Mayor Kevin Faulconer’s plan to raise hotel room taxes to pay for an expansion of the San Diego Convention Center and fund other priorities received a mixed reception Monday from the City Council and members of the public.
Faulconer first signaled his intention to get the long-stalled expansion project off the blocks at his “State of the City” address in January. He said the tax increase, which would go before voters for approval, would also raise money for road repairs and programs that address homelessness.
The increase would range from 1 percentage points to 3 percent percentage points, depending on proximity to the center. Those closest, which would benefit the most, would pay the higher amount.
The hotel room tax is currently 10.5 percent citywide, with an additional 2 percent fee that funds tourism promotions.
Nearly two-thirds of the new revenue would go toward the expansion project. The rest would be split evenly between road repairs and homeless programs.
Tourism industry leaders contend that San Diego has been missing out on the largest trade shows because of a lack of space. Officials in other cities with larger facilities have for years been trying to get the largest local show, Comic-Con International, to move out of town.
According to a staff report, adding 400,000 square feet of exhibit space would generate $509 million in direct annual spending at local businesses and have a regional economic impact of $860 million.
The report said the current expansion price tag was $685 million and growing.
Expansion was approved six years ago, but has been stalled by litigation over environmental and funding issues.
The latest hitch is that so much time has passed that control of land needed for the expansion has reverted to a private entity, Fifth Avenue Landing, which is required by its lease with the Port of San Diego to proceed with a hotel project of at least 400 rooms.
“Moving a public vote forward would be a direct interference with our contractual relations and put our project in serious jeopardy,” said Ralph Hicks, Fifth Avenue Landing’s project manager, told the council members.
“We fully intend to build our project,” Hicks said. “We’ve engaged in discussions with the city for over eight years and they have not proved fruitful, and we do not believe they will (be) going forward.”
The mayor’s office said discussions are underway to resolve the conflict.
Other public speakers during the nearly 90-minute meeting said city money could be better used for affordable housing, and that the $5 million estimated cost of a November special election would be wasted money, given the difficulty of garnering two-thirds voter support of a tax hike.
The estimated $5 million cost for the special election is included in Faulconer’s proposed $3.6 billion city budget for the 2017-18 fiscal year.
Council members on both sides of the political aisle questioned various aspects of the proposal, some suggesting it would be wrong to call a special election just months after voters approved a City Charter amendment that required major propositions to go on a general election ballot.
The City Council is scheduled to vote on whether to place the issue on the ballot at a June 12 meeting.
–City News Service