Chargers fans and many other San Diegans recently have heard a lot about a wonky campaign finance topic called the two-thirds voter threshold. It’s a statewide approval requirement that ballot measures need to meet when asking voters to increase their taxes to pay for something like a stadium.
A year ago, the Chargers said they would not participate in any “half-baked scheme” that attempts to avoid the two-thirds requirement. But now the team says it’s looking for ways to avoid that very requirement and supporting the so-called Citizens’ Plan created by environmental attorney Cory Briggs. That initiative claims to require only a simple majority rather than two-thirds voter approval. Saying something is true, however, doesn’t make it so.
At best, Briggs’ measure and the accompanying rhetoric are contradictory.
On one hand, he assures San Diegans that the money the measure would raise would be spent only on the Convention Center and not the stadium, and that we do not need to worry that these tax dollars would be siphoned off for other uses, as has happened in the past. If that were true, the measure would require the two-thirds majority. On the other hand, he says two-thirds is not needed because the measure does not guarantee funding. Which is it? It can’t be both, no matter how much the Chargers would like it to be.
There is a reason why there is a two-thirds requirement for tax increases in California. They are typically used as a funding stream for some sort of bonded indebtedness that encumbers future generations. Because our children will be paying for something far into the future that we are building today, it makes sense to think long and hard about what is being built and whether our children will be paying for something that will be useless in 30 years.
Briggs’ measure also appears to violate California’s single-subject rule, which says citizen initiatives can only make one request of voters. This initiative, as written, dangles several Christmas ornaments in front of voters. It asks us, among other things, to sell the existing Mission Valley site and require that a portion of the property be set aside for something called an Urban Rivers Scientific Interpretive Center.
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This money is for the Charger Stadium per every person trying to get me to sign. That makes it 66.6666+1% as far as I can see.
April, Comic Con is in the middle of Summer. Football is a Fall/Winter sport. The two have no scheduling conflicts.
For some reason there are people who cannot see my response to Felix's question below, so here it is again.
Thanks for the question, Felix.
The Citizens' Plan does nothing that policy experts don't regularly recommend and that politicians don't regularly approve: creating an economic incentive that gets people to do voluntarily what the government would otherwise have to compel involuntarily.
In this case, if the CP is approved by the voters and the hoteliers do their part, the end result for the public will be the same: a convention center (and possibly a sports/entertainment facility) will have been built. But it's the route one takes to get there that is legal or illegal without a two-thirds vote. If the politicians try to raise revenues and earmark the money -- creating a "special tax" -- that will trigger a two-thirds vote. But when the public creates economic incentives for the private sector to take on the responsibility for doing what is not being mandated (but is merely desired), that's not a special tax or an earmark or anything of the sort.
For example, the politicians could increase taxes in order to raise funds to pay for solar panels on your roof, put that money in a special account marked "homeowner solar panels," and then use that money to install the panels on your roof. Or the politicians could impose a tax hike for any purpose whatsoever, put that money in the general fund, and then give you an economic incentive to install the panels on your roof, leaving it to you to claim the incentive when you file your tax returns if you ultimately decide to install the panels and in fact do so. The outcome's the same (solar panels on your roof), but the decision was entirely up to you. And if you had decided not to do it, there'd be more money in the government's general fund to pay for libraries, sidewalks, cops, lifeguards, etc. (Tax incentives are ubiquitous, but the one most people know is the mortgage-interest deduction. The government encourages people to buy rather than rent a home and, as an incentive, allows people to write off their mortgage interest on their tax returns; we do not get to write off our residential rent.)
The other thing that many people overlook is the fact that the City of San Diego already has the authority to give economic subsidies to businesses. The latest example that comes to mind is Illumina's tax subsidy, by which Illumina agreed to do something socially and/or economically beneficial (e.g., keep its jobs in San Diego) in exchange for the right to claim some of the very sales-tax revenue that it generates in the future. I couldn't find the City's report on that subsidy quickly, but I did find one on Ballast Point Brewing Company's tax subsidy. Here's what it says (the part most relevant to your question): "The City expects to receive tax revenues from Ballast Point in connection with this project from the following sources, and the proposed [Economic Development Agreement] would require the City to reimburse Ballast Point's fee costs using future tax revenues as the funding sources. . . ." The City thus plans to let Ballast Point recover some of the very sales-tax revenues that Ballast Point helped to generate. Here's that report: http://docs.sandiego.gov/reportstocouncil/2014/14-32.pdf.
This is such a normal part of what the City does that the City Council even has a policy for processing requests for economic incentives. It's known as Council Policy 900-12, the Business and Industry Incentive Program, and you can find it here: http://docs.sandiego.gov/councilpolicies/cpd_900-12.pdf. The Citizens' Plan doesn't follow that policy per se. I'm telling you about it just so you understand how mainstream the incentive concept in the CP is.
