Taxing Tourists to Pay for Expansion Project?

By Gene Cubbison
|  Thursday, May 12, 2011  |  Updated 9:37 PM PDT
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Taxing Tourists to Pay for Expansion?

GL Brannock

Room tax hikes touted for convention center expansion.

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Taxing Tourists to Pay for Expansion?

It's now emerged as the basic approach to expanding the waterfront convention center.
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How's this for a way to bankroll a project that could generate thousands of jobs and millions of dollars for San Diego's economy and city's general fund: Higher hotel room taxes for tourists.

It's now emerged as the basic approach to expanding the waterfront convention center. But there would be legal and political issues.

The cost estimate for the expansion project has come down toward the $550 million range. Money from the Port and redevelopment funds -- if available -- could figure in.

But the city's major hotels would do the heaviest financial lifting, by charging guests more in transient occupancy taxes.

"They'll probably do something like three percent nearest to the Convention Center, two percent right after that and then one percent right after that. So it's concentric circles that radiate out of downtown. The idea being that the hotels right next to the Convention Center benefit most from the expanded Convention Center," said VoiceofSanDiego.org CEO Scott Lewis.

Right now the hotel room tax stands at 12.5 cents on the dollar. Ten and a half cents goes to the city's General Fund. The other two cents goes to a Tourism Marketing District -- a consortium of some 150 hotels with at least 70 rooms.

The proposal calls for the hotels to agree to create a Convention Center Assessment District, from whose newly created portion of the tax pie would come about $30 million a year to pay the debt on the expansion project.

But as part of the arrangement, there has been talk that the hotels want the Convention & Visitors Bureau, which they more or less control, to assume the Convention Center's sales and marketing operations -- and possibly, other aspects.

It's an idea that the nine labor unions providing services to the facility don't find appealing.

 "We haven't seen details. What we're hearing about is the possibility of this public asset -- something we have all taken pride in, in San Diego -- really transferring its purpose to be that of subsidizing the corporate interests of the hoteliers downtown," said Lorena Gonzalez from the San Diego-Imperial Counties Labor Council.

Further issues: Will the hotels' assessment district have to abide by Proposition 26, which requires public votes on tax-like levies that aren't self-assessments?

To what extent will redevelopment money be available?

Will a project labor or community benefit agreement govern the construction work?

Will the Coastal Commission approve it?

A City Council briefing is scheduled for Tuesday.

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