A Reality Check on Five Big Measure C Claims

Politics

A Reality Check on Five Big Measure C Claims

We dug into the most common claims being made by supporters and opponents of a ballot measure to raise hotel room taxes to fund a Convention Center expansion, homeless services and road repairs to determine what’s true.

Mayor Kevin Faulconer speaks at a press conference for the Yes! For a Better San Diego campaign. / Photo by Megan Wood

In the run-up to the March election, supporters and a major opponent of an initiative to raise hotel taxes to fund a Convention Center expansion, homeless initiatives and road repairs are flooding mailboxes and social media feeds with claims about Measure C.

We dug into some common pronouncements and criticisms of the citizens’ initiative, which would raise hotel taxes on visitors by 1.25 to 3.25 percent depending on the hotel’s proximity to the Convention Center.

Statement: “Measure C is a hotel tax to create 7,000 new jobs in San Diego and keep our economy strong,” according to a Measure C ad on Facebook ad.

Measure C jobs Facebook ad

Measure C supporters are touting the thousands of jobs they say would result from a Convention Center expansion. They even held a rally last week to trumpet that selling point.

Their claim of 7,000 permanent jobs stems from a projection included in a 2009 analysis by Economic Research Associates, rather than an in-depth analysis of the local job market. The report was commissioned by the San Diego Convention Center Corp., which has the central stake in the expansion. .

To calculate the number of jobs that might be tied to a Convention Center expansion, consultants applied what’s known as a Regional Input-Output Modeling System multiplier to estimates of projected increased spending in sectors including lodging and transportation.

Economic Research Associates concluded 6,885 new jobs would follow an expansion, and that two-thirds of them would materialize in the lodging and meal and beverage sectors.

For example, the consultant estimated there would be 2,923 new hotel industry jobs and 1,616 new food industry jobs. It also assumed hundreds of other new full-time jobs in retail, transportation and at local attractions including museums.

Murtaza Baxamusa, who helped craft Measure C, raised flags about this analysis in 2012 as then-Mayor Jerry Sanders publicized the jobs that might come with an expansion.

Baxamusa, a researcher affiliated with the county’s largest construction workers union, concluded in his own analysis that an expansion would produce closer to 4,500 jobs. At the time, Baxamusa argued Economic Research Associates overestimated spending on hotel stays and erroneously incorporated spending by local businesses and employees. Baxamusa also raised concerns with the quality of jobs promised with the expansion, and noted that many came with average wages that would not allow workers to meet basic needs without government subsidies.

Baxamusa declined to comment on his past analysis but wrote in an email to VOSD that he had conducted a separate review also reliant on economic multipliers that found that an expansion would also bring 3,819 temporary construction jobs that paid prevailing wages. Prevailing wage jobs are generally those that pay industry-standard rates that tend to skew higher due to the prevalence of union laborers.

Assemblywoman Lorena Gonzalez, a former union leader, also once had concerns with the jobs expected to come along with a Convention Center expansion. She even described the gigs that might come along with the expansion as “crappy jobs” at a January 2012 City Council meeting where city leaders sought to lay the groundwork for an expansion.

Gonzalez was among those who spoke at the rally last week playing up those new jobs.

Gonzalez told Voice of San Diego she is more confident in the quality of jobs tied to the expansion today given hikes in the minimum wage, the presence of more unionized hotels and promises that union jobs that were once set to be severed from the Convention Center will now remain there.

“This proposal is 100 times better than (what) we previously had,” Gonzalez said.

Keith Maddox, the Labor Council’s executive secretary-treasurer, said he is also confident the expansion will deliver quality union jobs.

“From the union construction tradespeople who lay the foundation and raise the roof to the union banquet captains and chefs who serve the attendees to the union stagehands who create audio and visual worlds to the union hotel and hospitality workers who support visitors outside it – thousands and thousands of jobs created by the new Convention Center will be middle-class union jobs – with strong wages, health care and retirements that raise benefits and pay for all San Diego tourism workers,” Maddox wrote in a statement.

Statement: “There are no guarantees or requirements that money raised by Measure C will build any housing or services for the homeless in San Diego,” according to a mailer funded by homeless advocate Michael McConnell.

Homeless advocate Michael McConnell has become Measure C’s most outspoken opponent, and has dropped more than $370,000 on mailers and social media ads against the initiative. Ironically, the campaign’s pitch that it will pull in about $2 billion for homeless services over the next four decades is what’s drawn McConnell’s ire. He has claimed that it’s not certain that the new homelessness funding promised in Measure C will be deployed for new homelessness programs.

McConnell has multiple beefs on this front. He says he’s concerned the new homelessness money could simply replace existing funding and that the broadly worded measure could allow for the money to be spent on people who aren’t homeless. He’s also highlighted a section of the measure that he reads as potentially allowing the City Council to vote to shift funds away from homelessness.

“While funding may come into those buckets, the measure has been written so that it is easy to imagine scenarios that could result in no new housing or services for homeless people,” McConnell said.

The campaign claims otherwise – and says the measure doesn’t dictate specific plans for homelessness so that future City Councils have flexibility to spend money in the way they believe would be most effective. It also notes that the initiative includes protections for the new homelessness money, including requirements for the city to set five-year spending plans, allow annual audits and to create a citizen’s oversight committee to ensure homelessness money is spent on homelessness initiatives.

“The initiative makes clear that the monies generated from it must be used for their intended and dedicated purpose,” Rachel Laing, a spokeswoman for the Measure C campaign, wrote in an email.

In November, Assistant City Attorney Sanna Singer told City Council members that city attorneys also don’t believe homelessness money can be directed to other needs such as Convention Center debt.

