Roundtable: Party Defections, Rent Control, Hotel Taxes
April 27, 2012 11:54 a.m.
Guests: JW August, managing editor, 10 News
Alison St. John, senior metro reporter, KPBS News
Katie Orr, metro reporter, KPBS News
PENNER: Today is Friday, April 27th. I'm Gloria Penner. And with me are JW August from 10 News, welcome back.
AUGUST: Thank you. Top of the mortgage to you, Gloria.
PENNER: And KPBS reporters, I'll introduce them in tandem, but greet them singly. Alison St. John, and Katie Orr. I'm glad you're with me.
ST. JOHN: Great to be here.
PENNER: And Katie, a delight to see you.
ORR: You too.
PENNER: Nov.'s switch, it has a catchy name, move to the middle. And it's all about the business community doing the same thing that Nathan Fletcher did. He talked about the partisan gridlock that has riled the city and the nation. When did he do this?
AUGUST: The change was what? Back in the -- I've got the polls I'm looking at. It was in early April, he made the switch.
PENNER: Before or after the poll?
AUGUST: Before the poll.
AUGUST: And after the -- after he made the switch, the polling came out that we do survey USA, and his numbers jumped. And -- and I actually pulled all the polling for the last year, and his numbers of all the candidates have jumped since a year ago June, 19%.
PENNER: You're saying he is the only one who's poll numbers increased?
AUGUST: No, both -- but DeMaio and FIilner both jumped, but nowhere near it. He jumped three times as much. And Bonnie has lost 2% from the poll a year ago.
PENNER: Well, when some numbers go up, others have to go down.
AUGUST: At that time, there was, hike --
ST. JOHN: 30% undecided, right?
AUGUST: Right. A huge number. Upon and the undecided numbers have really been dropping. So it did what he intended to do.
ORR: I think there was some speculation as to his motivation, right? Because he switched right after he failed to get the GOP endorsement. He has said, no, no, this is something that I've been thinking about for a long time, this is a genuine move. Others said then why did you campaign for the GOP endorsement and make the switch after you failed to get it?
PENNER: And the word that was used when people described his plea before the Republican party to get their endorsement, it was passionate.
ORR: Yeah. I think from all the accounts, I wasn't at the meeting, but it seemed like he made an effort to really try to secure that endorsement. And he said later he never expected to get it.
AUGUST: Huh. That sent me the audio tape, and I listened to it, it was passionate.
PENNER: It was.
AUGUST: I can say that it was passionate.
PENNER: Well, his passion obviously reached 37 people who were members of the business community because they pledged to leave their parties no matter what party they had and go independent.
ST. JOHN: Uh-huh.
PENNER: So who are these people?
ST. JOHN: Okay, well, there's various well-known business people, including Meninberner, who's been behind him. When you say you're leaving the party and becoming independent, you set yourself a challenge. How do you define yourself? So this big group of business people who jumped in behind him I think helps voters see that, okay, he may be independent, but he's obviously pro business because it's the business community that seems to be hot on his tail here.
PENNER: But thinks have changed in San Diego. We have a much larger democratic voter registration than we ever did before. And yet this is considered a nonpartisan race. Is there something a little strange about that? All of this is about partisanship. How did it become so connected as to whether a candidate is a Republican, a Democrat, or an independent?
AUGUST: Well, are the city has played that game forever about oh, this is a nonpartisan race. But everybody knows who the democratic was, everybody knows who the Republican was. Those titles are easy to put on people and help the voters make a quick determination to who to pick.
ORR: It's important from a financial stance. If you have an endorsement of one of the parties, you request get a lot of money from them. And they don't face the same regulations that individual donors might face.
ST. JOHN: And you can tell that someone who's a Republican is going to be supportive of developers, and a democratic might be more supportive of laborer unions and the middle class. So irrespective of party, that's one of the places where people on the City Council do define themselves.
AUGUST: But I -- can I just say, what was powerful about the ad they started to run, can a Democrat be fiscal responsible, they say? And they started raising questions a lot of us have. Can't you have both of these qualities in the people that you want to vote for?
>> And it really strikes a cord with him.
