes would pay for the convention center expansion, estimated to cost up to $685 million, provide up to $900 million in funding for homeless programs, and up to $900 million for street repairs.
“This ballot measure will create jobs, fix streets and help reduce homelessness in our city,” Mayor Faulconer said at a press conference this week. “Our convention center must be modernized and expanded to keep up with other cities that are taking away from our tourism business.”
Voters rejected a hotel room tax on last November’s ballot that would have funded a sports stadium downtown for the Chargers. That ballot proposition, Measure C, would have raised hotel room taxes by 4% to pay for a combined stadium and convention center, which became known as the Convadium.
This new hotel tax proposal is targeted mainly at funding a contiguous convention center expansion to attract more and larger shows and, thereby, drawing more hotel room visitors.
“I’m not asking San Diego taxpayers, who are being taxed enough already, to shoulder this burden,” Faulconer said. “We have an opportunity to move the ball forward on three major issues that are important not only to our tourism economy but to every San Diegan,” the Mayor added.
The current the San Diego Convention Center facility has reached maximum occupancy and a lack of available space is the number one reason clients are not able to bring business to San Diego.
The benefits to modernizing and expanding the convention center include adding 400,000 square feet of rentable exhibit, ballroom, and meeting space, and adding up from 816,000 square feet at the current facility. Indirect benefits also include generating over $500 million in direct spending at local businesses and a regional economic impact of $860 million, and creating thousands of construction jobs and nearly 7,000 permanent jobs.
The Convention Center hopes the expansion would create capacity for more than 50 additional events and 334,000 attendees annually.
The Mayor’s proposal also outlines using a portion of the projected revenues to address homelessness and repair streets throughout the City.
The proposes creates the City’s first dedicated revenue stream to address homelessness to support long-term regional efforts to address chronic homelessness and programs to prevent at-risk people from becoming homeless. Although the proposal does to provide details on exactly which programs would be funded or clear mechanism to perform the services, it does outline several concepts, including: increasing affordable housing; creation of Support Services Assessment Center(s); prevention and diversion initiatives; rental assistance; outreach, housing and case navigation services; and support for a regional homeless services delivery.
New hotel tax revenues would also be allocated for road repair by creating a new fund dedicated to repairing roads throughout the City, including: slurry seal, asphalting, paving, and concrete replacement; street reconstruction; and general road infrastructure and right-of-way improvements.
Mayor Faulconer’s hotel tax proposal is supported by tourism, hotel, and convention advocates, including Joe Terzi, President and CEO of the San Diego Tourism Authority.
“The completion of the expansion of our convention center is not only vital to our tourism economy, but to our region’s economy as well. Because of the center’s limited size, San Diego cannot stay competitive with other convention destinations and every year misses out on major business opportunities,” Terzi said at the Mayor’s press conference. “This results in the loss of millions of dollars in tax revenue that could be used to resurface our streets and hire more police officers and lifeguards.”
A previous hotel tax increase passed in 2012 was overturned in court because the special tax was approved by a vote of only hotel owners, not by voters at large. That halted expansion plans for the Convention Center. The proposed expansion plan has been approved by the California Coastal Commission, Port of San Diego, City of San Diego and San Diego Convention Center Corporation Board, and is currently included in the Port Master Plan.