First Impressions Of Mayor Sanders Last Budget And Convention Center Kerfuffle
April 11, 2012 1:11 p.m.
David Alvarez, San Diego City Councilmember for District 8.
Donna Frye former San Diego City Councilwoman.
Related Story: David Alvarez On The Convention Center Kerfuffle
CAVANAUGH: This is KPBS Midday Edition. I'm Maureen Cavanaugh. It's Wednesday, April 11th. Our top story on Midday Edition, a switch in who does the booking for the San Diego Convention Center has apparently led to an upheaval among top Convention Center officials. Late last month, the San Diego City Council took booking duties away from the staff and awarded the sales in marketing contracts to the private San Diego convention and visitors bureau, or ConVis. Now, three top officials including CEO, Carol Wallace, are in the process of leaving their positions. The turmoil at the top is just part of the regular reaction from labor and critics who say this decision was rushed and wrong. My guests, welcome to Donna Frye, former San Diego City Council woman. Welcome to the program.
FRYE: Thank you. Good to be here.
CAVANAUGH: And welcome to a late arrival, but we're glad to see you, David Alvarez, San Diego City Council member for district 8. Thank you for being here.
ALVAREZ: Thank you very much for having me.
CAVANAUGH: My first question is to you. You voted against this switch from the Convention Center booking its own events to now ConVis booking events. Why did you vote no?
ALVAREZ: Well, I think that whole process, the way everything came to us was quite rushed, very last-minute. I think that we could have had a more public process, I think we could have had a dialogue about this. There were no safeguards for the city as part of this. There was no business case. There was no business plan, which surprised me, actually from a -- a couple of my colleagues who are always talking about how we should do business at the city like the business world does it out there, and no business case made, no business plan, no guarantees, no safeguards. A lot of unanswered questions. Things that are supposed to be answered at some point in the future, we don't know. And the whole premise that we had to give away control in exchange of a vote so that the hoteliers would vote in support of the tax I thought was a little bit -- I was very uneasy with that. It almost was quid pro quo-ish for me.
CAVANAUGH: I want to ask you, I want to go into that a little bit more. Was there any other rationale given my supporters besides doing a quid pro quo for the hoteliers paying part of the expansion? Was there any other argument made in support of changing the booking events from the Convention Center staff back to ConVis?
ALVAREZ: No, in fact during my questioning period at council I asked that question to Mr. Cushman, who was the lead negotiator for the mayor on the Convention Center issues, directly, are we doing this because otherwise they will not support a vote for this? And he basically answered yes. He didn't say yes, but he said I had to do some things in order to make sure that we were able to move forward with the expansion, and this is one of those things.
CAVANAUGH: Let me just backtrack and talk to you, to know, for a minute. ConVis used to take care of sales and marketing for the Convention Center. Why did that stop?
FRYE: Well, they took care of the sales, and one of the reasons it stopped is because of the way they were spending the funds. The TOT funds that they were getting to promote and market the City of San Diego. So the duties and responsibilities were moved back to the Convention Center, which is where it should rightly be. What my big concern is is that the hoteliers now have the ability to set the booking rates and what is going to be charged. So they have all the authority, but they have none of the responsibility as to what happens as a result of their decisions. The people such as carol Wallace will still be tasked with having to be held accountable for Convention Center sales and bookings and have to answer to the city if those revenues are less than what's been expected. So the dynamics have shifted. The hotel owners have all the authority, and no responsibility. The Convention Center staff have all the responsibility and none of the authority to do anything about it. It's a bad deal.
CAVANAUGH: David Alvarez, so this -- so you're telling us that this was basically presented to you and the City Council as a way of sort of giving an incentive for the hoteliers who are going to be voting whether or not to up their tourist taxes and pay for a large percentage of the Convention Center expansion. This is a way to make -- sweeten the deal, so to speak, for them to agree to do that.
ALVAREZ: I think that was quite clear. And I think if you ask people who follow this, that's exactly what happened. Unfortunately the discussion at council was not about that, and it should have been because that's exactly what was going on. It was trade off, basically, from the city. We were giving away something in exchange of getting something else. And again, I asked that question specifically, and I request feel strongly in saying that that is exactly what the response was from those leading the negotiations. And it was if we don't give the hoteliers this authority, we're not going to get the votes that we need to expand the Convention Center.
CAVANAUGH: Now, labor organizations came out in force against making this switch back to ConVis. Why was that, Donna?
FRYE: Well, I would hope because they saw it for what it is, which was a way to take over $1.2†billion in tourist taxes that would otherwise go to general fund where we could use it for pretty much what we wanted to, and instead have shifted that money over to the control of the hotel owners. I think is they also realize that there is a large incentive for the hotel owners to have control over the booking of the Convention Center. And what I mean by that is that the hoteliers can -- their goal is to make sure the hotels are profitable. Let's get real. And in order to do that, they now have the ability to charge higher room rates and reduce the booking fees that would be charged to the Convention Center. And I think that labor is rightly concerned about taking a public asset that is performing very well and driving it into the ground.
CAVANAUGH: Are they worried about jobs, David?
