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March 3, 2020 — Primary Election
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Local

City of San Diego
Measure C - 2/3 Approval Required

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Election Results

Failing

238,431 votes yes (65.2%)

127,035 votes no (34.8%)

INITIATIVE MEASURE - HOTEL VISITOR TAX INCREASE FOR CONVENTION CENTER EXPANSION, HOMELESSNESS PROGRAMS, STREET REPAIRS. Shall the measure be adopted to: increase the City of San Diego's 10.5% hotel visitor tax by 1.25 to 3.25 percentage points, depending on hotel location, through at least 2061, designated to fund convention center expansion, modernization, promotion and operations, homelessness services and programs, and street repairs: and authorize related bonds; with a citizens' oversight committee and audits by the independent City Auditor?

What is this proposal?

Pros & Cons — Unbiased explanation with arguments for and against

Information provided by The League of Women Voters of San Diego (LWVSD)

The Question

Should the City of San Diego increase the current 10.5% hotel visitor tax to to 11.75%, 12.75% or 13.75%, depending on distance from the Convention Center, that will continue at least until 2061?

This requires a 2/3 majority to pass. 

A Yes vote would authorize the increase in Hotel Visitor Tax. A No vote would not authorize the increase.

The Situation

The City has been looking to expand its Convention Center but needs a way to finance it.

It also needs a major source of revenue to fund homelessness programs and services and a backlog of street repairs.

The Proposal

Authorizes City Bonds, payable from the increase in tax revenues for the same purposes.

 

From 2020 to 2023-24, revenue from the increase would be allocated:

  • 59% to Convention Center expansion, modernization, operation and promotion.

  • 41% to homeless programs and services

 

After fiscal year 2023-24, revenue would be allocated:

  • 59% to Convention Center

  • 31% to homeless programs and services

  • 10% for street repairs.

 

Bond debt shall not exceed $2 Billion ($850 Million for Convention Center; $750 Million for Homeless and $400 Million for street repairs.)

Fiscal effect

If the tax is in place for 45 years, it is estimated to generate $6.8 Billion: $4 Billion for Convention Center, $2.1 Billion for Homeless programs and services and $0.7 B for street repairs. Because an expanded Convention Center is expected to bring in more visitors, it is estimated to generate $10 to $15 Million in tax revenue annually.

Convention Center expansion was estimated to cost $685 Million in 2017, not including land acquisition costs. If the 59% of revenues is not enough to cover the costs, then expansion would have to be modified.

Supporters say

  • Tourists pay, not San Diegans

  • It will bring bigger conventions to our city and may help keep Comic-Con

  • San Diego has a homelessness emergency; this will provide funds for programs and services.

  • These funds will fix an estimated 150 miles of streets annually, after FY 2023-24.

  • It will be audited yearly.

Opponents say

  • It authorizes $2 Billion in bonds for which San Diego residents will be responsible.

  • There is an existing problem of ocean water seepage into the Convention Center, with pumps continually pumping out water. The projected rise in sea level will exacerbate the problem.

  • It was put on the March Primary ballot after voters said that they want important ballot issues on the November General election when more people vote, ignoring the will of the voters.

  • It does not guarantee that even one unit of housing will be created with this money.

  • There is no cap to administrative costs.

Measure Details — Official information about this measure

Summary

San Diego City Attorney

BALLOT TITLE

Initiative - Hotel Visitor Tax Increase and Bond Authorization for Convention Center Expansion, Homelessness Programs and Street Repairs

BALLOT SUMMARY

This tax and bond measure is the result of a citizens' initiative petition, in which voter signatures qualified the measure for the ballot. 

If approved, the City of San Diego's (City) 10.5% hotel visitor tax (the tax) will increase by 1.25 to 3.25 percentage points, depending on a property's location in one of three geographic zones. Depending on the location, the tax will increase to 11.75%, 12.75%, or 13.75%.

Revenue from the tax increase would be allocated to:

(1) Convention Center expansion, modernization, promotion and operations;
(2) Homelessness services and programs; and
(3) Street repairs.

