New Analysis: Delaying Tourism Vote a Year Will Result in Over $75M Loss for Taxpayers
Construction Costs for Convention Center Expansion Would Soar by $43M, City Would Lose Revenue and Dedicated Funds for Street Repair & Reducing Homelessness
Friday, June 2, 2017 - NEWS RELEASE
San Diego – A new financial breakdown shows a projected revenue loss and cost impact of more than $75 million if a public vote on the tourism ballot measure is delayed for a year.
“San Diegans need the City Council to step up and take action. The numbers clearly show that we can’t afford to kick the can down the road,” Mayor Faulconer said. “With each month that goes by we’re losing jobs and revenue we need to fix our roads and address the homeless crisis on our streets. The City Council’s choice is clear: they can take action to solve these problems or they can put their heads in the sand and let these problems get worse.”
The proposed tourism measure would raise the transient occupancy tax (TOT) – paid by visitors staying at local hotels – by up to 3 percent to fund the modernization and expansion of the San Diego Convention Center while also creating dedicated funding streams for homeless programs and street repair. The Convention Center expansion is projected to create 7,000 jobs and help San Diego attract and retain conventions, a key driver of local economic activity.
The analysis by Chief Financial Officer Mary Lewis includes estimates that show a delay in construction of the Convention Center expansion beyond the expected completion date of March 2023 will cost the project an additional $3.6 million a month, or about $43 million a year. The proposed TOT increase doesn’t account for an additional $43 million in expenses so a delay could jeopardize the full funding of the expansion.
The City would also lose out on a year of funding from the dedicated streams for homeless programs and street repair. If the election were delayed to 2018, the $10 million each for homelessness and roads would not be collected in FY2019 for those causes.
“As a homeless service provider, I can state unequivocally that the number one hurdle to reducing homelessness in San Diego is a lack of dedicated funding for the cause,” said Bob McElroy, Chief Executive Officer of Alpha Project. “We need more money to have a greater impact and help people get off the street. If you agree that we have a homeless crisis in San Diego, then I don’t know how you can suggest that waiting a year to address the problem is the right approach when there’s a solid plan on the table right now.”
In addition, a yearlong delay would result in significant lost revenue for the City. An outside consultant estimated the additional TOT revenue that will be generated by the Convention Center expansion to be $13 million annually. That money would be split between the General Fund (which supports public safety services, parks, libraries, etc.) and a special TOT Fund (which supports debt service on capital projects, arts and culture, economic development, etc.).
Total annual estimated revenue loss and cost increase from a one-year delay on the proposed tourism measure:
- $8 million loss for General Fund
- $5 million loss for TOT Fund
- $10 million loss for homeless programs
- $10 million loss for street repair
- $43 million cost increase for the Convention Center expansion
- Total: $76 million
CONTACT: Craig Gustafson at (619) 453-9880 or [email protected]