What's most important to remember about the incentives given out by the City is that it is done without triggering any public vote. The public could oppose any given incentive and seek to block it through the referendum process and a simple-majority vote. If the public can stop it through a simple-majority vote, the public is equally capable of authorizing it through a simple-majority vote.
Back to the Citizens' Plan: If the hoteliers opt not to assume responsibility for marketing the City and/or for building the off-waterfront convention center, that's perfectly fine under the CP. The revenues coming from the new TOT rate will be sitting in the general fund for any purpose under the sun. If the hoteliers get their act together, the voters will have already authorized an economic incentive that need not go through the approval process at City Hall. If the hoteliers choose not to act, then that's even more general revenue that'll be available for roads, sidewalks, cops, lifeguards, parks, etc.
One of the "carrots" that's in the CP is the insulation the hoteliers get from a future legal challenge to their own money grab. Right now the hoteliers could themselves go to the City and ask for an economic incentive like the ones Ballast Point and Illumina got (assuming other requirements are met). And the City, given our political leaders' cozy relationships with the hotel industry, would almost certainly fall all over themselves to approve that incentive. But there is substantial opposition to the hoteliers because of their position on certain policy issues (e.g., minimum wage and development on the waterfront), and so that incentive would likely be subject to a referendum. If, on the other hand, it was the public who approved the incentive at the ballot box, then the hoteliers need not worry about a referendum.
Hope this helps. . . .
What law school did April Boling graduate from? Lots of misquotes of that Briggs and the initiative say in this think piece.
Exactly! April, you nailed it!! This JMI - Spanos - Briggs initiative is the most destructive San Diego boondoggle I've seen in decades:
1) JMI gets the public to fund and build them their own personal convention annex;
2) Spanos gets the most valuable undeveloped public property in the city for their downtown stadium and get the City to seize private property for the rest of what they need;
3) The urban neighborhoods / barrios get traffic, parking lots, sports bars, low wage jobs, and "streamlined" CEQA review;
4) The public loses the only convention center expansion configuration that is attractive for the "convention superbowls" like Comic-Con.
5) The East Village academic & innovation renaissance gets snuffed out along with higher wage jobs and education close to urban neighborhoods.
6) The public loses the future property tax revenue stream from the "Convadium" site; and
7) The public gets stuck with a hybrid "Convadium" that benefits only Spanos and JMI.
So far the analysis has only been on the upfront cost - even there, the Convadium is more expensive than separate stadium and convention center expansion. Where it really falls apart is on public return on investment.
It seems like we need to take the initiative to some lawyers school in CA municipal financing and see if, on the record, they agree with April or with Cory. The reason is really civic as the voters need to know whether to sign the thing or to demand a future alternative of how to accomplish what they want.
@Erik Bruvold --I had the chance to sign it last week. I told the guy to come back when we know as to whether a simple or super majority will be needed to pass this measure, among other reasons.
Mr. Bruvold: I do not wish to add to the smokescreen that I think this opinion piece represents. I think it's simply an effort by an opponent (or the shill of opponents) to throw anything that might stick and confuse the public discourse, but to me it's rather immaterial. If people think it's a good idea and more than two thirds approve it, it's done. If a smaller majority approves there will be a legal challenge from some regardless. Whether it flies or not is likely to be determined by the courts. Regardless, here is a matrix from the California Legislative Analyst's office.
@Chris Brewster while I disagree with your characterization of the article, I very much thank you for this very helpful chart. BTW, the more complex the project, the more likely the smokescreen, especially where principle backers are billionaires.
@Chris Brewster I get the above. The issue is that the the above chart is mute on the question of using a BID-related tax credit tightly linked to the legislative mechanism (the initiative) to reduce the tax liability when the BID is constrained (both in respect to BID law and then even more constrained by the Briggs initiative) as to that spending. Give Cory credit - it is pretty darn creative. The question will be whether the courts think it, to coin a phrase I learned from my North Texas Grandmother, "too cute by half." Who knows. What _IS_ clear to me is that there is no way that question is resolved prior to when the Chargers said they need clarity - so either they DON"T need clarity or they will move to Inglewood (and we will be "stuck" with the C.I. and no team so supporters/signers/yes voters need to be sure they are happy as clams with that outcome if it comes to it). I am sure some are. Others may not be.
Is effective oversight built into the initiative? VOSD has exposed some major problems with misallocation of school bond funds -- even though that measure outlined very specific projects that must be implemented.
How are the citizen/voters guaranteed that all provisions of the Briggs proposal are implemented for our benefit?
