Monday, April 3, 2017 - NEWS RELEASE

San Diego – With the goal of tackling three of San Diego’s biggest challenges, Mayor Kevin L. Faulconer was joined Monday by tourism, lodging and civic leaders to announce a proposed ballot measure to modernize and expand the San Diego Convention Center and – for the first time – create dedicated funding streams for street repair and reducing homelessness. Modernizing and expanding the convention center is key to creating jobs and growing San Diego’s tourism economy. Tourism is the third largest source of revenue for the City of San Diego and funds essential neighborhood services.

The ballot measure would raise the transient occupancy tax (TOT) paid by tourists staying overnight in San Diego by up to 3 percent to fund the convention center expansion and generate hundreds of millions of dollars for street repairs and programs to reduce homelessness. Mayor Faulconer will ask the City Council to call a November special election for San Diegans to vote on the initiative – which requires a two-thirds voter majority to pass.

“This ballot measure will create jobs, fix streets and help reduce homelessness in our city,” Mayor Faulconer said. “Our convention center must be modernized and expanded to keep up with other cities that are taking away from our tourism business. I’m not asking San Diego taxpayers, who are being taxed enough already, to shoulder this burden. Using tourism taxes to expand the convention center will create jobs, support our economy and grow city revenues. This plan will also guarantee tourism dollars for repairing our roads and investing in programs proven to reduce homelessness. We have an opportunity to move the ball forward on three major issues that are important not only to our tourism economy but to every San Diegan.”

CONVENTION CENTER EXPANSION

The need for a convention center expansion is clear. The current facility has reached maximum occupancy and a lack of available space is the number one reason clients are not able to bring business to San Diego. As a result, these conventions go to other cities and San Diego loses significant economic benefits.

“The completion of the expansion of our convention center is not only vital to our tourism economy, but to our region’s economy as well. Because of the center’s limited size, San Diego cannot stay competitive with other convention destinations and every year misses out on major business opportunities,” said Joe Terzi, President and CEO of the San Diego Tourism Authority. “This results in the loss of millions of dollars in tax revenue that could be used to resurface our streets and hire more police officers and lifeguards. We applaud the mayor for making the expansion one of his highest priorities and the visitor industry stands with him in support of this important endeavor.”

The benefits to modernizing and expanding the convention center include:

Generating $509 million in direct spending at local businesses and a regional economic impact of $860 million.

Creating thousands of construction jobs and nearly 7,000 permanent jobs.

Generating an additional $15 million annually in TOT for the City from more than 380,000 new hotel room nights. The increased revenue would help pay for important City services such as public safety, parks and libraries.

Adding 400,000 square feet of rentable exhibit, ballroom and meeting space, up from 816,000 square feet at the current facility.

Retaining and attracting large conventions like Comic-Con International.

Creating capacity for more than 50 additional events and 334,000 attendees annually.

REDUCING HOMELESSNESS

The San Diego region has a significant homeless crisis with an estimated 8,700 homeless individuals and families living in shelters or on the streets. One of the biggest hurdles to reducing homelessness is the limited financial resources available for programs, services and housing opportunities. For example, the state eliminated the redevelopment program in 2012, ending a funding stream that would have generated $187 million for affordable housing projects over the past five years. In addition, the City has the nation’s fourth largest homeless population yet this region ranks 23rd in the amount of federal funding.

Under the proposed initiative, the City would use a portion of the TOT increase to create an annual funding stream of about $10 million for reducing homelessness – a sum that would grow over time as overall TOT revenue increases. The City could then issue taxable bonds against that revenue stream and generate $140 million in Fiscal Year 2019 for homeless programs.

“A new continuing source of City funding is essential to overcome one of the biggest challenges to addressing homelessness – limited resources for permanent supportive housing and additional homelessness programs,” said Richard C. Gentry, President and CEO of the San Diego Housing Commission. “The Housing Commission looks forward to collaborating with Mayor Faulconer and the City Council on the mayor’s proposal for voters to address this important issue this year.”