ORR: That's what was interesting to me. A lot of people feel what way. A lot of people say listen, I don't necessarily like all the pension expenses the city has faced, but I'm not antiunion, so where do I fit in? I think that really speaks to a lot of people's views. I wonder though, like, however they're going to get. People donate money when they're passionate about a cause, right? That's when you're on one side or another. And if you're just a more moderate, in the middle, are you really going to have that motivation to go out this and be involved in some something?
PENNER: Well, they also donate money when they think they're going to benefit from that person who might win based on their donations.
ORR: Right, right
PENNER: It goes, I think beyond being passionate about it. It's pocketbook issues.
PENNER: How has Nathan Fletcher's switch impacted your opinion of him? Has it changed?
ST. JOHN: I was wondering, what does being in the middle really mean? How did we first come to know Nathan Fletcher? The first thing was the Chelsea's law which is very pro-public, pro law enforcement, then there was the under -- behind closed doors initiative that he took to extend redevelopment money, which is like pro development.
PENNER: I think you need to just explain that a little bit.
ST. JOHN: So the redevelopment agency was going to run out of time, it was going to reach the end of its time to work in San Diego to redevelop downtown, and Nathan Fletcher managed to get a law passed in Sacramento that would extend the time so that San Diego's -- center city development corporation could continue its efforts.
PENNER: And this was seen as a move to improve the chance of the Chargers stadium getting built.
>> That was very much a part of it. These are things that define him. Whatever party he's in, those are more Republican kinds of action.
PENNER: JW, why do you think that these business leaders decided to "follow Fletcher?" Was it really a following of Fletcher, or might there have been the possibility that they were going to band together to say we're going to become independent anyway?
AUGUST: Well, there's a difference between independent, in the middle, and I think part of the problem of describing this, they describe themselves as in the middle. But being independent doesn't necessarily mean you're in the middle. You can be on any spectrum, but still be an independent.
AUGUST: So the term bothers me a little bit.
PENNER: Well, it used to be decline to state.
ORR: Well, that's what they technically did.
AUGUST: Right. But I think they did it for -- it's easy to remember,
PENNER: Oh, sure.
AUGUST: But I think these were all close Nathanites from the get-go.
PENNER: Was it a stunt as Bonnie Dumanis said?
AUGUST: I see a lot of press conferences at the District Attorney's Office, someone could say those are stunts but they're not. And I think they realize now that given the mood, that this was a good mood and those Nathanites came out of the closet, and I think it's an important thing that he did. It's going to make a lot more of the folks on the edge make a decision.
ORR: On the UT San Diego home page, they have absolutely not scientific, you can vote as many times as you want, but they have an informal vote, and Nathan Fletcher is actually leading that. I believe by -- he has, like, 30% of the vote. So it at least speaks to his name recognition. He's been out there, the one people are talking about. And that can only be good.
ST. JOHN: And don't you think that the public is so frustrated with the gridlock that he did actually buck that up a little bit in Sacramento. So people respect that. But it doesn't necessarily let you know as a voter, where does he stand? You know that maybe he's not going to be hardline on one side of the other and take a no taxes pledge and refuse to budge. But at the same time, he still has to define himself so those decline to state voters know whether he's really what they want.
PENNER: Okay, well, it appears that we have some calls coming in. My computer screen isn't working at the moment. So I'll take whatever call the producer decides to put on the air. Keith on line 1.
NEW SPEAKER: Hello. Thank you very much for having me. My name is Keith Jones. And I just wanted to call and comment about what Nathan did and the signal of what that shows for our two party system. Just as in the last few days, the California Republican party has opened up an independent expenditure to attack Nathan Fletcher. They have put a quarter of a million dollars into this independent expenditure to attack Nathan Fletcher because they realize the fact that if he does win and is successful, this is real trouble for the party system and their party up and down the state. And they're afraid that if he wins that more will defect, and if they are successful in defeating Fletcher through this new independent expenditure, again of which they have raised a quarter of a million dollars in here, they know they can get other Republicans to fall back in line. And this is it just the kind of divisive politics that we are operation in. And as a member of the movement to the middle, I was part of the group of 30-plus CEOs that came out a couple of days ago, this is the divisive politics that we are about trying to stop.
PENNER: In a word, Keith, just in a word, was that your primary motivation, the divisive politics rather than anything that Mr. Fletcher did?
