San Diego Considering Tourist Tax Hike

San Diego Mayor Kevin Faulconer on Monday said raising the city’s hotel tax would keep Comic-Con in town, fix crumbling roads and address a growing homelessness problem. (Bianca Bruno/CNS)

SAN DIEGO (CN) – Undeterred by last year’s failed sales-tax ballot measure to build the now-Los Angeles Chargers a new stadium, San Diego Mayor Kevin Faulconer called Monday for a special election this November to raise the city’s tourism tax to expand the convention center, fix San Diego’s crumbling roads and solve a growing homelessness problem.

Faulconer’s proposed ballot measure would raise the transient occupancy tax, or TOT, paid by overnight tourists visiting San Diego by up to 3 percent. The initiative requires two-thirds of the vote to pass – the same threshold last year’s ballot measure on the Chargers’ stadium failed to meet, when more than half of voters said no to the project.

If the proposed tax hike passes, San Diego’s tax would still fall below that of other tourism competitors such as Los Angeles, Orange County, San Francisco and Orlando, according to the mayor’s office.

San Diego’s convention center is most famous for hosting Comic-Con each summer, a major event which brings thousands of tourists and millions of dollars to the local economy. But the world-famous comic book and entertainment convention has indicated it has outgrown the convention center, which will need to expand to keep the annual convention in San Diego.

The convention center has reached maximum capacity and the lack of available space is the top reason larger conventions hold their events elsewhere – meaning huge loses for San Diego’s economy, Faulconer said.

Tourism is the third largest source of revenue for the city, according to the mayor’s office.

Under the mayor’s proposal, 400,000 square feet of rentable exhibit, ballroom and meeting space would be added to the 816,000 square feet at the current facility.

An expanded convention center would create capacity for more than 50 additional events and 334,000 more attendees annually, the mayor said.

Delays and deferred maintenance are increasing project costs to expand the event space by more than $1 million a month, according to the mayor’s office.

Not only would the tourism tax raise money needed to expand the convention center at its current location on the San Diego waterfront, it would also generate millions to tackle the city’s growing homelessness problem and fix crumbling roads.

The tax is expected to generate $10 million annually for reducing homelessness in the city and another $10 million to fix crumbling city streets – both major items on the mayor’s agenda as laid out in his State of the City address earlier this year.

The funding boost to address homelessness and fixing streets would be the first dedicated funding stream from the city to fixing both problems, Faulconer said.

He said the three issues are some of the city’s top problems and “demand immediate attention by City Hall.”

“There is urgency here. We’re not into gimmicks, we’re looking for results,” Faulconer said.

If the City Council approves the special election and the tourism tax hike passes in November, construction on the convention center expansion would begin in summer 2019 and take 44 months to complete, according to the mayor’s office.

At his press conference, Faulconer was flanked by city and business leaders who are on board with raising the tourism tax to make improvements the mayor said are desperately needed.

Interestingly, the type of business leaders who are typically opposed to raising taxes believe this tax will increase the tourism industry’s revenue and boost San Diego’s economy. Since the money raised will be put toward making improvements that benefit residents and visitors alike and will help the city attract conventions and meetings it has lost to bigger facilities, groups like the Regional Chamber of Commerce and Tourism Authority have come out in support of the tax hike.

“It won’t hurt business and will help our tourism economy grow,” Faulconer said.

The mayor acknowledged “getting a two-thirds vote is never easy,” but said he’s “confident San Diegans understand how important our tourism economy is.”

The City Council’s rules committee will consider the proposed ballot measure at its Wednesday meeting. The City Council is expected to vote on placing the measure on a November ballot sometime in June.

 

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