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The Decisions That Led to the Spectacular Failure of the Mayor’s Biggest Pursuit

The decade-long push to expand the Convention Center has failed once again. Funding for homeless services is not on the way. Likely more than a million dollars of donations and union dues put into the campaign was lit on fire. Along the way, even as warning signs emerged, several decisions were made to keep going forward.

Kevin Faulconer

Mayor Kevin Faulconer appears at the US Grant Hotel on the night of the June 2018 primary election. / Photo by Jamie Scott Lytle

Tommy Knepper helps run a firm called In Field Strategies. Knepper is a veteran political operative. He managed the congressional campaign of Carl DeMaio, the former city councilman.

In Field Strategies’ service is door-to-door marketing, usually for candidates.

This summer, the firm was called in to work urgently on a different kind of campaign than Knepper is used to. It wasn’t a conservative candidate or cause but a tax increase – the Yes for a Better San Diego push to expand the Convention Center, fund homeless services and road repairs.

The group received $113,000 to go door to door – an unusual way to try to collect petition signatures. Councilman Scott Sherman said he even got a visit.

It was a last, desperate bid to collect enough signatures before it was too late to make the November ballot.

Hiring Knepper’s firm was just one of many decisions the campaign made as part of a mad scramble in June and July to qualify the measure for the ballot. But it has now ended in a deeply humiliating public failure. The decade-long desire to expand the Convention Center has failed once again. Funding for homeless services is not on the way. The final tally is not in but likely more than a million dollars of donations and union dues put into the campaign was lit on fire.

Along the way, even as warning signs emerged, several decisions were made to keep going forward. Like a gambler who has lost all his money and can’t face it, the campaign sought out more funding and kept going each time, refusing to book the losses. Finally, this week the loss became clear and the finger-pointing has become fierce.

“What a shit show,” said Tom Lemmon, the leader of a coalition of labor unions called the Building Trades Council. To be clear, he was speaking at a public meeting in favor of a last-minute effort by the mayor and some members of the City Council to salvage the campaign by putting the measure on the November ballot through a Council action.

This was not the first time an effort to expand the Convention Center fell apart, and it probably won’t be the last. This chapter of the story, though, started last year when the California Supreme Court handed down a ruling that some have interpreted to mean citizens’ initiatives aren’t governed by a part of the California Constitution regarding how you pass taxes.‏

In that part of the Constitution resides the rule that special taxes require a two-thirds vote of the people. Thus, one logical conclusion from the ruling was that citizens’’ initiatives don’t need two-thirds vote.

A lot of people agreed. The San Francisco city attorney did. But it wasn’t guaranteed. The theory would need to be tested.

The mayor and leaders of the Chamber of Commerce, Downtown Partnership, the visitor industry and labor also thought the theory was solid. They began meeting and plotting how to use it to finally achieve the goal of expanding the Convention Center. A similar effort had just failed in the summer of 2017. The mayor brought in two veterans of city politics – Aimee Faucett, his new chief of staff, and Kris Michell, now the city’s new chief operating officer. Their mandate was to get stuff like this done.

The bipartisan, diverse group they convened lost a few members but not key labor and business leaders. They decided to finally make a deal on the Convention Center and raise the tax a little more than previous attempts in order to put more money into homeless services and roads. They deliberately offered no plan on homeless services. Just money.

Then they made a crucial decision: They decide to pursue it not as a suggestion to the City Council to put on the ballot but as a citizens’ initiative. They wanted to test that new Supreme Court ruling and the theory that citizens’ initiatives would not need to be approved by two-thirds of voters to raise taxes.

It was all ready, and Mayor Kevin Faulconer quickly made it his highest priority.

“This initiative will be the most important decision before voters in November, and I will work tirelessly with the coalition to get it passed,” he said at his annual State of the City address in January.

By spring, the details of the measure were set and published. But it started off awkwardly. The coalition of primarily labor and visitor industry leaders and the mayor’s allies had to make decisions unanimously. They each had preferred consultants they wanted working on the measure. And the consultants cost money.

In May, after we reported how much the campaign was spending on consultants compared to signature-gatherers, the campaign blew off concerns about the signature gathering. “We have assembled an outstanding, bipartisan team that will help us achieve a high voter threshold of two-thirds ballot measure,” Laura Fink, the spokeswoman for the campaign, wrote in a statement.

But the rumors that things weren’t going well persisted.

By late June, even a signature-gatherer told us things were not going well.