NEW SPEAKER: Absolutely.
NEW SPEAKER: We're supposed to live in a democracy, but with the two party system, we live in a dictatorship.
PENNER: Thank you very much and I'm going to congratulate you, I'm not going to congratulate you on the fact that you switched or you didn't switch or what have you, but just that you took some action. So many people seethe about things and don't do anything. And Keith did something. And that made me impressed.
ORR: To that point about taking action, it will be interesting to see if all these people who say they support him actually come out on election day. Because primaries have a history of attracting people who are hardcore party faithful Democrats and Republicans.
ORR: He could get all the attention in the world and these people could not actually go to the poll.
PENNER: Keith, thank you for your call. And we have another, sir or ma'am, would you please identify yourself? You're on. Well, I don't think that we have our caller anymore. Okay. While we're waiting for the caller, one report indicates JW, that the group, this group of movement to the middle hopes to start a national movement to end partisan gridlock. What value does starting a national movement have for, let's say, Fletcher's campaign? Is the national --
AUGUST: Well, there certainly is the mood for that. And I actually was talking to Steve Peace and Jeff Marston yesterday, and there is a move afoot, called the independentvotersnetwork.something, and they have been spending about four or five years trying to get this launched. They were in our station arguing with how we poll because we use surveys. And they were arguing because of the new 2-tier system, polling shouldn't count, that you should look at every candidate and at their history and if they have a chance to real succeed because they say, and there's a lot in what they say, Republicans and Democrats in this present system are always going to have a leg-up early. But the Independents and by their nature, Independent voters come in late in the game. They're always waiting for the Independents to make up their mind. When they left our building, I scratched my head, thinking they've got some good points.
PENNER: I'm going to interrupt you, Katie, because we did get our caller back. Mike from Oceanside, you're on with the panelists.
NEW SPEAKER: Okay, thank you very much. I want to comment about the fact that Nathan Fletcher is now declined to state. And he says that's in the middle, but when the Republican party supported prop 23, which would have suspended our climate solutions act, AB32, I didn't hear him complain about that. And that's the middle. Most people understand that we have a climate crisis, and he was just hanging there in the Republican party, he thought that was the best thing for him, and that's not the middle. And that proposition lost by double digits here in San Diego County.
PENNER: Okay, well, thank you, Mike. And I think that Mike's brought up a really interesting issue, and that is for everyone, an election represents a different issue. For Mike, climate change is really important of the for others it would be the pension fund. And for others still, it might even be the rent control that we're going to be talking about next.
PENNER: Oceanside has been riddled with league battles as conflicts emerge over the city's mobile home park rent control ordinance that went into effect in 1984. In 1984, Oceanside did get rent control for their mobile home parks. And now those battles are heating up. The City Council voted last May to phase in an end to rent control. And now an initiative is on the June ballot that will let voters decide. So it goes back to the voters. What are the essential issues in this controversy?
ST. JOHN: Okay. Well, basically it's all about affordable housing,, it's all about private property rights, and all about politics. To expand on that, Oceanside has got a lot of veterans, and a lot of seniors that live in it, and traditionally, they have found a home in the 17 mobile home parks up there, where with rent control, they could rely on the fact that they would not ever be priced out. So it was providing a sort of haven for low-income seniors and veterans. So this is -- this rent control threatens that. It could be that the rents could be raised from a few hundred dollars a month to $1,000 or more. There's no cap really anymore under this initiative on how much the owners of the parks could charge for the spaces.
PENNER: I want to interrupt you, because this is interesting, only in mobile home parks, I think, the residents actually provide their own home.
ST. JOHN: That's anything right. They own the home.
PENNER: It's their home. But in order to keep the home at the park, they have to pay rent. So they are both homeowners and renters.
ST. JOHN: You got it. So there's two sorts of private property owners at stake here. Of the people who own the actual mobile home, and those things are not mobile, by the way. One told me it was probably cost $30,000 to move it. . So basically, for all intents and purposes, they're manufactured homes. Then you have the people who own the parks who probably built the parks and the roads and the systems, and the amenities. So they also have their private property rights. And the rights of those two kinds of property owners are being pitted against each other here.
PENNER: JW, you always think deeply about these things. Why shouldn't mobile park owners have the right to raise rent fist they see fit? They own the parks.
