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April 4, 2016 (San Diego) The Chargers finally releases their plan, which they intend to put to the public vote in November. The first problem we have with the plan is that this will not end on the ballot as a citizen initiated voter initiative. This is a corporate initiative intended to benefit a corporate entity, that be the San Diego Chargers. Presenting this as the will of San Diego voters is dishonest and an abuse of a system created to give voice to citizens, not corporations. This will benefit a commercial entity, not necessarily the citizens of the second largest city in the state of California.
This is written with the ultimate intent of ensuring it’s passage. It ties the stadium project to a much needed Convention Center expansion. It intends to make it very difficult to reject it. The City gets more money to the General fund from convention center events including Comicon, than they get from all sports teams combined. Comicon alone has a far larger economic benefit to the city than all sports teams combined do. The expansion to the Center is an economic reality. The city sees that as part of the economic engine of the city, after the economy diversified away from Department of Defense income, after bases were closed.
According to the city budget the Convention Center had the following impact on the city last year.
“In Fiscal Year 2014,the Convention Center hosted 153 events that generated $1.33 billion in regional economic impact.” Since it opened in 1989 it has generated $24.9 billion in economic impact.
- Raising the Transient Occupancy Tax from the current 12.5 percent to 16.5 percent. The current 12.5 percent, authorized by voters to finance the convention center expansion is still in the courts. Exactly how do the Chargers not expect a furtherincrease to end in the courts is a mystery to us.
- The increase contemplates 5 percent of this going to a stadium fund to pay for the public obligation of $350 million. There is also a prohibition for the public to be on the hook for more than $350 million. So if there are cost overruns, the public will not be on the hook for it.
- The city will also use those funds to establish a $200 million dollar fund for land acquisition.Other details that matter in this. This tax will sunset back to 13 percent if a team stops playing at Qualcomm stadium for two consecutive years. This seems to us, is an escape clause for the Chargers if they do not get exactly what they want; this is not rare in these kinds of deals. It also puts pressure on the city of this should pass. They might be left holding the bag of a billion plus project, with no way to finance it. Ergo, it is a nice little pressure to the city. If the voters should approve this, the city will be in a bind not unlike the early 2000s. The city already went partially bankrupt due to a bad deal with the Chargers. Another might be in the offing.Then there is the physical location. This project is going to be sited east of the East Village. The boundaries are going to be 12th Avenue to the west, K street to the north, 16th street to the east and finally Imperial Ave to the south. There are several facilities of concern to any development.
- The Wonder Bread building. This factory is of historic value.
- The Metropolitan Transit System (MTS) bus maintenance yard.The project has money’s to either make the wonder bread building part of the structure or move it. If the project makes the Wonder Bread factory part of the project, it is obvious they are taking
The latter is more problematic. Earlier news reporting said that moving the facility could take upwards of 7 years. The Chargers have said that this is too long. There is more. MTS starts and ends many of its routes downtown and this faculty allows it to provide for mobility. There are talks beginning as to where to move the faculty. Land will have to be acquired,
There are issues that were pointed out to the Chargers as early as 2015. The city of San Diego does not own the property. Nor can they transfer it willy nilly. MTS is independent. and this transfer has to be voted on by the Board of Directors.
The facility is not only a mere maintenance yard for buses, meant to create the most efficient bus routes, but also houses Information Technology equipment and a dispatch center. Voice of San Diego also obtained a letter written in 2015 warning that relocation could take anywhere from 5 to 7 years,
So what is this plan about? It is about muddying the waters in the hope that the taxpayers will be suckered into this plan. This is what this is about. This plan is actually worst than what was already proposed. partly because Dean Spanos does not want to play second fiddle to the Los Angeles Rams. Also, this means that he can keep not investing into a team, but pocketing the benefits.
As usual, the tax payer is the chum, that will take it in the chin.
This is not just our analysis, but Neil deMause agrees. This is far from usual that a team will try to blindside the tax payer. City Hall better take a good look at what is being offered, Never mind we expect this plan to land in the courts, and be delayed for years. Why? The previous increase for the TOT to fund the Convention Center is in the courts, The hoteliers arenot on board. Why? It would make the city of San Diego one of the cities with the highest TOT taxes in the nation. This means any short term benefit will be countered by conventions looking for cheaper hotel rates.