FIXING SAN DIEGO’S STREETS

Since taking office, Mayor Faulconer has made street repair the City’s top infrastructure priority by more than doubling funding for road projects. The City is currently ahead of schedule to repair roughly one-third of its entire street network – 1,000 miles – over a five-year period.

One of the primary methods to maintain streets is the use of slurry seal, which has traditionally been funded via state gas tax and the Proposition 42 Replacement Fund. However, those sources of revenue have declined because of lower fuel prices and an increase in fuel-efficient vehicles.

As a result, the City needs to identify a new source of funding for slurry seal to ensure the continued repair and maintenance of hundreds of miles of streets each year.

Under the proposed initiative, the City would use a portion of the TOT increase to create an annual funding stream of about $10 million for street repair – a sum that would grow over time as overall TOT revenue increases. The City could then issue tax-exempt bonds against that revenue stream and generate $150 million in Fiscal Year 2019 for fixing streets.

“I stand with the Mayor in his commitment to strengthen our economy and improve the quality of life of all San Diegans,” said City Council President Pro Tem Mark Kersey. “This proposal tackles some of the City’s most pressing challenges: keeping our tourism sector competitive, bringing our roads up to the standard residents and businesses deserve, and getting people off the street. These problems cannot be solved overnight—but action is needed now.”

If approved by voters, the TOT increase would be levied and funds would be collected for reducing homelessness, improving road conditions and the convention center expansion project beginning in the second half of Fiscal Year 2018. Construction on the convention center expansion would begin in summer 2019 and take 44 months.

The proposed ballot measure will go before the City Council’s Rules Committee at its Wednesday morning meeting.

For more specifics on the plan, see the accompanying Fact Sheet.

Here’s what others are saying about the proposed ballot measure:

David Glanzer, Chief Communications and Strategy Officer for Comic-Con International: "We've long felt a contiguously expanded convention center would best serve the citizens of San Diego as well as the many convention planners who hope to hold their events in America's Finest City. We applaud the Mayor's efforts and are heartened by the support of civic and community leaders."

Mike McDowell, CEO of the San Diego Lodging Industry Association: “The lodging industry supports this plan to raise the tourism tax to modernize and expand the convention center, repair roads and reduce homelessness. This plan will actually help businesses and workers that rely on tourism because, if approved, San Diego’s transient occupancy tax would still be below the rate of our key competitors. But we need to act now because San Diego is losing jobs and revenue to Los Angeles, Orange County, San Francisco and Orlando because of our outdated convention center.”

Kris Michell, President & CEO of the Downtown San Diego Partnership: “Mayor Faulconer’s proposal is common sense and good for the local economy. Expanding the Convention Center will protect San Diego’s tourism economy for years to come, and investing in homeless services and street repair is just as critical. San Diego will not be able to maintain its status as a world-class destination if we can’t find a way to care for our most vulnerable and maintain the streets and roads responsible for moving people and goods.”

Aimee Faucett, the Chamber’s Executive Vice President and COO: “The Convention Center is one of the city’s most vital economic drivers and the San Diego Regional Chamber fully supports the contiguous expansion of the Convention Center. An expansion of the Convention Center is a crucial next step for our city that will grow businesses, create jobs, and fuel our economy for years to come.”

Peter Seidler, Managing Partner of the San Diego Padres: “I’m encouraged by the idea of a designated annual revenue source to support regional priorities to reduce homelessness, and I am eager to see how the ballot language is written. The idea of expanding the convention center, helping people find their way into housing and all of us driving more safely on our streets is a win for all our families.”

Janet V. Skorepa, Executive Vice President Education for the American Urological Association: “The association will be bringing our convention to San Diego next month. We are expecting over 16,000 attendees and close to 50,000 total room nights filled over our five-day convention. While we currently have enough exhibit space in the building, we have completely outgrown the meeting space your facility has to offer. This forces us to place meeting sessions and lucrative ICW’s in hotels versus satisfying our attendees’ needs to have all events in one location.”

Read the fact sheet here.

CONTACT: Craig Gustafson at (619) 453-9880 or [email protected]