AUGUST: Jeffersonian, let me think, property rights, property rights. I'm thinking deep, Gloria.
[ LAUGHTER ]
AUGUST: I don't like the City Council was manipulated somehow. These people are 55 years and older.
ST. JOHN: Many of them.
AUGUST: How old?
ST. JOHN: About half the parks have got a 55 or older at least.
AUGUST: And they're veterans, and come on. The price of housing is so expensive, this is a reasonable thing. If you're not making enough profit with the park, sell the park to somebody that'll buy it and be happy with their little 25% return. Don't throw these -- do not do this to these people. It's just not the right thing to do. I mean, I think most people, if you really think about it, the league of women voters opposes it because they believe in affordable housing. Why would we remove more affordable housing from our community? It's just -- it's very disturbing that the City Council would do something like that.
PENNER: Well, I'm going back to Alison, then do to you, Katie. A lot of it has to do with the politics of of what's going on in Oceanside.
ST. JOHN: Exactly.
PENNER: You have a City Council that's basically a 3-2 split. Explain that.
ST. JOHN: Well, it's worth mentioning that mobile home park rent control has been in place in Oceanside since 1984, and none of the City Council since then have questioned it. They've seen it as a benefit to residents of the city, and that it hasn't actually cost the city. Now we have a situation where there is a -- there's always a tug of war going on in Oceanside, with the 5-member City Council, but Jerry kern who is running for mayor is more on the side of the park owners. And he is saying that the city cannot be supporting a shift of the assets of those private park orphans to the residents of the park. So he is framing it in terms of it being something where the city is on the side of the homeowners, and that, you know, one has to ask one's self how much support is he getting from the people who own the parks? There is no evidence that they have given much to his campaign at this point. But it is true to say that he is very pro business, and pro private property rights. And he, I think, is more on the side of the park owners and their profits. And one of the, you know, the interesting things is that you cannot really ever find out how much the park owners' profits are because those are private. One park has entered into a lawsuit. So they know that their owners are making, like, 60% profits. So JW, you said 25%. Nobody really knows. But this is an issue that is splitting the City Council. And it's really indicative of a trend toward a more pro property right, pro business council.
PENNER: Throughout the entire county of San Diego, wee seeing that there's less and less rent control. And I would like to ask our callers, do you feel that there should be some form of rent control? Katie, Scott Barnett is now on the San Diego City School Board, but he also is a member of -- what is the name of that group? Like, protect people's interest rates or something like that. It's a fiscally conservative group.
AUGUST: Consultant, right?
PENNER: As a consultant, he conducted a study for the north San Diego County association of realtors. And it concluded that Oceanside's rent control ordinance is costly to taxpayers because of the expense of providing government oversight for the ordinance. In other words, the government has to watch and see that the ordinance is being taken care of. Others say there's absolute no impact on city residents because Oceanside collects the fee only from mobile home park residents and the owners to fund the program.
ORR: Well, you're asking for my reaction on that, I think that governments have to govern, right? They have to provide oversight. That's kind of what they do. And it just seems to me people pay taxes, if people pay fees, that's what they are paying these things for. You could make that argument for pretty much anything that the government does, that it costs money to run the government, and that's what they're dealing with here in San Diego, and outsourcing these services to try to make it cost les.
>> And Scott Barnett? What do you think he's going to say? I would hope that his mom and day some day live in a mobile home where they got rent control.
[ LAUGHTER ]
ST. JOHN: I think you're making a really good point there. The issue does come down to does the community want to have a place where seniors and veterans can survive, or do they want them on the streets?
AUGUST: What kind of quality of life do they want for these people?
ORR: It speaks to the entire cost of lific in this region. This is an expensive place to live. And I wonder sometimes, personal disclosure, I'm in my 30s, right, can me, and my friends buy houses here in San Diego? Some of them probably can, but a lot of them are not in a position to do that. And how is this region going to adjust going forward if we can't afford to live here?
PENNER: Alison, there's obviously -- we've all acknowledged it's some kind of a profit motive. This has to be a reason why the mobile home park owners want to increase rents. And it would have to be a profit motive.
ST. JOHN: Well, their argument is that they don't have enough money to repair the parks, and keep the streets repaired, but there's no way of proving that it isn't just going to do into more profits.
