By Doug Porter
Oh, what a tangled web we weave in San Diego. Tourism tax dollars go into private coffers. Hotel owners snap their fingers and elected officials bow down before them. Our local politicians say and the media convey our most pressing needs as a meeting hall and a place to play football. The mayor fills potholes for TV cameras to make citizens feel better about it all.
The spoilers in all this have been lawsuits. The biggest one of them all is likely coming to trial shortly after the first of the year. San Diego’s hoteliers have spent millions of tourism tax dollars defending the indefensible. Their attempts to shoot the messenger, both in the courts and in the media seem doomed to fail.
It may sound a little complicated, but there is a way to straighten this mess out. A proposed initiative that would change the current system rolls out today, endorsed by the League of Conservation Voters and a host of others to be made public at an upcoming press conference.
Voter Approval: What a Concept!
The “Citizens’ Plan for the Responsible Management of Major Tourism and Entertainment Resources,” better known as the Citizens Plan, proposes to change the way the game is played downtown. Unlike the current system, the citizenry will get to vote on it.
Signature gatherers will begin to pop up around the city in the coming weeks. The plan is to get the initiative on the June 2016 ballot.
I’ll point out here that there are two reasons to oppose the plan being circulated.
- It’s too complicated and/or confusing. (Therefore, it can be thrown out in the courts.) My personal favorite are those saying the 77 page explainer (mostly legal citations saying it would follow precedents) is the same as what will appear on the ballot. The City Attorney has floated the idea that its complexity violates the single-subject requirement for initiatives in California.
- Attorney Cory Briggs came up with the concept. (And “everybody knows” how evil he is.)
Here’s the part of the equation that most of the early examinations of the Citizen’s Plan have missed:
There is a better than even chance that the current method of financing the Tourism Marketing District (a 2% fee, not-a-tax) will be declared null and void. Thirty million dollars a year will be taken off the table.
The preferred method at city hall, abetted by the moguls of the tourism industry, of dealing with this possibility has been to throw money at lawyers.
From Dorian Hargrove at the Reader:
Since January 2013, San Diego’s hoteliers have paid outside attorneys $2.1 million in hotel-tax revenues, according to numbers released by San Diego’s Tourism Marketing District pursuant to a public records request.
That number will increase, as the Tourism Marketing District’s attorneys are now in court defending the legality of the transit occupancy tax as challenged in a lawsuit from San Diegans for Open Government.
For an overview of how America’s Finest City got to this point, Scott Lewis’ article on the Citizen Plan in Voice of San Diego is a good place to start. And if you want to get real wonky about tourism taxes, Cory Briggs penned an up close and personal essay on these pages last year.
How Complicated Is It?
There are a lot of moving parts in the city’s management (or lack thereof) of tourism resources that need to be addressed to fix this broken system, but the concept is not hard to understand.
Here’s Donna Frye’s statement in support of the plan:
“The focus of the initiative is to reform management of our city’s tourism- and entertainment-related resources. The Pacific Ocean, its bays, its beaches, its rivers and tributaries are irreplaceable natural resources that define the quality of life for city residents and attract tourists who help fuel our local economy.”
“The initiative allows the public to vote on creating a more rational, transparent and fair process for management, enhancement and protection of these resources,”
“To do this properly we must manage all of these resources as a single, connected ecosystem. This is true both from an environmental perspective and from an economic perspective.”
The FAQ at the Citizens Plan website explains the complexity/single subject issue in plain English:
California’s ‘single subject’ requirement for initiatives has nothing to do with shortness or having only ‘one thing’ (e.g. having a kitchen but no bedroom in a single house). It requires that initiatives deal with one unified ‘subject.’ So, while it is fine to deal with a narrow issue — like building a kitchen — it is equally o.k. to deal with additional related matters (like building a bedroom and a bathroom) so long as they have a single unified subject (building the entire house).
What About the Stadium and Convention Center?
Another bit of mythology making the rounds is that the Citizen’s Plan makes a new stadium for the Chargers happen. And that is not true. None of the funding involved here would go to a stadium.
Now if the city council or the mayor decides on a mechanism for funding a stadium, it would still need to go up for a vote. Rumors have it this might happen at the mayor’s behest in June, provided he’s willing to gamble with tying the plan to his reelection effort.
What the plan does do is:
- Authorizes river-park, university-related and tourism uses of the Qualcomm Stadium site with or without a professional sports stadium (including NFL). Eliminates delays due to environmental litigation (California Environmental Quality Act, “CEQA”) for both Mission Valley and downtown. Allows for other uses upon voter approval.