The tax increase will be highest, up 3 .25 percentage points (increasing to 13. 7 5% ), for properties generally located downtown, closest to the San Diego Convention Center (Convention Center).

The tax increase will be lower for properties farther from downtown. The 1.25 percentage point increase (to 11.75%) applies to portions of the City either north of State Route 56 or south of State Route 54. The 2.25 percentage point increase (to 12.75%) applies to City properties not in the other two zones. (See Tax Zone Map in the voter pamphlet.)

If approved, the tax rates could be in effect until at least 2061.

The measure authorizes a special tax, meaning the additional revenue is designated for specific purposes, and thus requires a two-thirds vote for approval.

The measure does not estimate annual revenues expected from the tax increase, or revenues expected for the Convention Center or street repairs. It states it is "expected to generate more than $140 million" in the "first five years" for homelessness.

The initiative measure must be submitted to voters as written when circulated for signatures. It states the tax increase will take effect January I, 2019, but the measure was not submitted to voters in time. If approved, the tax increase would take effect at least 30 days after the election, after results are certified, in accordance with applicable laws.

From the date the tax increase takes effect, through the City's Fiscal Year 2023-2024, revenue from the increase would be allocated:

  • 59% to Convention Center purposes; and
  • 41 % to homelessness programs and services.

After Fiscal Year 2023-2024, revenue from the increase would be allocated:

  • 59% to Convention Center purposes;
  • 31 % to homelessness programs and services; and
  • 10% for street repairs.

The measure authorizes City bonds, payable from and secured by the additional tax revenues, for the same purposes. Bond debt shall not exceed the lesser of the additional tax revenues for the purpose, projected over the life of the bonds, and:

  • $850 million for Convention Center purposes;
  • $750 million for homelessness purposes; and
  • $400 million for street repair purposes.

The City Council may increase Convention Center bond debt, after a public hearing, and amend provisions to clarify how funds are spent. It may not alter or increase the tax rate or transfer tax revenues between accounts. Any changes must be consistent with the measure's purpose and intent. 

Impartial analysis / Proposal

San Diego City Attorney

CITY ATTORNEY’S IMPARTIAL ANALYSIS

This tax and bond initiative measure would increase the City's hotel visitor tax and authorize the City to issue bonds.

Revenues from the tax increase and bond proceeds would be designated in specific amounts for:

(1) Expansion, modernization, promotion and operations of the downtown San Diego Convention Center (Convention Center);
(2) Homelessness programs and services; and
(3) Street repairs.

Visitors to City lodging establishments, including recreational vehicle parks and campgrounds, pay the hotel visitor tax. The increased tax revenues would be used, in part, to pay and secure the bond debt. 

This measure seeks to generate financing for the specified purposes. If the measure is approved, additional government actions must be taken to expand the Convention Center, create homelessness programs or services, or make street repairs.

If approved, the hotel visitor tax would increase from 10.5% to 11.75%, 12.75%, or 13.75%, depending on a property's location in one of three tax zones (see Tax Zone Map in the voter pamphlet). The tax increase will be highest (increasing to 13.75%) for properties downtown, near the Convention Center, and lowest (increasing to 11. 7 5%) for properties farthest away. 

The Ballot Summary in the voter pamphlet details the specific percentages of tax revenues to be allocated for each purpose. The measure does not discuss expected annual revenues. The tax increase would take effect after election results are certified.

The measure authorizes the issuance of bonds, payable from the additional tax revenues, up to the following limits:

  • $850,000,000 for Convention Center expansion and modernization;
  • $750,000,000 for homelessness programs and projects; and
  • $400,000,000 for street repairs.

The City Council (Council) may increase Convention Center bond debt, after a public hearing. 

If approved, the increased tax rates will be effective for 42 years after long-term bonds are issued to expand the Convention Center. If such bonds are not issued within 10 years after the tax increase takes effect, the tax increase would end, unless the revenues are needed to repay outstanding debt on bonds already issued to support the specified purposes.

At least 20 years after the tax increase, if more revenues exist than needed for the Convention Center, the Council may allocate less revenue to the Convention Center and more revenue to the other purposes in a given year.