PENNER: One of our callers commented that owners are getting 13-14% on their money. And isn't that money? Do we know what they're getting on their money? Is there any revelation?
ST. JOHN: That is the thing, Gloria, they are entitled to keep that to themselves. They don't have to be transparent about their profits.
PENNER: Because they're private businesses.
ST. JOHN: Right. And unless you're engaged in a lawsuit. And one lawsuit has revealed that one mobile home park owner is making 60% profit.
>> Maybe we should do like Saldana is doing with Scott Peters, show us your income tax return if you guys want to lift the rent controls.
ST. JOHN: Well, one point just from the perspective of those who say this is good affordable housing, there's one problem with that which is that there is no means testing for anybody to buy into a mobile home park. So you could buy a second home in a mobile home park, and some people do. Of so this is why the city can legitimately argue that it isn't necessarily a good affordable housing kind of a strategy because someone who's really wealthy could decide I would like one of these mobile homes near the ocean and move in.
PENNER: And I do want to talk a little more about second homes and speculation because I think that's all part of it. Now we have a caller on the line. John from Mission Hills.
NEW SPEAKER: Thank you. I think there's some very good points brought up. And I do think that affordable housing is an important thing to have in any city, and San Diego has been getting les affordable. However there's also the issue of individual property rights, and the rights of people who brought these properties as investments. They didn't buy them -- they bought them with expectations to get a return on their investment, and someone could argue what a reasonable rate of return is on an investment. But to come in after the fact, and say you can only raise your rents X, they made an investment, they had an expectation of a rate of return, and that's the risk they've taken, and will they be able to increase rents over time? Even though they're affordable, there was no guarantee that they'd you would remain affordable forever when they bought them. And I think it's important that there be affordable housing for seniors, and we have other things that will assist seniors in making things more affordable, but to come in in the back end and regulate someone who bought an investment property and say you're now capped, you can only earn X percentage of what we determine to be a reasonable rate of return, seems like it's overreaching in terms of what the government should do. There are ground leases, where it's similar, the business who owns the business doesn't own the dirt, they lease it from an operator. Are they going to reach into that and say you can only raise your rent X? Where does it stop?
PENNER: Thank you very much for your comment.
AUGUST: I think John made some good points. But I am wondering how many of them purchased the land after the price of rent control. 1984?
ST. JOHN: I believe most of them were already in position before that time.
AUGUST: In other words the people that currently owned the mobile home parks owned them before the rent control --
ST. JOHN: And then it was imposed on them.
AUGUST: So they knew --
ST. JOHN: Well, no, you could argue they didn't.
ST. JOHN: And I think you could argue --
PENNER: Let's clarify. They didn't what?
ST. JOHN: The people who bought the parks already had the parks before the rent control was imposed in 1984. Of
PENNER: So they bought it an expectation that they could impose any rent they wanted, then rent control was imposed. I wonder what was going on in Oceanside in 1984 that had them do that.
[ LAUGHTER ]
ST. JOHN: For one thing, you have a very character charismatic City Council woman, melba bishop, who really changed the climate in Oceanside and set the tone for quite a while to come, and really argued for people who needed affordable housing, and has been a champion for perhaps -- she has said if you want your mom and pop to come live with you, that's fine. But if you feel like you want them to have somewhere affordable to live, that's why we have rent control here in Oceanside.
AUGUST: Once there was Camelot.
[ LAUGHTER ]
ST. JOHN: Well, Oceanside has -- it has definitely veered from one side to the other in a very alarming fashion. But I would like to mention that there was an attempt to make a compromise. I think there are some arguments to be made for providing an ability to raise rents a little more, have some discretion to raise rents more than there currently is. But the attempts to reach a compromise failed, which is why it ended up on the ballot.
PENNER: So people are -- they're hardlined their positions.
ST. JOHN: Yes, so this initiative would allow them to raise rents to any level. There is no cap. So there is particularly damaging to the homeowners, to the people who would be the victims of this if it passed.
PENNER: We have many calls on this one. Let's try to take several of them in a row and hear what our listeners have to say. We'll start with Martha and then to Steve. Go ahead.