- Authorizes, but does not require, a professional sports stadium (including NFL) in either Mission Valley, or within a defined downtown ‘Convention and Entertainment Overlay Zone’.
The other rumble came up in a Sunday UT survey of business types, asking the question “Could Cory Briggs’ “Pay Your Own Way Initiative” resolve the debate over a new stadium and convention center expansion?”
(The obvious answer would be “no” because the plan doesn’t set out to “resolve” the debate.)
The plan does nix the idea of building a contiguous expansion to the Convention Center, mostly because Briggs and others contend (and will sue to prove) it violates the California Coastal Act and would obstruct legally protected public access to the bay.
And the idea of a unified structure on the waterfront is near and dear to the downtown set currently in control of the Tourism Occupancy Tax. The problem is that there is currently no method to finance an expansion, contiguous or otherwise. So the price to be paid for getting that money in the future via a private/public matching funds mechanism is not build it where it will attract years of litigation.
The Fear of Higher Taxes
The taxes in question are paid by hotel guests.
One of the objections raised by a UT panelist was that the new tax structure would “likely put us at the maximum visitors will tolerate and equal the tax rate in San Francisco which is near the top of all cities.”
The Citizens’ Plan will raise San Diego’s TOT to 15.5% for large hotels (14% for smaller ones). Here are the tax rates for the city’s primary competitors: Anaheim (17%), San Francisco (16.25%), and Los Angeles (15.5%).
Going to the Voice of San Diego article mentioned about, we learn (emphasis mine):
The innovation from Briggs is this: The initiative would raise the hotel-room tax from the 12.5 percent it effectively is now, to 15.5 percent. But if hotels owners decide they still want the Tourism Marketing District (Hint: They do) they can prove they contributed to a new one, and deduct 2 percent. If hotel owners decide they want to build a Convention Center in the same way, they can deduct another 2 percent.
What’s more, it would also authorize the city to allow the visitor industry to take over operations of the Convention Center – something that has caused a beef between the Convention Center and the San Diego Tourism Authority for years.
In other words, Briggs intentionally designed the initiative to appeal to hotel owners.
Needless to say, this is bit uncomfortable for some of those hotel owners.
The Citizen’s Plan, because it doesn’t specify a use for the taxes in question can be approved by 51% of the voters. The city has twice tried to raise the hotel tax with dedicated monies (which require a ⅔ threshold) and failed.
The Fear of Cory Briggs
Having dealt with the known objections to the Citizen’s Plan, that leaves us with the ‘Cory Briggs is evil’ part.
As part of their efforts to get the lawsuits challenging the legality of the Tourism Occupancy Tax thrown out, the defendants have been trying to prove that Cory Briggs and the plaintiffs don’t have legal standing.
Curiously enough, a local investigative news outlet happened upon information leading to a series of articles strongly suggesting wrong-doing on Brigg’s part. He sued them, causing First Amendmentitus in some quarters, the courts agreed, and the case was dismissed.
The lawsuit got plenty of coverage. The investigative series, not-so-much. The outfit in question stands behind their reporting. They have vigorously denied assertions their reporting was politically motivated. And when that doesn’t do the trick, personal attacks have been in order.
The point here is that Briggs is a controversial lawyer. Whether or not that invalidates an attempt to clean up the mess in the local tourism business is what opponents are asking you to decide.
Try reading the plan, and then decide. That’s what all the cool kids are doing.
On This Day: 1915 – Joe Hill, labor leader and songwriter, was executed in Utah for what many believe was a framed charge of murder. Before he died he declared: “Don’t waste any time mourning. Organize.” 1919 – The Senate rejected the Treaty of Versailles with a vote of 55 in favor to 39 against. A two-thirds majority was needed for ratification. 1990 – Milli Vanilli was stripped of their Grammy Award because other singers had lent their voices to the “Girl You Know It’s True” album.
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Doug Porter
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The creative “explanation” of the single-issue test does nothing to ease my mind that the plan, as good as it may be, will be tied-up with legal challenges — as if Mr. Briggs were on the other side of it.
I’ll probably vote yes (if it DOES come to the ballot) but I’ll bet that courts will invalidate it if there is a legal challenge.
The proposed Citizens’ Plan initiative is in fact a complicated piece of legislation which our system leaves to the Legislature. Saying it addresses a single subject viz. “the Responsible Management of Major Tourism and Entertainment Resources” is a bit disingenuous. It is like saying that city government itself is a single subject. It may indeed be a visionary statement but in scope it is a mini-charter.