In a surprising turn of events, an initiative that would have raised San Diego’s hotel tax to underwrite a long sought expansion of the city’s bayfront convention center does not have enough valid signatures to make the November ballot.

Hoping to still salvage the measure, the City Council, at the request of Mayor Kevin Faulconer, will meet Thursday afternoon to consider placing on the ballot a proposal very similar to the initiative, which called for raising the hotel tax to not only fund the convention center project, but also finance homeless initiatives and road repairs. The meeting has been scheduled for 4 p.m.

“I will not be deterred from addressing the urgent issues of homelessness, road repair and protecting our economy,” Faulconer said. “I will ask the City Council on Thursday to place a measure on the November ballot.”

Such a move, though, would raise the required voter approval threshold to a daunting two-thirds majority. As a citizens’ initiative, the measure may have only required a simple majority, based on a California Supreme Court ruling last year.


Expansion of the convention center has been a top priority of Faulconer’s since he took office in 2014. He had tried, unsuccessfully, to persuade the City Council last year to hold a special election in November 2017 for a slightly different hotel tax hike measure.

“We were prepared for any eventuality because the mayor was absolutely committed to moving forward on these critical issues,” said Matt Awbrey, Faulconer’s deputy chief of staff, of the key components addressed in the initiative. “San Diegans have demanded action on the expansion, homeless solutions and road repairs, and the mayor has heard their calls for change and is using his authority to ask the council to place the measure on the ballot.”

× Business reporter Lori Weisberg and business editor Diana McCabe talk about the initatives that are on and are off November’s ballot.

In a statement, the initiative campaign, Yes! for a Better San Diego, said it supports Faulconer’s push for the November ballot measure.


“San Diego can’t wait to combat homelessness, repair roads and create jobs,” said Laura Fink, spokeswoman for the campaign, which is backed by a coalition of tourism and business leaders, organized labor and homeless advocates. “Our coalition is in full support of the Mayor’s efforts to uphold the will of more than 100,000 San Diegans and place a measure on the ballot; inaction is not an option.”

On Wednesday, the mayor’s office scrambled to come up with an alternative plan after San Diego City Clerk Elizabeth Maland reported earlier in the day that a random count of the initiative campaign’s more than 114,000 signatures by the county Registrar of Voters fell short. As a result, she said, a full verification of all signatures is now needed. The problem, though, is such a count takes up to 30 days to complete, and the deadline to place anything on the ballot is this Friday.

In a random sampling, the number of valid signatures must exceed 110 percent of the number of signatures required, but the initiative’s projected valid signatures fell under that percentage, Maland reported. Although the random sampling estimated that the initiative would slightly exceed the more than 71,600 required signatures of registered voters, percentage-wise, it still fell considerably short of the 110 percent threshold, reaching only 101.5 percent.

“Colossal failure,” Councilman David Alvarez, who does not favor the initiative,” tweeted early in the day.


In an interview, he objected to any effort to now place a similar measure on the ballot, saying such an action breaks faith with the electorate.

“At this point, this would further erode public confidence and send a message that City Hall only listens to big special interests,” said Alvarez, whose own ballot proposal to increase the city’s hotel tax to raise money for homelessness programs was rejected this week by the council. “We had that chance earlier and chose not to do that. Clearly, there was a struggle to get signatures and it goes to the fact that people are pretty clear about what they want to see: more money for housing and homelessness.”

Like the citizens’ initiative, which sought to revive a long-stalled expansion of the convention center, the proposed ballot measure calls for boosting the city’s effective hotel tax of 12.5 percent to 15.75 percent for downtown hotels, 14.75 percent for Mission Valley and Mission Bay-area hotels and 13.75 percent for hotels in the northern and southern peripheries of the city.

Potentially weighing on the fate of the measure and a future convention center expansion is whether a previously approved financial deal the city secured for control of the project site will remain intact.


That deal, which was tied directly to the success of the citizens’ initiative, authorized a payout of more than $33 million to longtime port tenants Ray Carpenter and Art Engel, who proposed building a $300 million hotel complex on the 5-acre waterfront parcel that they control under a lease with the port.

As part of that deal, the Fifth Avenue Landing leasehold, as it is known, was to get an upfront payment of $5 million ahead of the November election. The city will now have to negotiate an amendment to the agreement should the council approve the ballot measure Thursday. Also party to the pact was the Port of San Diego.

“We are going to work with all the parties to ensure that the agreement will still stand even if the measure is placed on the ballot by the City Council,” Awbrey said. “The city, Fifth Avenue Landing, and the port have been in conversations throughout the day and we expect to have a productive and positive dialogue between all three parties following the vote .”

Carpenter declined to make any comment on Wednesday.


Backers of the initiative spent more than $1.4 million through the first half of this year to get the measure on the ballot, soliciting contributions from major companies, including Sempra Energy, and large hotels. In the waning days of the signature-gathering campaign in June, supporters grew so desperate that they sent out an appeal to the business community for help, enlisting the aid of the San Diego Regional Chamber of Commerce and the Downtown San Diego Partnership to reach out to their members.

Over the 42-year life of the measure being considered by the council, the city says the tax hike would generate an estimated $5.9 billion, although backers of the citizens’ initiative had estimated the total amount at $6.4 billion. During the first five years, homeless funding, which could be used to finance services and housing, would be accelerated.

The greatest share of revenues from the tax increase - nearly $3.5 billion - would go for the convention center project, including continued upkeep and marketing. More than $1.8 billion would be set aside for addressing homelessness, and $551 million would be set aside for road repairs, according to calculations from the city.

A staff report prepared for Thursday’s meeting notes that under the ballot measure, 20 years after the tax hike goes into effect, the council could approve a changed allocation that would divert money set aside for the convention center to increased spending on homelessness and street repairs. That provision is similar to what was contained in the initiative.


Carl DeMaio, a radio talk show host and former San Diego city councilman, is vowing to launch an opposition campaign against the measure.

“From the get go, the politicians denied that they were involved with this initiative for a tax increase, and now they’ve just outed themselves as having always concocted this in the back room,” DeMaio said of the move to have the council put a measure on the ballot.

DeMaio says he has money to spend — $1.25 million from Reform California, a political action committee he heads that opposes tax increases and is seeking to repeal the recent California gas tax.


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lori.weisberg@sduniontribune.com (619) 293-2251 Twitter: @loriweisberg