NEW SPEAKER: My call is -- I live here in Escondido, and we don't have rent control, but we also have owners so the owners can pretty much do whatever they want. They're raising our rent to $940 dollars, 6%, unless we sign a piece of paper promising not to sue them. They're not fixing our water mains, not fixing our electrical problems, we have had homes go up in flames. And they're not doing the things they need to do to keep this park viable, vibrant. They're buying the owners out and buying the homes and selling them themselves so that the owner is actually taking a loss on the home.
ST. JOHN: I think that's a really interesting point, perspective. I'm glad that you called in because you're from a park where there is no rent control. And that means that the homeowner has no protection. There is a huge potential for exploitation of the owner.
AUGUST: Trust me, trust me. That's what they're asking. And you're right. This does happen again and again and again. They buy those homes cheap because what are the people going to do? No place to move them.
PENNER: Our other call is Steve on line 3.
NEW SPEAKER: Hi, I have a rental property, and I also have a home. And my thing is, with this rent control, no, I don't have rent control where I'm at, but I bought this to retire on. And my retirement is based on the rent over there because I'm naturally going to have it paid off by that time. If they put in rent control, they ought to have some government intervention or something saying you will pay me the market value for this price for this home if I got to set my standard as far as how much I'm going to collect on rent. Other than that, I wouldn't even buy a home.
PENNER: Okay, thank you.
ST. JOHN: This is the point. So many of these residents are seniors, and they were depending on the value of their home, if they needed to move into assisted living, which ain't cheap. So as soon as rent control passes, the value of the home drops, right? Because nobody is going to pay as much if they know that the rent could go up sky high. So it does affect the value of the home. The people who argue in favor of this initiative because it's vacancy decontrol say you don't need to lose the value of your home until you sell it. Of so as long as you stay in the park, your home is the same value. But that's just theory. Because if you need to sell it in order to provide for somewhere else to move, the value of your home is key. And if it plummets as a result of the end of rent control, you have lost your plan for how to survive.
PENNER: In other words, perspective buyers will think five times before buying a home that will be under rent control.
ST. JOHN: Yeah.
PENNER: I just want to make one more point before we wrap this one up. The question of litigation, even if this is -- goes to the ballot, and it wins one way or the other, is it really subject to litigation? And some cities maintain that litigating rent control is prohibitively expensive. The city of Capitola in California is concerned that the cost of defending rent control will bankrupt the city.
ST. JOHN: Right.
PENNER: Alison, could Oceanside find itself in the same situation?
ST. JOHN: Well, the fact of the matter is that, yes, if there's litigation, and there has been some statements made by attorneys who have represented the park owners, that one of their strategies is to go after cash-strapped cities and litigate. And the city might be able to afford managing a rent controlled mobile home park, but as soon as they are faced with huge litigation costs, it becomes too much to manage, they throw up their hands and abolish rent control.
PENNER: With that note, we will end the segment. Thank you all very much.
PENNER: I'm Gloria Penner. This is Midday Edition Roundtable. With me today is JW August from 10 News, from KPBS news, Alison St. John and also from KPBS news, Katie Orr. Now wee going to talk about the fact that hotel owners in San Diego overwhelmingly approved a new room tax that will provide funding for a proposed $520†million expansion of the San Diego Convention Center. 92% of them own property. And that will add an additional 1-3% fee onto the charge guests currently pay on their bills. So that runs to about 15.5%. Why such an overwhelming yes vote?
ORR: Well, it's a good deal for conventions, for there to be more conventions in San Diego. When people travel to conventions, they have to stay in hotels. And the hoteliers like the business. There was some dissension among the ranks from what I understand among hoteliers because people who live in Rancho Bernardo, who have a hotel out there might not necessarily see the benefit of an expanded Convention Center. And yet their tax rate is still going up, 1%. So as a way to entice these hoteliers to approve this tax, the City Council has voted to switch the marketing contract from the public convention center board to the private convention and visitors bureau of which the hoteliers are a part. And that effectively gives hoteliers more say over what happens at the Convention Center.
PENNER: So which happened first? The vote or the switch to giving the convention and the visitors' bureau say over marketing?
ORR: The vote lasted a couple weeks. They were mailout ballots. And while they were voting, the switch happened. That's raised the question, if it's something you're doing because it's a good business move, why did you do it when the hoteliers were voting?
