Image: Huckster PropagandaStatement: “This expansion will be done by private investment from the hoteliers,” Carl DeMaio, a mayoral candidate, said at a televised debate April 19.

Determination: Huckster Propaganda

Analysis: Ballots are due today in the election to raise hotel-room taxes by $1 billion over the next three decades to finance the majority of San Diego’s proposed Convention Center expansion. The city’s hoteliers are the ones casting the ballots and the process has attracted a good deal of scrutiny.


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At a televised mayoral debate last week, KPBS reporter Katie Orr asked candidate Carl DeMaio, a city councilman, why he supported this hotelier vote for the expansion. The Convention Center’s initial construction and a previous expansion, she noted, were approved by public votes.

DeMaio replied that the prior Convention Center deals were paid for with public money through hotel-room taxes while hoteliers will finance this one. Later on in the debate, he stated this point more explicitly.

“This expansion will be done by private investment from the hoteliers,” DeMaio said.

The city, however, plans to finance the project entirely with public money, through an effective increase in the same hotel-room taxes that paid for a previous expansion. No private investment is proposed. And DeMaio should know that. He’s voted for the expansion’s financing plan every step of the way so far.

Let’s quickly breakdown the current proposal. There are three sources of money for the project:

• $3.5 million annually for the next 30 years from the city’s day-to-day operating budget. This is money that otherwise could pay for regular city services, such as fire and police. But expansion supporters argue the project will generate more than enough new tax revenue to cover the city’s portion and provide a healthy profit.

• $3 million annually for the next 20 years from the Unified Port of San Diego.

• $35.7 million annually, eventually, for the next three decades from the hotel-room tax increase. This is the abnormal part of the deal. Typically, these kinds of tax-increase elections go before the public. In 2004, city voters twice rejected hotel-room tax increases for various purposes. This time, expansion backers were worried the public wouldn’t pass it again.

So instead, they developed a plan that allows the hotel industry to decide if it will tax its guests to finance the expansion. City Attorney Jan Goldsmith has said he’s not sure if this process is legal and will ask a court to sign off on it immediately after the plan is complete.

The whole financing plan would be much cleaner and definitely legal, Goldsmith said, if the public voted on it.

It’s this third part of the deal, the hotelier vote, that DeMaio was referring to at the debate. DeMaio’s campaign manager Ryan Clumpner amplified this point in a statement to us:

Privately owned hotels are voting to pay for the Convention Center expansion using funds that they will generate themselves. Those funds can only be used for the purposes of the Convention Center expansion. We can split hairs over semantics, but Carl DeMaio’s point remains that private businesses are producing funds that cannot be diverted for any other public purpose.

However, the tax functions the same as regular hotel-room taxes collected by the city. The lodging industry has called these kinds of charges “effective” hotel-room taxes. Goldsmith used all capital letters in describing the deal for emphasis: “To be clear, this IS a tax.”

And everyone involved in the deal admits this charge will be a line item next to the city’s existing hotel-room tax on visitor bills.

If hotel owners simply wanted to pool money together to build a facility, as DeMaio is suggesting, they could do that on their own without a vote involving the city. Instead, the hoteliers want to pass a tax, which would uniformly raise their fees across the board even for the hotels that don’t want it.

In short, San Diego visitors, residents and port tenants will pay for the expansion, not hotel owners.

Our definition for Huckster Propaganda is that a statement is not only inaccurate but it’s reasonable to expect the person knew it and made the claim to gain an advantage.

As a councilman, DeMaio is intimately involved with details of the expansion’s financing plan. It’s reasonable for him to expect to know its components. Two months ago he earned a Huckster Propaganda and a False for different statements about expansion financing.

Supporting this tax hike also doesn’t fit well in DeMaio’s anti-tax narrative, an approach so well-honed he has opposed a nickel increase to fines for overdue library books.

DeMaio’s statement about private investment not only was wrong, but also played to his taxpayer watchdog narrative.

If you disagree with our determination or analysis, please express your thoughts in the comments section of this blog post. Explain your reasoning.

You can also e-mail new Fact Check suggestions to factcheck@voiceofsandiego.org. What claim should we explore next?

Liam Dillon is a news reporter for Voice of San Diego. He covers San Diego City Hall, the 2012 mayor’s race and big building projects.

Please contact him directly at liam.dillon@voiceofsandiego.org or 619.550.5663.

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    This article relates to: Election, Fact Check, Government, Mayor 2012, News

    Written by Liam Dillon

    Liam Dillon is senior reporter and assistant editor for Voice of San Diego. He leads VOSD’s investigations and writes about how regular people interact with local government. What should he write about next? Please contact him directly at liam.dillon@voiceofsandiego.org or 619.550.5663.

    48 comments
    Jim Jones
    Jim Jones subscriber

    And professionalism extends not only to Goldsmiths dubious legal opinions, it extends to appearance as well. Looking professional does matter.

    Jim Jones
    Jim Jones

    And professionalism extends not only to Goldsmiths dubious legal opinions, it extends to appearance as well. Looking professional does matter.

    Jon Osborn
    Jon Osborn subscriber

    I thought it was a comb-over, not a rug. Either way, it has no bearing on his professionalism.

