The San Diego City Council's Rules Committee on Wednesday advanced Mayor Kevin Faulconer's proposal to increase hotel room taxes by up to 3 percent in some areas of the city to fund a $685 million expansion of the San Diego Convention Center. The tax hike would also earmark $10 million each for road repairs and homeless programs.
The committee unanimously agreed to have city staff draft the proposed ballot measure. The full City Council will have to decide whether to call a special election in November. If it ends up on the ballot, the plan will need a two-thirds majority approval from voters.
"It's the right thing to do and really it has so much support," Faulconer said. "To get us on solid footing for tackling some of our biggest issues, that's what voters want. They want solutions and they want guaranteed funding."
San Diego’s Independent Budget Analyst on Tuesday found Faulconer’s plan has reasonable estimates for how quickly revenue from the new taxes will grow. While new revenue from the hotel taxes will be about $53.5 million in the first year, it could be as much as $214 million per year by 2058. That would be enough to finance all costs tied to the Convention Center expansion.
But the Independent Budget Analyst report took issue with the mayor’s staff report, which claimed the new business generated by the expansion would lead to 380,000 new hotel room stays each year. That would lead to $15 million in new hotel taxes, according to an unreleased analysis from a consultant for the city’s Tourism Marketing District.
“We find the $15 million estimate to be overstated,” the report said, noting that past estimates suggested a range of $4 million to $9 million per year.
Council President Myrtle Cole asked the mayor's staff on Wednesday whether the tax revenue devoted to homeless services could be increased, at least for the first few years of the tax hike.
The IBA said it had been asked a similar question about shifting some proceeds away from road repairs or the Convention Center expansion.
"The Mayor’s Office strongly believes that such a modification significantly reduces the likelihood of voter approval, noting that the City currently does not have a spending plan for additional homelessness funds," the Tuesday report said.
The mayor's staff said Wednesday that some flexibility could be built into the final ballot language.
A private developer currently controls the lease to much of the land Faulconer would want for the Convention Center expansion. But Faulconer said he was confident a deal could be reached with the developer.
“It’s not uncommon that you move forward on projects when you’re working through issues.,” Faulconer said. “There’s been several hurdles that have gone on in this, but my commitment and the city’s commitment is we’re not going to slow down because it’s too important to this city.”
Faulconer shared more details about the ballot proposal Wednesday on KPBS Midday Edition.