PENNER: Well, isn't that obvious?
AUGUST: Oh, yeah, to make the deal happen. The labor unions are pretty ticked off about this, and I happen to agree with them on this. This was a $30 million giveway to conviz to get back in the business.
PENNER: $30 million?
AUGUST: That's a figure a year. They'll be handling that kind of action.
ORR: The taxes raised from this move, if they stand up in court, will generate about $30†million a year to go toward the expansion.
PENNER: I see.
AUGUST: And virtual the marketing team at the -- and as I recall, the marking team at the Convention Center did a pretty good job. Now these other guys come in, and their track record isn't sterling.
ORR: The Convention Center always told us the reason we need a bigger center is because we are booked solid, we need more room, different kinds of room, because they were effective at marketing it. Carol Wallace gets pretty much universal praise from everyone for having done an outstanding job. So the question was, if things are going so well, why did we switch it to conviz? People there have told me it's about streamlining the operation. They said they had two sets of people doing double duty marketing in San Diego. Now they have one.
ST. JOHN: That just takes it out of the hands of the public sector and put its in the private sector.
PENNER: Why should only the hotel owners vote rather than the public on a tax?
ST. JOHN: Yeah, well --
PENNER: First of all, is it legal?
ST. JOHN: Well, I think the legal question remains to be seen. But the thing I'm thinking about is that there was a time when San Diego City was trying to raise money, and they tried to get a TOT tax, and the tax was put on the ballot, and the public voted
PENNER: The same as a hotel room tax.
ST. JOHN: It's a similar one, basically taxing tourists instead of residents. And blow me down, the residents voted against it! They didn't want the tourists to be charged more. Here we are where the owners are just being allowed to raise the hotel tax on tourists.
PENNER: Whether you live here or not. If you decide to go down and stay at a hotel overnight --
ST. JOHN: So the whole question of public input into do we want a bigger expansion of the Convention Center, is that where we want our resources to go, not to mention the question that still is at the top of my mind, is is that money going to be enough? Or is there going to be a big amount of money left that needs to be -- someone has to foot the bill, and it'll end up being the public.
PENNER: Let me pose that question to our audience. Do you believe the public should have a vote in whether the city's hotel/motel room tax is raised?
AUGUST: I think they should call the expansion the C. Arnold Smith expansion. It reminds me of the old days in San Diego when they'd sit down at the country club and decide what was best for us. I do appreciate they've taken that load off of us, but maybe they'll let the citizens vote on it next time. Of
ORR: Well, you might get the chance. If the Court rules that this tax is not allowed, now that the city attorney has said he will file the lawsuit, the City Council has to certify the hoteliers' vote coming up in May, and following that, are the city attorney is going to take it to a judge and ask if this is it a legal way to fund this expansion.
PENNER: Let's talk about the importance of the expansion for a minute. Why is this so important to the owners?
ORR: Of conventions are big business. The expansion itself has support from basically everyone in San Diego.
PENNER: Chargers don't support it
ORR: Well, the Chargers want to be a part of it. They want to jump in on it because they know that the project has such good support from politicians and people in charge. Everyone wants the bigger conventions, everyone is terrified of losing ComiCon. Although I spoke to union members who say it isn't that profitable for the city because they don't get a lot of food and beverage contracts, which is where the money is.
ORR: According to the hotel union, that's what they say. But -- so the idea of an expansion is something that is pretty much accepted by everyone involved. But how to pay for it is where you run into problems.
PENNER: There's something else too, involved in how good a deal is this, and that is what kinds of jobs does it create? Is it the kind of job that when you're raising your child, you say, son, I want to be sure that you stay in San Diego because we are going to expand our Convention Center? And there's going to be lots of opportunity for you to work?
ST. JOHN: To go and maybe get a few tips as a bell boy or something. That's the big problem with creating jobs in San Diego, it's so tempting to rely on the sunshine and the beaches and create more tourist type jobs which are not good enough jobs to survive in this community. At least they might be if there were guarantees of someone minimum pays that the labor unions have actually succeeded in many case, in some of the holingses around town to get an agreement whereby if they're going to have a hotel, the wages of the people who build it, who work there, will be guaranteed. But I don't think that's the case here.
