While a compromise struck recently by City Council to phase-in proposed special-event fee increases for nonprofits is helpful, it’s not nearly enough to support a live-events industry on the brink of collapse from pandemic restrictions, said an industry spokesperson.
“The cost increases are coming from all sides after many of us in the live-events industry didn’t work for the last 18 months,” said Laurel McFarlane, president of the San Diego Event Coalition. “Other industries like hairdressers and gymnasiums were able to find ways to work. But our industry was almost completely shut down. It hasn’t been open since June 2021.”
Added McFarlane: “There just seems to be this non-understanding that there is a complete industry here that basically just took it on the chin during the pandemic. But instead of giving us a few years to recover, the City is potentially increasing fees in an industry that’s barely hanging on as it is.”
The fee controversy erupted after a recent City proposal to hike 50 different user fees 40 percent or more to recover costs and generate a projected $8.4 million in annual revenues. It is the first time City user fees for events have been raised since 2013.
On Feb. 14, District 1 Councilmember Joe LaCava got unanimous approval for his amendment to more slowly phase in an increase in special event fees for nonprofits over four years instead of two. He argued the change will significantly lessen the burden for nonprofits while reclaiming some City fee revenues.
“There are 580 different fees the City charges to nonprofits and commercial enterprises, and these fees have not been changed in over 10 years,” LaCava said. “[The fees] were no longer comparable to what it costs the City to provide those special services.”
LaCava pointed out one fee hike proposal that drew nearly all of the negative reaction was for special events operated by nonprofits served by uniformed police officers. “The City’s original proposal was to keep the current hourly rate the same for one more year, bump it up 50% next year, then bump it up again to the full rate in the third year,” said LaCava, pointing out that increase would take fees charged for uniformed police officers at special events from $55 an hour to $119 an hour in two years.
“My recommendation was to spread that over four years to make it more of an incremental increase to get the City back its costs while giving a longer ramp-up time for nonprofits,” said LaCava. “That allows them the ability to adjust, and in some cases rethink, how they can more effectively host their events, and have better control of those costs. It isn’t a perfect solution. But it gives a little more breathing room for nonprofits and the San Diego Event Coalition.”
Racquel Vasquez, senior City spokesperson said that, according to City Council Policy 100-05, the City performs a comprehensive user fee study every three to five years. “The study aims to identify the cost of service for activities that charge user fees and develop target cost-recovery rates that could bring existing fees in line with full or partial cost recovery, depending on City policy goals. Police special-event fees will not see an increase next fiscal year.
“However, the fees will gradually increase over three years arriving at a total subsidized cost of 33%. In other words, only 67% of the cost to provide the service will be recovered by the City. The increase in costs is a result of salary and benefit increases and the fact that these fees have not been raised in a long time.”
To put things in perspective about fee increases, McFarlane said special events for rental of tents, tables, chairs, etc. that cost about $75,000 in 2020 would go up to more than $225,000 under the new fee structure for the exact same rentals.
Those kinds of increases, McFarlane warned, will necessitate major changes – and cutbacks. “We will have to modify the events because no one can afford those kinds of increases,” she said. “It’s just at the point where free events are going to have to go away because they’re no longer (financially) sustainable. We’re just asking, as a coalition and an industry, to not have more fees right now. It’s the exact opposite of what the industry needs.”
McFarlane added: “We understand there need to be some fee increases. We’re just saying we need to get all the stakeholders to come to the table and come up with a financing plan that’s somewhere in the middle. We need to have a meaningful dialogue with the City Council to tell the side of the event industry, and to tell the City that it needs to find other revenue streams to help subsidize nonprofits and free events.”
LaCava thinks his plan to phase in cost increases over a longer period of time is a fair and workable compromise. “I crafted a solution to meet the needs of both the City and our community partners,” he said. “While the City needs to recover its costs in providing special services, it can reduce the sticker shock of catching up after past administrations failed to implement incremental fee adjustments over a reasonable time frame. These nonprofit-sponsored special events increase our quality of life and add to the city’s economy.”