The Council must hold public hearings to adopt annual budgets for each purpose; approve an implementation plan every five years; and determine if plan amendments are needed. A seven-member citizens oversight committee will be created to advise the Council on homelessness fund expenditures. 

An independent auditor, retained by the City's Chief Financial Officer, must prepare annual reports showing tax revenues collected, funds spent, and status of the specified activities. Also, the City Auditor must conduct performance audits on a rolling three-year basis.

The Council may amend provisions, but may not alter the tax rate or take action in conflict with the measure's intent and purpose.

Voter signatures qualified this citizens' initiative measure for the ballot. 

Financial effect

Offices of the San Diego Mayor, Independent Budget Analyst, and City Auditor

FISCAL IMPACT ANALYSIS

MEASURE C: INITIATIVE MEASURE – HOTEL VISITOR TAX INCREASE FOR CONVENTION CENTER EXPANSION, HOMELESSNESS PROGRAMS, STREET REPAIRS.

This measure would increase San Diego's 10.5% transient occupancy tax (TOT) by 1.25, 2.25 or 3.25 percentage points depending on which of three geographical Tax Zones a lodging facility (hotel, RV park, campground, or other overnight lodging facility subject to the TOT) is located. If approved, San Diego's TOT (paid by guests staying in lodging facilities) increases from 10.5% to between 11.75% and 13.75% depending on the location of the overnight lodging business - see Map in Voter Pamphlet. 

The City expects lodging facilities to begin collecting the new TOT (Additional Tax) on May 1, 2020 and continue collecting for 42 years from the month in which long-term bonds are issued to finance Convention Center expansion. If such bonds are not issued within 10 years after the tax increase takes effect, the Additional Tax will cease unless other bonds have already been issued for homelessness or street repair purposes in which case the Additional Tax would continue until enough revenue has been collected to repay the outstanding bonds. 

For the first 20 years, Additional Tax revenue must be allocated in the exact percentages for the intended purposes generally described below. Thereafter, if the Convention Center allocation exceeds eligible costs, City Council may allocate a lesser percentage to the Convention Center and a greater percentage to Homelessness or Street Repairs in any given year. 

  • 59% of the revenue to finance Convention Center expansion and otherwise support Convention Center operations.
  • 31 % of the revenue (41 % through fiscal year 2023-2024) to address City Homelessness issues. Eligible expenditures include support programs, shelter programs, permanent supportive housing and associated financing.
  • 10% of revenue (beginning in fiscal year 2024-2025) to support Street Repairs. Eligible expenditures include a broad array of street-related infrastructure and associated financing. 

If the Additional Tax remains in effect for 45 years at the stipulated percentages, it is estimated to generate $6.8 billion: approximately $4.0 billion for the Convention Center; $2.1 billion for Homelessness; and $0.7 billion for Street Repairs. A near-term recession could substantively reduce these estimates.

In the first 10 years, the Additional Tax is estimated to generate $766 million: approximately $452 million for the Convention Center; $265 million for Homelessness; and $49 million for Street Repairs.

Additionally, because an expanded Convention Center (once complete) is expected to attract additional visitors who will make taxable expenditures in San Diego, it is estimated that General Fund tax revenue could increase by approximately $10 to $15 million annually.

Excluding land acquisition costs, the Convention Center expansion was estimated to cost $685 million in 2017. Actual costs could be higher. If 59% of the Additional Tax revenue is insufficient to finance the current cost, design elements would need to be scaled back to make expansion feasible.

San Diego's effective hotel tax rate paid by lodging guests, when including the 2% Tourism Marketing District assessment, would range from 11.75% to 15.75%. At 15.75%, the tax for certain City hotels is close to that of cities with higher hotel tax rates, but this is not expected to significantly impact visitation. 

Published Arguments — Arguments for and against the ballot measure

Arguments FOR

ARGUMENT IN FAVOR OF MEASURE C

YES on C - For A Better San Diego

Measure C makes San Diego better by reducing homelessness, repairing crumbling streets, and expanding our convention center to keep conventions coming and create jobs.