PENNER: Before I take you, Katie, I'm going to take one of our listeners. Bob from El Cajon. Welcome to our panel.
NEW SPEAKER: How are you today?
PENNER: I'm fine. Please go ahead.
NEW SPEAKER: I don't think the public needs to vote on it. I mean, the effect is this money is going for the Convention Center, which will draw in more people, it's for the tourists to pay, not you and me. I go down three or four times a year, and it doesn't bother me. I pay more when I go to Santa Barbara and San Francisco than I do here. Let the tourists pay for it!
PENNER: Thank you very much, bob. Okay. So there is one point of view, which is, hey, it's not going to cost us who live here in San Diego. It's going to cost those people who decide to come and visit here. So why should we care?
AUGUST: Well, let's move the Convention Center to El Cajon and let Bob have -- no, better not.
[ LAUGHTER ]
AUGUST: But I think Katie checked on the cost in other cities, didn't you?
ORR: Right, LA, their rate is about 15.5%, which is what downtown would be, because this is a tiered system, so the further out you are, you pay more. Closer to the Convention Center, it's a 3% increase. But there are places with higher -- Anaheim has 17% tax rate, New York, 17.9%. Boston, 17.45%. So it gets to that question, do people look at it? Like Bob was saying, if you're coming for a couple nights or your company is paying for it, are you going to look? No, you're going to come to San Diego in January and go to a convention and you're not going to nickel and dime the tax. That's what a lot of hoteliers are counting on as well. San Diego is a vacation destination. Is it really going to keep people out of your hotels?
PENNER: I think you bring up a really excellent point, that being that if people suddenly see that hotels are more expensive in San Diego, would this discourage visitors? Would it depress the convention and visitors' market?
ORR: I think -- I don't have any scientific evidence. But San Diego has a lot going for it in terms of vacation, right? In January, as I said, it can be we -- we get chilly at 60†degrees, but for someone from Minnesota, it's a nice time of year to come here. I don't know what the tipping point would be. At 15%, is it still acceptable to some people? I don't know.
PENNER: Going back to what Alison was saying earlier, will this -- and we should talk about that, we're talking about the money going to expand the Convention Center. Will the increase be enough to fund the expanded center? Or is other tax money needed? In other words is this just an entree point, and then the taxpayers are going to end up picking up the bill?
ST. JOHN: Steve Cushman who the mayor assigned the task of finding the funding for this worked very hard to find funding, and he focused on the hotel owners, and he got this. But there's a big question as to whether that would even be enough. And there are other things going on behind the scenes to make sure that there might be other sources of public funding available if this thing does get pushed through, and it does cost more than what the hotel tax would amount to.
PENNER: JW, if I recall the mayor's -- one of the mayor's major interests in terms of, if not his legacy, that he would like to see happen during his term in office is for an expanded Convention Center to be approved and perhaps even begun. To what extent does his wish, his desire, impact this situation?
AUGUST: Well, I'm sure the mayor was very much involved in pushing this along. That's why --
AUGUST: Well, may be it is a vision thing. He's got the library, and the Convention Center, but of course people in positions of power like to leave something behind.
ORR: Right, it's a legacy.
AUGUST: It's his legacy thing.
PENNER: We're not overstating this legacy thing?
ORR: I don't think so. His state of the city was all about the library, the Convention Center, about the plaza de Panama, a few football stadium. These are all big development projects he would like to see off the ground in some shape or form before he leaves office.
PENNER: And you say it's just to leave a legacy?
ORR: Well, I don't know just to leave a legacy, but I think that definitely is a role. He wants to leave San Diego as a --
AUGUST: A better place.
ORR: Revitalized, exactly.
AUGUST: A better place than when he came into office. No matter what you think of his administration, it is a better place than when he came into office.
ST. JOHN: And I must say the design of the Convention Center expansion is really nice.
ORR: The park on the top would be fabulous.
AUGUST: It's cool. But where's the money and and I don't trust when they given us, oh, it's going to be $2 million. And oh, I forgot about the basement!
[ LAUGHTER ]
>> Reporter: The City Council has to sign off on the tax increase. What chance is there that the council won't -- you've got just a few seconds. .
ORR: They signed off on this ConViz plan, 7-1. David Alvarez was the only one who voted against it. They will definitely support it.