ALVAREZ: I think they are. And one of the things that I said is we should you will be worried about jobs, that's absolutely true. But this should not be a shell game. We should not be moving the business from the Convention Center into private hotels. The goal of an expansion of the Convention Center should be to grow the pie so hotel owners and hotel properties do better but the city does better as well. And what we're seeing, and what this created, are the potential is that as Donna was saying the hotel owners will now be able to control more what books occur at what rates, and they could potentially move some of the business that currently occurs at the Convention Center into hotels. And that's a way for them to make more money as well. So this as I said at council, this could be a really good win for all of us, but the way this was structured so far, it's a win for hotels, not a win for San Diegans.
CAVANAUGH: Mayor Jerry Sanders and supporters of this deal have argued and will argue for strongly that getting the hoteliers, if indeed that new tax on them, if they approve it is legal, getting the hoteliers to pay for a large part of the Convention Center expansion removes that burden from the whole of San Diego City taxpayers. And they feel very strongly about that, are and they're proud of being able to put this deal together. But Donna, all of this makes good copy for news organizations about who's going to be booking events at the Convention Center, I'm wondering why should the average San Diegan care about who does the sales and marketing for the Convention Center?
FRYE: Well, the public first of all should understand that the original Convention Center, when it was built, as well as the first expansion went to a public vote. The public got a vote and decided how they wanted the money to be spent. The other thing is that people need to understand what the actual cost is. It's not $520†million. It's over $1†billion or more in public tax funds, tourist dollars being sequestered for a specific use that could otherwise be used in a general fund. Of and the public has no say so over that. The other thing that I believe is the big problem is that the voters voted at the same time for voted for the Convention Center expansion back in 1998, they also voted for another charter amendment, which was charter section 90.3, that there would be a public vote for major public privates conferring significant private benefit. I think this meets the bill. So the whole thing is ironic. The other thing it does is it locks this money up for 30-40 years and preclude us going back to ask for tourist taxes for at least 40 years, shifting the tax burdens onto the individual taxpayer as opposed to the tourist. That's why the public should care because now the sources for new funds and revenues that would help pay for basic city services fall squarely on the backs of the individual taxpayer in the City of San Diego.
CAVANAUGH: David, what kinds of discussions have there been in the City Council about making up these transient occupancy taxes that will be lost to the general fund if they do indeed go toward paying for the Convention Center expansion?
ALVAREZ: That's when I was mentioning that there's no safeguards. We started this discussion a while ago, before I was in council, there was a task force that met for a year or more to discuss the idea of whether or not we should even expand the Convention Center. We went from that very public process to a process of over the course of months without all these discussions that occurred in the previous round occurring to decide how we're going to pay for it. So we were first told there would be no public money. That has now changed. There will be $3.5†million at least from TOT money now. So that would otherwise go to all these other services that the city pays for, police, fire, recreation centers, libraries, that's already being taken to pay for the Convention Center. Part of the payments. Then in the future, we -- there's no guarantee. We don't know if they could grow. The cost to the general fund. We do hope that there will be increase, and naturally there will be increase in TOT because as time progresses, the economy gets better, more people visit San Diego. But how much this -- we can tag a TOT increase directly connected to the expansion of the Convention Center, there's no way to really calculate that.
CAVANAUGH: When are we going to get the tally of the votes from the hoteliers about whether they've agreed to go in on this and to get those TOT funds to the Convention Center?
ALVAREZ: We should know in the -- we will know by mid-May.
CAVANAUGH: All righty. Let me change the subject just a bit. Because San Diego mayor Jerry Sanders has just released his budget for the next fiscal year. He's already said this budget closes the city's structural deficit. And councilman David Alvarez, have you seen the new budget?
ALVAREZ: I have it right here.
CAVANAUGH: Have you had a chance to look through it?
ALVAREZ: A little wit, but not in detail.
CAVANAUGH: Let me get your first impressions then.
ALVAREZ: Well, I think overall in the last couple years, the council and the mayor have done a good job of restraining themselves, trying to control some of the costs. But what I'm looking forward to is even though the budget is balanced and we're going to have revenues that meet the expenditures, over the last few years we've significantly cut the services that the public was used to. We used to have 25 service centers throughout the city where people could go into their neighborhood and do city business. Those have all been eliminated, basically. We used to have pot hole repair at an average of 2-3 days. That's now eight-days a week. Our library hours have been significantly cut. We have had kept on pace, but that doesn't mean this year has been the best year. We need to keep making sure that we don't spend in ways that are inappropriate and that we try to stay in line and restrain our -- continue to restrain ourselves. It's not the end of this crisis.
CAVANAUGH: Donna Frye, you have already talked on this program when the mayor announced that the structural deficit for the city had now been eliminated, basically. And with the announcement of this new budget, mayor Sanders is once again saying the structural deficit is gone. You don't agree with that.
FRYE: Well, I would say compared to what? Where was the baseline set for what city services we should have? If you want to set it at a 2002 baseline, it's not balanced because we certainly are nowhere close to the services that were being provided to the citizens in 2002. So one of the things that the mayor did when we shifted to a strong mayor and he started taking over the budget was that there was no measurements provided to the council and certainly not to the public as to the service levels are, what the current service levels are. So if you eliminate most of the public services and then say now we've balanced the budget and there's no deficit, I would say compared to what?
CAVANAUGH: I'm not going to question you anymore about the budget, councilman Alvarez because you have to look at that a little bit more.
[ LAUGHTER ]
CAVANAUGH: But I want to let our listeners know that we will be discussing the mayor's new budget in depth here on KPBS later in the week. Thank you both very much.
FRYE: Thank you.
ALVAREZ: Thank you for having us.