San Diego Tourism Authority announces support for mayor’s proposed TOT increase
SAN DIEGO (KUSI) — San Diego tourism and lodging leaders said Thursday they strongly support an increase of up to three percent to the transient occupancy tax (TOT) to modernize and expand the San Diego Convention Center, repair city streets and reduce homelessness.
The "TOT for Jobs, Streets & People" plan would raise the TOT, or visitor tax, three percent for downtown lodging facilities, two percent for those on the periphery of downtown and one percent for facilities located elsewhere in the city. Tourism leaders are spearheading the effort because it would boost San Diego’s tourism economy, create thousands of jobs, repair roads and reduce homelessness. It also would add millions of dollars to the city’s General Fund, which pays for neighborhood services.
"It’s rare for any business to support a tax hike on its operations, but our Convention Center is losing conventions and turning away others because it is outdated and inadequately sized to accommodate them," said Joe Eustice, Board President of the San Diego County Hotel-Motel Association. "This is not only bad for San Diego’s tourism economy – it is bad for every neighborhood in the city. We’re missing out on tens of millions of tax dollars for public safety, parks, libraries and other city services that our visitor tax helps pay for."
"Overnight lodging visitors poured more than $200 million into the city’s budget in 2016. The visitor tax is now the third largest source of revenue for the City of San Diego. The good news is we can significantly increase this revenue stream if we modernize and expand the San Diego Convention Center, and we are willing to tax ourselves to get this done," said Mike McDowell, CEO of the San Diego Lodging Industry Association.
An April 2017 report by HVS Convention, Sports & Entertainment Facilities Consulting suggested the Convention Center has reached its effective capacity. The study predicted that the proposed modernization and expansion plan would attract 50 more events and 380,000 new overnight lodging guests each year. Related fiscal impact studies by Economics Research Associates have suggested that a modern, expanded Convention Center would create nearly 7,000 permanent new local jobs.
"The projected costs to modernize and expand the Convention Center are increasing by more than $1 million per month," said Joe Terzi, President/CEO of the San Diego Tourism Authority. "These costs may soon be too high for visitor taxes alone to fund. The time is now to address this issue before it’s too late for tourism dollars alone to fund these needed improvements."
"A hike in the visitor tax of up to three percent for lodging facilities will keep San Diego competitive with the other markets like Orlando and Las Vegas and help boost tourism," Terzi added. "We support the use of some of the visitor tax proceeds to repair streets throughout the city and establish permanent funding to reduce homelessness. So in addition to boosting our tourism economy, adding jobs and creating new revenues for neighborhood services, this proposed increase to the visitor tax would help address two pressing citywide problems."
"This proposal will create thousands of permanent local jobs, pave hundreds of miles of streets and help reduce homelessness in our city," McDowell said. "These are worthwhile goals and we’re hopeful there will be broad support on the City Council to place this on the ballot and get it approved."
Mayor Faulconer responded Thursday to the Tourism Authority support his proposed ballot measure to increase TOT.
"San Diego is already losing out on thousands of jobs and tens of millions of dollars due to lost conventions, and a new study shows that the convention center has reached capacity. We can’t afford any more delay in modernizing and expanding one of San Diego’s most powerful economic engines. We need to place a measure on the ballot this year to bring back these jobs, grow our economy and invest in civic priorities like repairing roads and reducing homelessness. In action is costing us millions each month, and the time to act is now."
The San Diego City Council is scheduled to hold an informational meeting on the proposed increase to the visitor tax on Monday, May 22. A majority of the City Council must vote to place the item on a Special Election Ballot for November 2017.