If the additional revenue derived from the increase in the TOT is not pledged to servicing any debt, how does the convention center expansion/stadium get funded?? I would guess that the incremental funding increase for one year would be insufficient to fund the facilities. Therefore, a pledge of future revenues would be required (i.e. servicing debt) to permit the construction of the facilities. Otherwise, the hoteliers, Chargers or some other big bucks entity would have to guarantee it and take the risk that the TOT revenue will be later allocated for that purpose. Am I missing something?
The long overdue + 5% Transient Occupancy Tax (TOT) Increase goes directly to the City's General Fund. Therefore only 50% + 1 public vote is required.
It will be up to the City Council and the Hoteliers to direct the money to a specific project, or use the Tax Increase for Police, Fire, Pensions, Libraries, Parks, etc.
Through Council Member Mark Kersey's Rebuild San Diego City Charter Amendment in June, 50% of the TOT Increase would be dedicated to Infrastructure Capital Improvement Projects (CIP). Which in theory can be used for a Convention Center expansion and/or multi-purpose NFL Stadium in downtown or Mission Valley.
This commentary is a good example of what happens when people don't read. Here's the author's (bogus) claim: "There is a reason why there is a two-thirds requirement for tax increases in California. They are typically used as a funding stream for some sort of bonded indebtedness that encumbers future generations. Because our children will be paying for something far into the future that we are building today, it makes sense to think long and hard about what is being built and whether our children will be paying for something that will be useless in 30 years."
Not only will our children not be paying for bonds under the Citizens' Plan, but neither will we or our grandchildren or their children. Here's the exact language from the Citizens' Plan, Section 61.2807(a): Except for the economic incentives that hoteliers have the "sole discretion" to claim, "the City shall not directly or indirectly provide any form or manner of financial support, lend its credit, pledge anything of value, allow any public asset to be used for less than fair-market value as determined by an independent fee appraiser, or otherwise make any kind of expenditure or commitment for a future expenditure that would in any way facilitate either of the following: [convention center or stadium uses, activities, etc.]." Section 61.2805(a), in turn, prohibits the city from incurring debt for a waterfront convention center.
This commentary also appears to have been written before the author read Scott Lewis's article today about the carrots and sticks in the Citizens' Plan. As he pointed out this morning, the Citizens' Plan assumes that the hoteliers will pull their own weight in helping to resolve some long-standing, vexing civic problems. The initiative does not guarantee funding for a convention center (and prohibits it for a stadium). A majority of the hoteliers are the ones who'll have to guarantee funding for a convention center (off the waterfront). Whatever your definition of tax, the word "voluntary" -- except when immediately preceded by the prefix "in" or the word "not" -- doesn't appear anywhere in it.
Lastly, for those who keep citing the single-subject rule, the California Supreme Court requires that the topics covered by an initiative be "reasonably germane" to one another. To see that tourism, convention centers, sports, college athletics, and our coastal resources are all intimately related in San Diego, one need look no further than this video by the city when it was wooing the NFL to opt for Mission Valley: https://www.youtube.com/watch?v=tBXNi1PK6cA.
April, where does Cory's Citizens' Plan "assure San Diegans that the money the measure would raise would be spent only on the Convention Center and not the stadium, and that we do not need to worry that these tax dollars would be siphoned off for other uses, as has happened in the past."? Perhaps I've missed it. Please quote exactly where it says that. Thank you.
@Pat Flannery You will not be provided that citation to the language in the Citizens' Plan because it does not exist. Here's an exact quote from the Citizens' Plan, Section 35.0109(a): "This section increases the City’s Transient Occupancy Tax rate to enable the City to keep its competitive advantage over other major tourism destinations while at the same time generating additional general revenues to, by way of example and not limitation, support general government services, facilities and infrastructure, and the protection of the environment that make the City one of the nation’s top tourism destinations."
Here's another exact quote from the Citizens' Plan, Section 35.0109(d): "All revenues collected pursuant to the taxes imposed by the City under this section shall be deposited in the General Fund of the City and be used for general governmental purposes as the City Council may from time to time provide in accordance with the Charter of the City of San Diego and the City Council’s appropriation ordinance. To this end, the tax imposed under this section is intended to be and shall be a general tax and not a special tax."
And here's an exact quote from the California Constitution, Article 13C, Section 2(b), which applies whenever the local politicians try to raise taxes: "No local government may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote. * * *"
@Cory Briggs I honestly do not get it. What is the difference whether the city directly spends tax money on X or allows the hotels to reduce their tax by the same amount if they spent it in X? Is the outcome not exactly the same?
@Felix Schlesinger @Cory Briggs --It's interesting to note that Donna Frye was on KUSI recently and did exactly what this initiative says it doesn't do. She broke down the potential revenue streams to specific areas--2% ($36 million) for tourism marketing, 2% ($36 million) for "tourism related infrastructure--possible including an off-site CC expansion" (the use of the word "possibly" is quite clever), and the other 1% ($18 million) to the city general fund.
This will end up in court.