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The visitor industry is pleading with the city to let it compete
in a game it has already won.
Few people are as influential in this town right now as Mike McDowell. He’s top enforcer of Atlas Hotels’ C. Terry Brown’s wishes. He’s the leader of the Lodging Industry Association. He’s the chairman of the San Diego County Taxpayers Association.
He’s as smart as you can get.
He was the engine that, in 2008, managed to add a 2 percent hotel-room tax in addition to the city’s 10.5 percent levy. The City Council had tried twice before only to have voters reject something similar.
Suddenly, the San Diego Convention and Visitors Bureau, once a troubled local agency struggling to imagine whether it would ever get city funds again, found itself flush with cash. While the city has declined, ConVis has soared.
But this tax, engineered without a public vote, is scheduled to expire. And despite passage of a new state law, which stated that all those fees that look and smell like taxes must go to a vote, the hoteliers, led by McDowell, asked the city to renew it for 40 years. They don’t want to have to worry about it again for a few decades.
It was really interesting to read his appeal to the San Diego City Council the other day, as noted by reporter Liam Dillon (my emphasis added):
We just believe that it’s time that we look at tourism maturely within the context of our other industries and let us be a competitor with manufacturing, let us be a competitor with the military and biotech and give us the infrastructure that we can deliver on the promise of tourism, which over the last 40 years I think has been under-delivered to this community.
His comments scared me. A competitor? With biotech? The military?
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Competitors, well, don’t they compete? Don’t they try to destroy each other?
One of the things that worry me about the future of San Diego is the visitor industry. Obviously, tourism will be a part of our economy forever. And it should be. But as the city dissolves, no group has recognized as clearly as hoteliers have that they must build their own small government.
And as they work to take care of what they care about — areas of the city frequented by visitors, publicly funded marketing of the region and infrastructure related to the industry — the rest of the city continues its slow deterioration.
You need only travel to Cabo San Lucas to see what it’s like when a city only takes care of the places that tourists see.
Yeah, I’m being paranoid. But am I?
The municipal government known as the city of San Diego depends on three revenue streams to keep its day-to-day operations running — to build and maintain its streets, take out the trash, pay police officers, firefighters, lifeguards and librarians.
By far the most important source of revenue for the city is also its most stable: property taxes.
The second most important source of money is sales tax.
But the third source of revenue is still gigantic: the hotel-room tax. In 2010, the city collected nearly $68 million from the tax on visitors.
This helps explain the decisions the city makes with things like downtown development. As Erik Bruvold, president of the National University System Institute of Policy Research, pointed out at a forum about redevelopment we held several months ago: If you have a 1 percent stake in one type of business and a 10.5 percent stake in another type, which business are you going to advocate for?
This is what’s happening to San Diego City Hall. City leaders can talk all they want about supporting other industries but when it comes right down to it, tourism is what they want and what they’ll support.
That’s the context I’m thinking about when I hear McDowell plea for the city to “let” the visitor industry compete with the military, biotech and other local industries. What more does he want?
We’ve allowed them to create their own tax. We’re about to hand the next generation a large portfolio of crumbling city assets — streets, buildings and infrastructure that are falling into disrepair and only get more costly the longer we wait to fix them. And yet we’re pushing to build a new Convention Center downtown.
The visitor industry is pleading with the city to let it compete in a game it has already won.
Clarification: The caption on this post has been changed to reflect that the photo was taken before Sanders introduced Jacobs’ presentation, not during the presentation.
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