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The Chargers are asking us to increase the tax paid by visitors while spending less money persuading them to come here.
Like many San Diegans, I have listened and watched the discussion regarding the future of the Chargers unfold over the past 15 months. Other than sharing my displeasure when talks broke down and turned into personal attacks, I chose to reserve judgment. I have been waiting for a detailed plan that would have the backing of a key figure in the discussion, the Chargers. Only then would San Diegans have something concrete to review, study and ultimately, make a final decision.
The team recently presented a $1.8 billion plan and the media has outlined various costs associated with the stadium, Convention Center annex, remediation of the MTS bus yard and how much the Chargers would pay in rent.
I have read the Chargers’ plan, and I have serious questions and concerns with the impacts it would have on taxpayers.
Let’s start with what’s in the measure:
The first concern I have is with the proposed tax hike for hotel visitors. The current 10.5 percent rate, plus an additional 2 percent rate for most hotels for funding tourism promotion, would be increased to a flat 16.5 percent tax. Only one percentage point of the new rate would be allocated toward promoting San Diego.
The proposed tax increase would give San Diego one of the highest hotel taxes in the country, putting us at a competitive disadvantage with other convention destinations. Cities like Los Angeles, San Francisco, Las Vegas and Orlando would have lower tax rates and they will use that fact to lure conventions away from San Diego. Convention planners, like consumers, often choose the city where they can get the best deal.
To make matters worse, the proposal sharply reduces the guaranteed amount of money invested to promote San Diego to potential visitors. In short, the Chargers are asking us to increase the tax paid by visitors while spending less money persuading them to come here. Last year, our Tourism Marketing District spent $24 million promoting San Diego to people in New York, Chicago and elsewhere; Las Vegas spent $200 million.
As the third-largest source of revenue for our city, any negative impact to our tourism economy, no matter how small, would reduce our ability to pay for police services, fix our streets and provide other neighborhood services.
While the Chargers are asking taxpayers for a multimillion-dollar subsidy, the team’s investment is minimal at best. The team’s proposal calls for the Chargers to contribute $350 million toward construction, with another $300 million on loan from the NFL. The Chargers would control all revenue from personal seat licenses, naming rights and other football-related revenue. Based on a conservative estimate conducted by the Citizen’s Stadium Advisory Group, these items could generate approximately $320 million and immediately backfill the team’s share of construction costs.
Here’s what’s not in the measure:
First, the measure does not include any details regarding the cost to construct a new stadium or Convention Center annex. While some members of the media seem to have been given a glimpse of the Chargers’ financing plan, none of that information has been released to the public. The Chargers should immediately release any financing plan the team has developed to give San Diegans the opportunity to review it thoroughly.
Another glaring issue: The plan does not include a cap on exactly how much money will come from the proposed tax increase. The $350 million allotment from the public for the construction of the stadium is mentioned, but that won’t be the only public contribution for the stadium. It is certain that taxpayers will be on the hook to cover fixed costs associated with hosting non-football events and additional maintenance throughout the course of the year.
In addition, there is no mention of how much the construction of a Convention Center annex will cost. The measure is silent on this critical point. The Chargers are very clear that the team will cover any cost overruns associated with the stadium which leaves taxpayers on the hook for any and all costs for the Convention Center annex, even if they go over the budget produced by the Chargers. Nor is there a cap on the cost to acquire neighboring parcels or to move and remediate the MTS bus yard. That means taxpayers will be expected to cover those costs.
What about the rent the Chargers will pay as a tenant? Some members of the media have claimed the Chargers will pay a certain amount of rent. In fact, the initiative is silent on that obligation. It could easily be the case that, once again, a private company worth over a billion dollars ends up paying little to no rent while using a city-owned and operated facility to make tens of millions of dollars.
Dig further into the measure, you’ll read that additional tax revenue over the $350 million must go toward maintenance of the stadium, as well as any revenue the city receives from non-football events at the stadium, e.g., concerts, soccer games, etc. Shouldn’t that revenue belong to the taxpayers who own the facility?
Does the measure say anything about the current debt payments for the improvements at Qualcomm Stadium? No. While taxpayers would be investing in the construction and maintenance of the new downtown facility, they also would be on the hook for the remaining $50 million in debt on past Qualcomm Stadium renovations – renovations specifically requested by the Chargers and sold to the city as vital to ensure multiple Super Bowls.
Finally, the measure is silent about the design and purpose of the Convention Center annex. Will it be prioritized to benefit conventioneers or will it primarily be for the benefit of the Chargers on game days?
Soon, voters will be asked how they feel about this plan. A signature collector working for the Chargers to qualify this proposal for the November 2016 ballot will ask you to sign a petition to save the Chargers. He or she also might even try to convince you that your signature would help save Comic Con. It won’t. If enough signatures are collected, voters will have the final say on the Chargers’ plan on Election Day.
And based on what is and isn’t in the plan, I’m going to politely decline to sign the petition. You should too.
Chris Cate is a member of the San Diego City Council, representing District 6.