Zombie Convention Center Tax Rises From the Grave
Given the devastation caused by the pandemic to the conference business, you’d have to wonder what our city’s leaders are thinking as they once again consider steps to enlarge the San Diego Convention Center.
Next Tuesday (April 6), the San Diego City Council will be asked to resuscitate a hotel tax proposal that failed to get enough votes for passage last year. The move to increase tourism revenues was unsuccessful despite backers gaming the system to improve their odds.
Measure C appeared on the March, 2020 ballot, garnering the approval of 65.4% of city voters.
Backed by a super-coalition of business and labor groups, the promise was that it would generate nearly $7 billion for convention center expansion, homelessness programs and road repairs.
Funding for homeless services and paving streets was the sugar coating all parties agreed was needed to sell a tax increase. But make no mistake about it, the desired payoff was all about getting public support for an enhanced convention center.
San Diego voters had already agreed to limit ballot measures to general elections in order to prevent strategies aimed at leveraging lower primary turnouts. There was, however, a loophole, created to allow emergency measures to be considered, and strings were pulled to make this initiative happen in the spring.
Now, having come short at the ballot box, another workaround is under consideration. Given my understanding of America’s Finest Backroom Politics, I’ll bet the City Council will play along.
Remember; since the proposal asked for approval of a tax increase for specific purposes, a two thirds majority supporting the effort was supposedly needed for it to pass.
A series of court decisions have challenged the premise of needing a supermajority for passing tax increase measures advocated for by non-government entities.
From Union-Tribune coverage:
While supporters of Measure C acknowledged before the vote that it needed two-thirds approval, they gathered signatures to qualify it for the ballot, so it would be a citizen’s initiative if the distinction ended up becoming crucial.
The state Supreme Court has indicated it is inclined to uphold the recent court decisions requiring a simple majority for tax hikes proposed by citizens, but it has not yet issued a definitive ruling.
Should the City Council vote to affirm passage of Measure C, no steps towards implementation would be taken until such time as the City Attorney is able to get a favorable court ruling. I suppose one could buy into the logic holding that such a delay was no big deal, since the need for a bigger and better facility was pushed down the road by the pandemic.
I think it’s fair to ask questions: does San Diego really need or want a Convention Center expansion? If the tourism business is going to be a long time in recovering, would the increased hotel taxes be enough to make payments on the construction bonds? And if 41% of zero equals zero, will there be funding for promised services and infrastructure repairs?
From the text of Measure C:
Except as otherwise specified in Section 35.0204(a) the Homelessness Program Tax Component shall equal thirty-one percent (31%) of the Additional Tax Revenues, the Street Repair Tax Component shall equal ten percent (10%) of the Additional Tax Revenues, and Convention Center Tax Component shall equal fifty-nine percent (59%) of the Additional Tax Revenues
The need (and market) for bigger public gatherings was already being questioned pre-COVID19, as technology appeared making even larger and more exciting virtual events possible. As with many things tech-based, the only factor limiting more widespread adoption was monetization.
After a year of limited human interaction and/or large gatherings, convention planners are looking differently at the future of their business. It may be that increased volume could compensate for lower ticket prices.
From industry publication Convene:
David Adler, CEO of BizBash, says to expect smaller satellite events complementing larger gatherings. So if the main event is in Atlanta, you might have smaller hubs in Philadelphia, Dallas, and Seattle.
“It’s going to be a hub-and-spoke model,” he said.
That will be especially true in the early going, when people might be wary of larger gatherings but more willing to attend smaller ones.
The most important aspect of a physical meeting will be value. With budgets tight and attendees still wary of the danger of the virus, meetings and events must add serious value to attract people.
The scientific community, whose conferences have been a part of San Diego’s success as a destination, also sees a change coming.
A poll of Nature.com readers found that the majority of survey respondents — 74% — think scientific meetings should continue to be virtual or have a virtual component after the pandemic ends.
Next to accessibility, poll respondents said that the lower carbon footprint offered by virtual meetings is their greatest benefit. Case in point: according to one estimate, the 2019 Fall Meeting of the American Geophysical Union (AGU) — which brought more than 25,000 attendees to San Francisco, California — produced the equivalent of 80,000 tonnes of carbon dioxide owing to participant travel alone.
“It used to just be a struggle to get conference organizers to even acknowledge the possibility of having a virtual conference,” says Lorraine Whitmarsh, an environmental psychologist at the University of Bath, UK. Now she’s optimistic that scientists will rethink traditional conference models that require participants to “jet around the world” multiple times per year.
More than any other career group, students have enjoyed virtual meetings because of their lower cost, according to Nature’s survey. Twenty-seven per cent of student respondents cited cost as a top benefit, compared with about 17% of respondents further along in their careers. Virtual events require no travel, which can be expensive, and often have lower registration fees. For example, the annual meeting of the Society for the Study of Evolution (SSE), which is jointly organized with two other small societies, has lowered its student registration fee from more than US$300 for an in-person event to as low as $10 for the upcoming 2021 virtual meeting.
Just saying No to Convention Center expansion because big public gatherings are on the decline isn’t the only option here.
Chances are good at some point in the future this tax increase will take effect. Maybe San Diego could look into finding a better use for the property, one that might include conferences. Maybe there’s another loophole to be exploited to redirect the funds.
I know the big players in the hospitality industry won’t be thrilled by those possibilities. But, hey, it’s a different world now.
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