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Mayor Pushes Tax for Homelessness, Decides No Plan Is Best Plan

Mayor Kevin Faulconer’s hotel-tax hike promises to throw more annual cash at aiding the homeless but he doesn’t have a spending plan. His team’s selling the flexibility that offers.

Mayor Kevin Faulconer is calling on San Diegans to support a proposed hotel-tax hike he’s said would, in part, help reduce homelessness.

Yet Faulconer doesn’t have a plan to spend the more than $10 million that would flow to that cause annually if voters approve the measure in November.

Homeless advocates see the lack of a plan as more evidence the mayor’s not serious about addressing the problem but the mayor’s staff is selling it as a positive feature that offers flexibility.

Faulconer’s pitching to increase city hotel taxes by 1 to 3 percent citywide to bankroll a Convention Center expansion and upgrades, and to throw more money at aiding homeless folks and repairing roads. A City Council subcommittee voted Wednesday to give the mayoral staffers the go-ahead to work with city attorneys to draft proposed ballot language.

The measure emerged from long-running discussions with boosters about the need for a waterfront expansion of the Convention Center. As the mayor watched expansion construction costs estimates balloon, Faulconer decided he needed to take immediate action. He saw an opening for other much-discussed causes at the same time. Hoteliers were concerned with San Diego’s homelessness problem and crumbling streets too.

Faulconer’s jumping in without a plan to tackle homelessness.

For now, the mayor’s office just describing options for the new cash. It could provide leverage for affordable housing projects and perhaps, the mayor’s team says, a bond that could bring in up to $140 million. This dedicated cash also could pay for housing vouchers, new outreach programs and a slew of other things.

The mayor’s office prefers not to get into the details for now.

Faulconer’s team says that’s by design. If voters sign off in November, the increased tax could be collected for 40 years and they’re not sure what the needs will be over the long haul.

“It’s impossible to prescribe for 40 years how the money’s going to be spent,” said Stacie Spector, the mayor’s special adviser for housing solutions.

Instead, Spector and others say, the mayor prefers to let current and future city leaders decide.

Spector said City Council President Myrtle Cole has set the stage for that oversight by moving to create a City Council select committee on homelessness.

Even without a spending plan, some City Councilmembers have already decided they need more money. At the Wednesday hearing, Cole and City Councilwoman Barbara Bry asked Faulconer’s staffers to consider increasing the share of cash going to homelessness, at least in the initial years of the measure.

Ironically, the mayor claims that could endanger the measure’s appeal with voters because there’s no spending plan for the money as is.

IBA’s Office Deputy Director Jeff Kawar wrote that the mayor’s office concluded directing more money from the hotel-tax increase to homelessness and away from the Convention Center or street repairs could paralyze the measure.

“It should be noted that the mayor’s office strongly believes that such a modification significantly reduces the likelihood of approval, noting that the city currently does not have a spending plan for additional homeless funds,” Kawar wrote.

If the measure passes in November, the City Council could pursue a $140 million bond in 2019.

Jessica Lawrence, Faulconer’s director of budget and finance policy, noted both the annual revenue and potential bond cash could supplement state, federal and private funding to house homeless folks and give the city more bang for its buck.

But $10 million annually – or even $140 million – won’t go far.

The state treasurer’s office recently estimated the average cost of a single affordable housing unit in California is about $367,000.

Jonathan Hunter, a consultant who’s spent decades working to combat homelessness and create homeless housing in the western U.S., said cities and counties typically count on other sources footing two-thirds of the bill.

Using that assumption, Hunter estimated a $140 million bond entirely focused on housing could help the city create 800 to 1,000 new units for homeless San Diegans – the equivalent of about 16 to 20 percent of the city’s homeless population as of last January’s census.

And that’s if all the cash was dedicated to permanent housing rather than new homeless intake centers, rental vouchers or other projects.

Mayor’s staffers weren’t airing estimates like that at Wednesday’s subcommittee meeting.

Advocates made clear they weren’t impressed with what the mayor’s team did share. Multiple speakers called on the city to pursue a bolder homelessness and affordable housing measure.

They also zeroed in on the proposal’s focus on the Convention Center expansion.

“The mayor’s proposal is about expanding the Convention Center, not solving this crisis,” said Ismahan Abdullahi of the Partnership for the Advancement of New Americans. “Homelessness and infrastructure are included in the language simply to garner public support. The public can see through this guise and we will challenge it.”

Stephen Russell, executive director of the developer-representing San Diego Housing Federation, juxtaposed the mayor’s proposal with Father Joe’s Villages recent pitch to invest $531 million in 2,000 new housing units.

Russell said putting a significant dent in homelessness will require far more than the proposed hotel-tax hike measure.

“The $10 to $15 million that is potentially dedicated to homelessness is certainly appreciated. It is certainly needed but is nowhere near what we need,” Russell said. “It is a small down payment toward the enormous problem.”

Russell is among the advocates already talking about a larger housing measure for San Diego.

Some activists fear the mayor’s proposal could hamper more substantial future initiatives.

Tom Theisen, former board president of the Regional Task Force on the Homeless, is in this camp.

“The lack of the plan indicates just how insubstantial the homeless aspect of this is in the overall proposal,” Theisen said. “In my opinion, there’s a good chance that doing this will more poison the well for our homeless efforts rather than a freestanding bond that is well thought out and aimed primarily at homeless efforts.”

Stephen Puetz, the mayor’s chief of staff, is adamant adding homelessness to the tax-hike proposal wasn’t a political calculation. He and others also acknowledge the mayor’s proposal won’t solve San Diego’s homeless problem.

Puetz said Faulconer’s team just wanted to seize an opportunity they had to help.

“The reason we did this is because we wanted to do the right thing,” Puetz said.

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