The campaign had made a strategic decision that it could wait on gathering signatures. In the spring, signature-gatherers were collecting for more than a dozen different measures. It would cost a lot of money per signature to move the city of San Diego measure to the top of their piles. They decided to hold off – to “slow roll it” as one insider put it to me – so that they could take advantage of cheaper prices after other measures met their goals.

But days ticked off and the signature-gatherers vanished. Unemployment is low, there are a lot of initiatives across the country. The measure was struggling.

Campaign leaders now say that, just weeks before they were set to submit signatures, they learned they were getting fraudulent reports about progress from the signature-gathering firm Arno Consultants.

“Campaign officials found information suggesting that the firm fabricated signature reports for months – making apparent misrepresentations about how many signatures had been collected, what the validity rate was and how many gatherers were being paid,” read a statement from the Yes For a Better San Diego Campaign Thursday. The campaign is now suing Arno.

Owner Mike Arno did not return a call for comment.

Throughout this period, though, the campaign and mayor had an out.

They always had the option of putting the measure on the ballot through the City Council. It would save donors a lot of money. And the public could have (gasp!) been involved in the formation of the measure.

But if the measure got on the ballot through the City Council, it would definitely require a two-thirds vote. Even the chance of avoiding that was apparently worth a million bucks – the campaign desperately sought more donations, assured donors it was all on track and decided to push on until the last possible moment.

Crucially that meant they left no chance of any hiccup – there would be no time for an expanded signature vetting, for example; they would have to get so many that the registrar would decide on first pass that it qualified for the ballot.

They turned the signatures in with much fanfare.

Meanwhile, the city and Port made a deal with a couple guys to give them $33 million if the initiative were to pass and $5.3 million immediately guaranteed as a deposit scheduled to be made in just a few days. The city attorney told us previously that she thinks the city can keep that money if the measure didn’t make it to the ballot. The two guys think otherwise.

They got the deal in exchange for agreeing to give up their lease on land behind the Convention Center, land that is crucial for the long-envisioned expansion of the facility.

The deal raised the stakes on this signature-gathering effort to incredible heights.

And then came Wednesday. The city clerk sent out a memo alerting the city that the registrar had sampled 3 percent of the signatures and found a full count would be required.

City Councilwoman Barbara Bry said she saw that memo on her iPhone and had trouble reading it – both because of the small type and the magnitude of what she was learning.

“I’m reading it again and again. I was very surprised. And then as you can imagine there were lots of phone calls,” she said.

The mayor’s staff scrambled and decided it was best to ask the City Council to put the measure on the ballot itself in an emergency session of City Council. The losses from all those bets on the citizens’ initiative would finally be booked. The measure would need a two-thirds vote of the public. But if the Council agreed, it would get on the ballot and they could live to fight another day.

But the transition from citizens’ initiative to a measure put on the ballot by the City Council is not seamless. The City Council has a policy requiring that ballot measures it considers take several steps through Council committees and public hearings. The idea is that the public may have something to add to the proposal.

The mayor was asking them to waive this policy.

A citizens’ initiative was hammered out in private meetings between labor and business leaders that none of us could even watch.

That would prove to be a significant concern. As the meeting went on, labor leaders, like Lemmon and Keith Maddox, the executive overseeing the San Diego Imperial Counties Labor Council, spoke in favor of the measure.

But if they put pressure on Democrats on the City Council to support the measure, it wasn’t apparent.

Suddenly, the escape hatch was closing. Bry provided the first knock. In the end, all four Democrats present rejected the proposal. Councilman Chris Ward, whose district includes the Convention Center and who supported its expansion and the plan, was far away on a vacation and apparently unable to call in.

“I support the expansion of the Convention Center. At the same time, the Council has well-established policies and procedures as to how we put measures on the ballot. If we made an exception today, we violate the trust of our residents,” Bry told us after the vote.

It was dead – a stunning failure that will stain the legacies of the mayor and the professional reputations of the campaign consultants, labor leaders, business organizations and visitor industry leaders who managed the effort.

The mayor was livid.

“The Council members’ procedural complaints are hollow comfort to the veteran living on the street or the family struggling to make ends meet,” he wrote in a statement.

The campaign, ever on character, expressed optimism that the measure could succeed on the 2020 ballot.

But to make that happen, the city will have to make a new deal with the two guys who control the land behind the Convention Center. The Port would have to agree to not let them develop it into a hotel.

And the donors and workers who invested more than a million dollars into a campaign with nothing to show for it will have to be convinced to support the campaign again.

That, to say the least, will not be easy.

Lisa Halverstadt contributed to this report.

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