Mayor Touts Hotel Tax for Convention Center Expansion, Homeless Aid, Street Fixes

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Mayor Kevin Faulconer, joined by business and political leaders, announces the ballot measure in front of the San Diego Convention Center. Photo by Chris Jennewein

Mayor Kevin Faulconer on Monday threw his support behind a hotel tax increase to fund expansion of the San Diego Convention Center, street repairs and homeless services.

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Faulconer, who was joined by hotel and tourism officials at a press conference outside the center, said he will ask the City Council to call a special election in November.

The proposed measure would raise the transient occupancy tax paid by hotel guests from 1 to 3 percentage points depending on the area of the city.

“The only people who will have to pay this very modest increase are the tourists and hotel guests,” he said. “We can finally — and I mean finally — fund the contiguous expansion of the San Diego Convention Center.”

The expansion could cost up to $700 million and take four years as construction is scheduled around convention activity.

The project would be financed with a bond issue, but the increased tax revenue would generate funds to pay off the bonds. In the first full year, the tax would generate an estimated $53.7 million, with $33.7 million earmarked for the convention center.

The remaining tax revenue would be used to fund homeless programs and infrastructure repairs, with the mayor committing to spend $10 million annually on each.

The ballot measure is similar to one backed by the Chargers last November, but in that case the increase was more and the funds would have gone entirely to a new stadium that could also be used for some convention activities.

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That measure was defeated, but Faulconer said it is now the “right moment” to present a different ballot measure.

“We have everybody working on the same page. We haven’t had that before,” he said.

Joe Terzi, president and CEO of the San Diego Tourism Authority, said the convention center has a $1.1 billion annual impact on the city, but thats can’t grow without an expansion. He said the hotel industry believes the benefits of an expansion far outweigh the added costs for guests.

“We couldn’t be happier than to be here today,” he said. “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,” he added.

The city said modernizing and expanding the convention center would:

  • Generate $509 million in direct spending at local businesses and a regional economic impact of $860 million
  • Create thousands of construction jobs and nearly 7,000 permanent jobs
  • Add 400,000 square feet of exhibit, ballroom and meeting space, up from 816,000 square feet at the current facility
  • Retain and attract large conventions like Comic-Con International
  • Create capacity for more than 50 additional events and 334,000 attendees annually

The $10 million earmarked annually for reducing homelessness would grow over time as hotel stays increase.

“A new continuing source of city funding is essential to overcome one of the biggest challenges to addressing homelessness — limited resources for permanent supportive housing and additional homelessness programs,” said Richard Gentry, president and CEO of the San Diego Housing Commission.

Representatives of Comic-Con and the lodging industry praised the ballot measure.

“We’ve long felt a contiguously expanded convention center would best serve the citizens of San Diego as well as the many convention planners who hope to hold their events in America’s Finest City,” said Comic-Con spokesman David Glanzer. “We applaud the mayor’s efforts and are heartened by the support of civic and community leaders.”

Mike McDowell, CEO of the San Diego Lodging Industry Association, said his industry supports the plan and is not concerned about the increased cost to tourists.

“This plan will actually help businesses and workers that rely on tourism because, if approved, San Diego’s transient occupancy tax would still be below the rate of our key competitors,” said McDowell. “But we need to act now because San Diego is losing jobs and revenue to Los Angeles, Orange County, San Francisco and Orlando because of our outdated convention center.”

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