Tourism Industry Groups Officially Come Out Against Chargers Initiative, Citizens’ Plan
Friday, September 2, 2016
The San Diego Tourism Authority and Hotel-Motel Association on Friday officially came out against Measure C, which would fund a new downtown football stadium, and Measure D, or the Citizens' Plan, which would impose several changes on the area's vacation and convention business.
Tourism industry leaders have for months criticized the ballot measures, which will go before voters in November, because they raise hotel room tax rates. The Tourism Authority and hotel group said in a joint statement that the measures "present a substantial threat" to San Diego's tourism industry.
The organizations cited four reasons for opposing the measures:
• elimination of the Tourism Marketing District, which they call "a proven source of revenue for marketing San Diego as a visitor destination"
• banning what they believe is a necessary expansion of the San Diego Convention Center in order to bring the largest trade shows to San Diego and keep Comic-Con International from leaving
• increasing hotel room taxes to levels that would put San Diego at a competitive disadvantage compared to other destinations around the U.S.
• studies that question whether revenue and expense forecasts for both initiatives are reliable
The current hotel room tax rate — officially referred to as the Transient Occupancy Tax or TOT — is 10.5 percent, plus an extra 2 percent fee that funds tourism promotions.
Both measures would get rid of the surcharge. C would raise the hotel room tax to 16.5 percent to raise funds to build the stadium and a convention center annex, and D would hike the rate as high as 15.5 percent.
"The Tourism Marketing District structure has proven to be effective and necessary for marketing the destination without having to use the city (Transient Occupancy Tax) or general funds," said Joe Eustice, Hotel-Motel Association chairman.
"The industry knows exactly what will happen if it is eliminated. In 2013, then-Mayor Bob Filner froze all funds from the (Tourism Marketing District), leaving the destination unable to market itself," Eustice said. "Hotel room night growth subsequently dropped 50 percent; the city lost $560 million in visitor spending revenue, and (Transient Occupancy Tax) growth dropped by half."
Supporters of both measures, including the Chargers, have countered the various criticisms.
The Chargers contend that Measure C would still provide 1 percent of the new revenue for tourism marketing, with room for that figure to grow. Backers of Measure D, in their ballot argument, said their plan puts proper oversight on tourism marketing and stops taxpayer-funded "giveaways" to hotels.
Supporters of the measures also believe San Diego's TOT is currently too low compared to similar cities.
In fiscal analyses that will be included in ballot materials sent to voters, the city's Independent Budget Analyst said the proposed higher rates "would put San Diego among those cities with higher TOT rates, potentially impacting hotel occupancy."
Regarding convention center expansion, consultants retained by the Chargers said in a news conference last week that the marketplace for the meeting industry is moving toward holding smaller events more often, eliminating the need for a larger facility and making a pairing with a stadium nearby more attractive.
In their statement, the organizations said they have received letters from groups like the National Association of Realtors, American Urological Association and American Society of Heath-Systems Pharmacists stating that a stadium annex would not work for them and that they may seek other cities to host their conventions.
Comic-Con International has previously announced its opposition to the measures.
While Measure C does not prohibit the city from expanding the convention center, it would make project financing more difficult. Measure D would only allow expansion of the facility if it's approved by voters.
A recent poll found both measures are falling short of the necessary margin required for victory. Measure C received backing from 39 percent of likely voters, while D had 29 percent — with 44 percent uncertain.
The Chargers' stadium plan needs a two-thirds "yes" vote to pass, with a slight chance that would be changed to a simple majority depending on the outcome of an unrelated court case. The City Attorney's Office has opined that Measure D also needs two-thirds, but backers argue that they only need to top 50 percent.
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