“The Council is not authorized to amend the municipal code provisions in a way that is inconsistent with the special tax purposes described in the citizen’s initiative or in any way that would change the percentage of tax revenues allocated to the three dedicated revenue accounts — for the Convention Center purposes, homelessness programs or street repairs, or that would transfer funds from one dedicated revenue account to the other,” Singer said.

Statement: “One of the major funders of Measure C is a national private prison corporation that could make millions of dollars if it passes,” according to a mailer funded by McConnell.

The Measure C campaign caught some criticism last fall when it was revealed that private prison company GEO Group had donated $50,000 to the effort in 2018 as proponents scrambled to try to get the measure on the ballot.

McConnell suggested that GEO Group might be trying to gain a foothold in San Diego’s homeless services sector and that it could vie for Measure C cash if the initiative passes. The company now operates immigration detention facilities across the nation including in San Diego.

GEO Group has been rapidly expanding its prison re-entry programs but a company spokeswoman told VOSD’s Maya Srikrishnan last fall that the company had “absolutely no intention” to begin providing homeless services in San Diego.

Laing, the Measure C spokeswoman, rejected McConnell’s suggestion that GEO Group could ultimately receive funds if the initiative passes.

“Is he saying that the City Council, who will approve the use of the dollars dedicated to homelessness, would give them to a private prison operator?” Laing wrote in an email to VOSD. “Why would they do that?”

In response to the pushback associated with the GEO Group donations last year, the campaign announced it would be donating the $50,000 from GEO Group to nonprofits that serve vulnerable San Diegans. The campaign also said it had put together stronger procedures to screen contributions.

Homeless-serving Monarch School, San Diego Youth Services and Think Dignity each confirmed they each received checks of more than $16,000 last fall.

But Think Dignity, which operates a homeless storage facility and provides criminal defense services to homeless youth, ultimately decided to return the check.

Laing said the nonprofit told the campaign that it could not accept the donation due to nonprofit accounting rules.

Think Dignity Executive Director Mitchelle Woodson said she and many of the organization’s board members also decided they didn’t feel comfortable accepting cash that had come from a company whose work conflicts with their organization’s mission.

“It was so counter to our reputation in the community and the work that we’re doing,” Woodson said.

Laing said the campaign plans to share the $16,000 with Monarch School and San Diego Youth Services.

Statement: “Yes on C will provide immediate funding to fill potholes fast, and repave an additional 150 miles of city streets each year across San Diego with a lockbox of more than $600 million for street repair, helping residents save money on repairs and time in traffic,” according to a mailer paid for by a San Diego & Imperial Counties Labor Council political action committee.

Labor Council funded Measure C mailer

Funding for road repairs is a key feature of Measure C and proponents including the Labor Council have sought to emphasize how the initiative might help fix the city’s crumbling streets in campaign mailers.

But that funding will not be immediate despite what the Labor Council-funded mailer claims.

The measure dictates that in the first five years, money will only go toward a Convention Center expansion and homeless initiatives. After five years, 59 percent of revenue will be dedicated to the Convention Center, 31 percent to homeless services and 10 percent to road repairs.

Maddox of the Labor Council didn’t deny that fact in a statement to VOSD – and even poked fun at the misleading claim in the mailer.

“From what I’ve seen in this town, filling potholes in five years IS immediate! Look, it’s true – the first five years of Measure C funding prioritizes $147 million to fight homelessness – and that’s the right thing to do,” Maddox wrote.

Subsequent Labor Council mailers haven’t claimed that the road funding is immediate.

The Labor Council and others have continued to say that once the roads funding kicks in, the roughly $8 million projected to come in annually for roads in Measure C’s first 10 years will pay for 150 miles of street repairs each year. The city has repaired an average of 287 miles of streets annually in the last five fiscal years.

Laing said the campaign’s estimate of repairs that might be possible with the new money is based on the city’s needs and costs per mile to lay so-called slurry seal mix used to coat streets plus repaving and pothole filling.

Statement: “Special interests are hiding the fact that Measure C could put San Diegans on the hook for as much as $2 billion in debt over the next 45 years,” according to a mailer funded by McConnell.

 

McConnell Measure C mailer

 

In addition to increasing hotel taxes, Measure C gives the City Council the go-ahead to issue bonds to seek upfront cash for a Convention Center expansion, homeless services and street repairs that it could end up paying off in coming decades.

But the initiative was crafted with the hope that hotel visitors rather than taxpayers will cover future debts.

As McConnell claims, Measure C allows the city to issue up to $2 billion in bonds with the promise that increased hotel-tax hauls will cover associated debt.

The initiative lets the city seek financing of up to $750 million for homeless initiatives and $450 million for street repairs. It also allows the City Council to seek $850 million in advance for the Convention Center expansion – and to vote to raise that cap if needed.

But Measure C doesn’t require the city to issue bonds for homeless initiatives or street repairs. The tax increase would halt after a decade if the city hasn’t sought financing for the Convention Center expansion and it hasn’t issued bonds for homeless initiatives or street repair work.

Measure C proponents are betting that increased taxes on hotel visitors’ – not the city’s general fund or local taxpayers – can cover any annual bond payments that materialize. For that reason, they argue taxpayers are unlikely to be on the hook.

This assumption doesn’t come without risks. If cash from tax hike doesn’t flow as expected, Convention Center debt in particular ends up being higher than expected or the city doesn’t set aside reserves to prepare for a downturn, the city’s general fund – and thus taxpayers – could end up helping cover bond debt payments in coming decades.

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