On Monday, April 3, Mayor Kevin Faulconer met with tourism, lodging, and civic leaders to unveil a ballot measure to create jobs, repair roads, and reduce homelessness. The ballot measure seeks to upgrade the San Diego Convention Center to complement the tourism industry in San Diego, dedicate funding towards street repair, and earmark money to tackle homelessness. To raise the required funds, the measure proposes raising the transient occupancy tax, or the hotel tax, by up to 3 percent. This tax would impact San Diego visitors staying overnight. “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 forwards on three major issues that are important not only to our tourism economy but to every San Diegan.”
The transient occupancy tax is taking shape in a “3-2-1” format. Tier 1 states all lodging businesses in the city would see a 1 percent transient occupancy tax increase, Tier 2 states all lodging businesses south of Highway 56 and north of Highway 54 would have an additional 1 percent transient occupancy tax increase, and Tier 3 states all lodging businesses situated in the downtown area are subject to yet another 1 percent transient occupancy tax increase. Even at the maximum of a 3 percent increase, San Diego’s transient occupancy tax rates will be less than competitors like Los Angeles, Orange County, San Francisco and Orlando. Modernizing the San Diego Convention Center is arguably the biggest item on the measure. Citing a lack of available space, conventions are choosing not to bring their business to San Diego, and the potential economic activity accompanying those events are unavailable to local businesses. Joe Terzi, president and CEO of the San Diego Tourism Authority, said, “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.” The measure plans to increase the usable area on the convention center by 400,000 square feet, on top of the existing 816,000 square feet. The expansion will bring in an estimated 50 more annual events, 33,000 attendees, and 380,000 overnight stays to boost the local economy. Additional benefits include about a 1,000 construction jobs and 7,000 permanent jobs, $509 million in direct spending at local businesses and a regional economic impact of $860 million, and an extra $15 million yearly to help fund city services like public safety, parks, and libraries. Within the estimated funds raised by this ballot measure, $10 million is set aside for street repair, and as transient occupancy tax revenue grows over time, $150 million set aside in a decade, and $900 million over 40 years. Moreover, the City Council will have the ability to leverage $10 million in annual revenue to issue tax-exempt bonds to generate $150 million in FY 2019 for street repair. This revenue will help fix and maintain hundreds of miles of damaged streets, replace concrete, improve right-of-way areas, and increasing quality of general road infrastructure. The ballot measure also creates the city’s first dedicated revenue stream to address homelessness issues. Studies show that it is less expensive to provide housing for the homeless than it is to pay for emergency services, hospital visits and law enforcement. Much like the plans for street repair, the ballot measure has $150 million set aside over a decade, and $900 million over 40 years as well as giving the City Council the ability to leverage $10 million in annual revenue to issue tax-exempt bonds to generate $150 million in FY 2019 for homeless programs. Overall, this more than triples the city’s existing general fund contribution for homeless funding. Faulconer has asked the City Council to call a special election in November for this ballot measure, citing the seriousness of the homelessness crisis, the need for road repair, and increasing project costs for the convention center expansion. The measure will require a two-thirds vote to pass.