    Jon Osborn
    Jon Osborn

    I thought it was a comb-over, not a rug. Either way, it has no bearing on his professionalism.

    Jon Osborn
    Jon Osborn subscriber

    Carl DeMaio's worshipers clearly have an interest in this not being a tax, so no one claim he's in favor of a tax. So how (if at all) do DeMaioists reconcile his support of this hotel "thingy" and his opposition to the increase in fines for overdue library books? That was clearly and completely a fee, not a tax, and payment was 100% voluntary (in the sense that it could be avoided by simply returning one's library books on time).

    Jon Osborn
    Jon Osborn

    Carl DeMaio's worshipers clearly have an interest in this not being a tax, so no one claim he's in favor of a tax. So how (if at all) do DeMaioists reconcile his support of this hotel "thingy" and his opposition to the increase in fines for overdue library books? That was clearly and completely a fee, not a tax, and payment was 100% voluntary (in the sense that it could be avoided by simply returning one's library books on time).

    Jim Jones
    Jim Jones subscriber

    Hey David, Donna isn't running so you don't need to worry about that.

    Jim Jones
    Jim Jones

    Hey David, Donna isn't running so you don't need to worry about that.

    David Cohen
    David Cohen subscriber

    Do we really want another self-serving, hairsplitting mayor? I sure hope not!

    fryefan
    fryefan

    Do we really want another self-serving, hairsplitting mayor? I sure hope not!

    Jim Jones
    Jim Jones subscriber

    This is obviously a way to backdoor what would otherwise be a tax if they could pass one, but that doesn't mean it is a tax, the whole point from a legal standpoint is that it isn't a tax but accomplishes the same thing.

    Jim Jones
    Jim Jones

    This is obviously a way to backdoor what would otherwise be a tax if they could pass one, but that doesn't mean it is a tax, the whole point from a legal standpoint is that it isn't a tax but accomplishes the same thing.

    shawn fox
    shawn fox subscriber

    Whether or not the city violates some other law by imposing a tax is irrelevant. If it walks like a duck and talks like a duck, then it is probably a duck! Hopefully, Goldsmith is true to his word and will file a lawsuit against this.

    shawn1874
    shawn1874

    Whether or not the city violates some other law by imposing a tax is irrelevant. If it walks like a duck and talks like a duck, then it is probably a duck! Hopefully, Goldsmith is true to his word and will file a lawsuit against this.

    shawn fox
    shawn fox subscriber

    If it isn't a tax, then I'm not sure why any hotel that doesn't support the concept would participate in the vote. I wouldn't. By participating in the vote, one would be agreeing up front to abide by the results; win or lose. If the vote passes, and all hotels have to pay the fee/tax (whatever you call it) or face penalties; wait who imposes the penalties for not paying up? The city? If so, then it is a tax. It might be an "illegal" tax, but it is still a tax. By the way, if the investment returns will be so good then why is the city involved at all? You'd think that millionaires all over the city would be jumping at the opportunity to invest in such a worthy cause! They wouldn't need to have a vote to force unwilling participants to pay up or else.

    shawn1874
    shawn1874

    If it isn't a tax, then I'm not sure why any hotel that doesn't support the concept would participate in the vote. I wouldn't. By participating in the vote, one would be agreeing up front to abide by the results; win or lose. If the vote passes, and all hotels have to pay the fee/tax (whatever you call it) or face penalties; wait who imposes the penalties for not paying up? The city? If so, then it is a tax. It might be an "illegal" tax, but it is still a tax. By the way, if the investment returns will be so good then why is the city involved at all? You'd think that millionaires all over the city would be jumping at the opportunity to invest in such a worthy cause! They wouldn't need to have a vote to force unwilling participants to pay up or else.

    Jim Jones
    Jim Jones subscriber

    And how, legally, is this a tax? It cannot legally be a tax because it has not gone through the legal requirement of a tax, therefore it is not a tax, it is private money collected by a private enterprise and donated to a cause.

    Jim Jones
    Jim Jones

    And how, legally, is this a tax? It cannot legally be a tax because it has not gone through the legal requirement of a tax, therefore it is not a tax, it is private money collected by a private enterprise and donated to a cause.

    Brant Will
    Brant Will subscribermember

    Edward, the point about foreclosure was to demonstrate, with just one example, why this tax is different from a transient occupancy tax, which is what the article is suggesting. You're issue with the California Constitution misses the point. For instance, do you think the Mello-Roos Act is unconstitutional? Because that clearly allows for a landowner vote. You may think that is odd, or unfair but it certainly isn't illegal. The City's district isn't a Mello-Roos district but it follows many of the same procedures. We'll find out in a few months whether a court thinks it is sufficiently different as to be invalid. I don't know what the answer will be and neither do you.

    brantwill
    brantwill

    Edward, the point about foreclosure was to demonstrate, with just one example, why this tax is different from a transient occupancy tax, which is what the article is suggesting. You're issue with the California Constitution misses the point. For instance, do you think the Mello-Roos Act is unconstitutional? Because that clearly allows for a landowner vote. You may think that is odd, or unfair but it certainly isn't illegal. The City's district isn't a Mello-Roos district but it follows many of the same procedures. We'll find out in a few months whether a court thinks it is sufficiently different as to be invalid. I don't know what the answer will be and neither do you.