An incredible coalition is united behind Measure C: Nurses and Homeless Advocates. Labor and Business. Father Joe Carroll. Even hotels support Measure C. Why?

TOURISTS PAY, NOT US. Measure C raises the visitor tax at hotels - making tourists pay, not San Diegans - to make every neighborhood in San Diego a better place to live. Here's how:

KEEPS IMPORTANT CONVENTIONS IN SAN DIEGO. "Measure C expands and modernizes the Convention Center to help ensure Comic-Con, the International Auto Show and other conventions keep coming to San Diego. We've already lost 7 conventions and $400 million in tourism revenue - we can't afford to lose any more." - San Diego Tourism Authority

CREATES 7,000 JOBS OF ALL KINDS. San Diego's Labor Council & Regional Chamber of Commerce agree: "Measure C creates over 7,000 permanent jobs for hard-working San Diegans - construction workers, hotel and restaurant employees, tech staff, salespeople and more."

REDUCES HOMELESSNESS. "San Diego's facing a homelessness emergency with 5,000 people living on the street. Measure C funds urgently needed shelter, drug treatment and mental health services for homeless families, veterans and children in need." - Father Joe Carroll

REPAIRS BROKEN STREETS. "Measure C fixes 150 miles of streets annually, saving San Diegans money on repairs, reducing traffic and making roads safer." - San Diego Police Officers Association

STRICT ACCOUNTABILITY. "Yearly audits by the City Auditor and a citizen's oversight committee ensure every dollar gets spent properly." - San Diego County Taxpayers Association

"Join us in voting YES on C!"
- Serving Seniors, Alpha Project, San Diego Military Advisory Council, Mayor Kevin Faulconer, Congressman Scott Peters, Assemblymember Todd Gloria, Councilman Scott Sherman, State Senator Toni Atkins and many more at: Yes4SD.com

 

KIMBERLY MITCHELL
CEO
Veterans Village of San Diego

HANEY HONG
President and CEO
San Diego County Taxpayers Association

REBECCA BUCKINGHAM, RN
Vice-President
United Nurses Association Of California

JACK SCHAEFFER
President
San Diego Police Officers Association

FATHER JOE CARROLL
Father Joe's Villages

— San Diego City Clerk

Arguments AGAINST

ARGUMENT AGAINST MEASURE C

Measure C is not what it seems and should be defeated. 

Measure C is full of loopholes and uncertainty and its backers are hiding the truth from voters. There is absolutely NO guarantee that the money will be spent as intended, and San Diego taxpayers could be on the hook for billions in bond payments. It will do little to solve our City's biggest challenges and it is being rushed onto the ballot for political reasons.

Fact: Measure C authorizes $2,000,000,000 in bonds for which taxpayers in San Diego will be responsible for decades.

Fact: San Diegans recently voted to require important ballot measures be voted on in November when most people vote. But the politicians ignored the will of the voters. They forced this measure onto the ballot in March, when fewer voters participate, giving the measure a better chance to win.

Fact: Measure C puts no limit on administrative costs, meaning money can be wasted on bureaucracy instead of solving homelessness and fixing our roads.

Fact: Measure C does not guarantee that even one unit of housing would be built for homeless people, veterans or vulnerable seniors.

Fact: Expensive publicly-funded construction projects frequently cost more than initially estimated. When the City cannot get the job done, they could take money away from homelessness and road repairs or come back to the taxpayers for more.

Fact: San Diego does not even control the land for the Convention Center expansion and there is already litigation adding to the costs and uncertainty of the project.

Join Me in Voting No on Measure C

Michael McConnell - Homeless Advocate, Former Vice-Chair Regional Task Force on the Homeless and Founding Member Funders Together to End Homelessnes San Diego

— San Diego City Clerk

Read the proposed legislation

Who supports or opposes this measure?

Yes on Measure C

Organizations (4)

Elected & Appointed Officials (1)

No on Measure C

Organizations (1)

Elected & Appointed Officials (1)

More information

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