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Tax-Hike Boosters: Vote Yes for Cash, Then Let City Leaders Decide How to Spend It

The coalition behind a proposed hotel-tax hike that would fund a Convention Center expansion plus homeless services and road repairs says its initiative was written to pull in cash, not to hash out how it should be spent.

The San Diego Convention Center / Image courtesy San Diego Convention Center Corp.

Proponents of a proposed hotel-tax hike expect it to pull in $6.4 billion over four decades to bankroll a Convention Center expansion, homeless services and road repairs – but they’re not dictating exactly how to spend that money.

Their plan instead: create a new supply of cash and then let others hash out specifics.

The business and labor coalition backing the initiative also isn’t prescribing how a Convention Center expansion should look – and whether it must happen on the waterfront as long envisioned. It just ensured its measure allowed for up to an $850 million bond to fund an expansion, which could be more expensive than the one expected last year.

And the coalition similarly isn’t laying out a vision for how to spend the more than $2 billion it expects to collect for homeless services and housing, or the $604 million that could flow to road repairs.

If the measure passes, the City Council will be required to invest the new money in Convention Center needs, homelessness and road repairs. But they’ll be free to decide the rest of the details.

“It’s a revenue stream that allows us the flexibility to get these things done, whatever that looks like,” said Carol Kim, a Building Trades Council official who negotiated with tourism leaders on the initiative.

In other words, the lack of specificity is by design.

“We want to make sure that experts are determining what happens with these dollars so we don’t want to restrict those dollars,” said Laura Fink, a spokeswoman for the Yes! for a Better San Diego campaign.

On the Convention Center front, this has opened up speculation about what an expansion might look like and how much it might cost.

For years, boosters have backed a waterfront expansion that’s faced a hail of challenges. They continue to prefer that option.

But the new initiative includes new language indicating the Convention Center expansion must simply be “physically connected to the existing Convention Center” – and removes language suggesting the project approved by Port and state Coastal officials is the only option. It also allows an expansion in the front of the facility, rather than just behind it.

Hotel executive Robert Gleason, who helped broker the deal with labor, said his team mostly relied on expansion cost estimates presented during Mayor Kevin Faulconer’s failed bid for a hotel-tax hike to fund the same priorities.

They don’t have a new cost estimate for the expansion project or various other Convention Center needs the ballot measure could fund. They simply projected how much they expect the measure to bring in – and planned for a potentially larger bill. An additional .25 percent tax increase is expected to help cover it.

Gleason and other coalition members said the city, the Convention Center Corp. and industry experts will be in the best position to firm up those numbers, settle on a final expansion plan and detail a plan to seek bonds for the project if the hotel-tax increase is approved.

The coalition followed a similar tack with both homelessness and street repair cash.

The measure defers to the mayor and other city leaders on decisions about road repair investments and adequate street conditions, and on how to address homelessness.

Labor leaders successfully pushed for more money to invest in homeless programs. They ultimately persuaded business and tourism players to triple the capacity to build homes by borrowing money and paying it back with the new tax dollars coming in.

Kim said the coalition’s conversations with experts drove home the need for cash to build new homes for a growing homeless population.

But rather than mandate that money be spent on new homes, labor leaders pushed the coalition to increase the share of annual cash going to homelessness in the first five years of the measure and allow triple the borrowing capacity should city leaders opt to invest more in new homes. If the measure is approved, a new Citizens Advisory Board would also weigh in on those decisions.

The city and the board could decide to instead invest in new services or cash incentives for landlords to rent to homeless San Diegans, or sink much of the new money into housing projects.

“We wanted to have flexibility for those homeless dollars to be determined by experts in the field and allowing that bonding capacity allows them to have maximum flexibility with those dollars,” Fink said.

Correction: An earlier version of this story mischaracterized the Yes! for a Better San Diego coalition’s reliance on previous projections associated with Mayor Kevin Faulconer’s failed bid for a hotel-tax hike. The group has released its own projections showing how much they expect a proposed hotel-tax increase to pull in.

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