    Dave Be
    Dave Be subscriber

    I detect a bit of circular reasoning here: it's a tax because it's enforced by the city; yet this can be enforced by the city because it's a tax. So what makes this (unquestionably) a tax as opposed to a privately accessed fee?

    daveb
    daveb

    I detect a bit of circular reasoning here: it's a tax because it's enforced by the city; yet this can be enforced by the city because it's a tax. So what makes this (unquestionably) a tax as opposed to a privately accessed fee?

    Scott Lewis
    Scott Lewis administrator

    Ha! Yeah, Brant, we're the ones to blame for how byzantine and confusing this plan is. When you try to avoid a vote of the people, you have to get creative.

    scottlewis
    scottlewis

    Ha! Yeah, Brant, we're the ones to blame for how byzantine and confusing this plan is. When you try to avoid a vote of the people, you have to get creative.

    Edward Teyssier
    Edward Teyssier subscriber

    What's really shameful is that Goldsmith hasn't shown the integrity and backbone to come out and simply say, "No!" to the City Council...he has to know it's wrong, and in fact he really doesn't argue otherwise, but instead wants to get it shuffled past the voters by using a validation action...what happened to his oath to uphold the state constitution?

    Edwardtlp
    Edwardtlp

    What's really shameful is that Goldsmith hasn't shown the integrity and backbone to come out and simply say, "No!" to the City Council...he has to know it's wrong, and in fact he really doesn't argue otherwise, but instead wants to get it shuffled past the voters by using a validation action...what happened to his oath to uphold the state constitution?

    Mark Giffin
    Mark Giffin subscribermember

    In the case of this expansion what are the liabilities to taxpayers if these taxes fall short of obligations? Who is expected to make up those shortfalls?

    mgland
    mgland

    In the case of this expansion what are the liabilities to taxpayers if these taxes fall short of obligations? Who is expected to make up those shortfalls?

    joe vargo
    joe vargo subscriber

    It's my conclusion that this is possibly an illegal tax. So if this doesn't pan out, we may foreclose. Are we obligated to pay for phase 3? Have we paid for phase 2?

    joev
    joev

    It's my conclusion that this is possibly an illegal tax. So if this doesn't pan out, we may foreclose. Are we obligated to pay for phase 3? Have we paid for phase 2?

    Paul Girard
    Paul Girard subscribermember

    How could CA law apply to 1b?

    Scott Lewis
    Scott Lewis administrator

    That is, unless the court tells the city attorney it's illegal.

    scottlewis
    scottlewis

    That is, unless the court tells the city attorney it's illegal.

    Dave Be
    Dave Be subscriber

    Also, in regards to this quote: "Instead, the hoteliers want to pass a tax, which would uniformly raise their fees across the board even for the hotels that don't want it." Let's assume, for argument's sake, that this isn't a tax. What would happen if a hotel refuses to impose this fee. Please take us through the ramifications of such an action.

    daveb
    daveb

    Also, in regards to this quote: "Instead, the hoteliers want to pass a tax, which would uniformly raise their fees across the board even for the hotels that don't want it." Let's assume, for argument's sake, that this isn't a tax. What would happen if a hotel refuses to impose this fee. Please take us through the ramifications of such an action.

    David Hall
    David Hall subscriber

    It is not a private fee or surcharge.

    sdguy
    sdguy

    It is not a private fee or surcharge.

    Frank January
    Frank January subscriber

    This should be surprising to no one. De-Maio is a master at Huskster Propaganda.

    clear_vision
    clear_vision

    This should be surprising to no one. De-Maio is a master at Huskster Propaganda.

    Jim Jones
    Jim Jones subscriber

    Once again fact check is wrong, letting logic fall victim to personal opinion.

    Jim Jones
    Jim Jones

    Once again fact check is wrong, letting logic fall victim to personal opinion.

    Jon Osborn
    Jon Osborn subscriber

    So in DeMaio-speak, if a tax is intended to help private business, it's not a tax. But if a fee is intended to help the government, it's a tax.

    Jon Osborn
    Jon Osborn

    So in DeMaio-speak, if a tax is intended to help private business, it's not a tax. But if a fee is intended to help the government, it's a tax.

    Brant Will
    Brant Will subscribermember

    Just a point of clarification. The Convention Center tax is a tax on the hotel property irrespective of whether the cost is passed on to the transient. This is different than TOT, which is specifically a tax on the transient. This may seem like a distinction without a difference but it's not. If the Convention Center tax is not paid, the City would be able to foreclose on the hotel property. This is not true with TOT.

    brantwill
    brantwill

    Just a point of clarification. The Convention Center tax is a tax on the hotel property irrespective of whether the cost is passed on to the transient. This is different than TOT, which is specifically a tax on the transient. This may seem like a distinction without a difference but it's not. If the Convention Center tax is not paid, the City would be able to foreclose on the hotel property. This is not true with TOT.