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Who Would Pay for a Downtown NFL Stadium?

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Explaining how the Chargers intend to pay for a downtown NFL stadium in San Diego and why they may need to the courts to settle the legality of it all.

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Editor's Note: Take this post, and any post on this blog about politics and finances, with a grain of salt. We are not experts, we're just doing our best.

I want to try and simplify one small part of the downtown stadium plan. I will not attempt to tackle every potential issue, as this situation has tons of nooks and crannies and most of them won't be answered until the San Diego Chargers reveal their plan sometime in the next 3-4 weeks.

However, I keep getting asked the same question by different people. "Who would pay for a downtown stadium?"

This question is usually in response to my answer of which stadium project I prefer (downtown), and it's usually met with the skepticism of someone that doesn't want their tax dollars going into Dean Spanos' pocket.

Here's the big truth:

Less of your tax dollars will go towards an NFL stadium downtown than would go towards an NFL stadium in Mission Valley.

Seriously. At least, the way that the Chargers are currently planning on doing it.

The Downtown Stadium Plan (for Dummies)

Look, this plan gets incredibly complicated and we don't even yet know all of the details. This is not a post for the nitty-gritty. This is a "big picture" explainer post, so we're keeping it at that level.

The Cory Briggs (and/or JMI) Citizen's Initiative plan doesn't actually ever mention a stadium. In fact, it isn't really meant for a stadium at all.

In a nutshell, the downtown convadium plan looks to raise the TOT (or Tourism) tax. It is paid by people renting hotels, motels, cars, etc. It is not paid for by the residents of San Diego. It's not a tax on those who live here, just those that are visiting.

Currently, the City of San Diego's TOT tax is 10.5%. This is absurdly low (by comparison, San Francisco's is 14%). This is leaving money on the table for the city. This is a big reason why hoteliers get involved with San Diego politicians, to keep this rate low so that they can keep more of the profits for themselves while matching the rates of other cities around the country.

We, as a city, are getting pushed around by the hoteliers on the TOT tax. The Cory Briggs' Citizen's Initiative is a plan to fix that. It raises San Diego's TOT to 15.5%, which is about right on where it should be compared to other hot tourism destinations.

Here's Where the Money Comes From

Keeping in mind that I want this to stay relatively simple, here's where the money comes from for a noncontiguous Convention Center expansion.

The hoteliers have an option to pay 13.5% TOT instead of 15.5%, as long as they use that other 2% on a project to build up the area where a noncontiguous Convention Center expansion is slated to go. They don't necessarily have to agree to put that money towards a Convention Center expansion, but they probably will because it does have some benefit for them.

That's it. That's where the money comes from. The hoteliers take 2% of their earnings and put it towards building a Convention Center expansion (hopefully/probably) instead of paying it into the general fund.

Wait, where's the stadium?

Exactly. The plan that will likely get voted on in November doesn't include a stadium (yet).

However, it allows for a stadium to be built on top of it, assuming that no taxpayer money goes towards said stadium. Seriously, it says that. No taxpayer money is to go towards the building of a downtown stadium.

When the Chargers announced that they're focusing on downtown instead of Mission Valley, one of their new partners also revealed that the team would be paying for the stadium portion of the project. Considering taxpayer money can't actually go towards the stadium portion of the project, this makes sense!

The new NFL stadium in downtown San Diego would be paid for by the Chargers, would be a multi-use facility, and would literally sit on top of the noncontiguous Convention Center expansion.

Why would the Chargers pay for that and not Mission Valley?

I'm glad you asked! It's the same answer as to why the Chargers couldn't, or wouldn't, build a downtown NFL stadium without the noncontiguous Convention Center expansion: MONEY.

An NFL stadium downtown would need parking. Unless parking was already built for the Convention Center downstairs.

An NFL stadium downtown would need underground plumbing. Unless underground plumbing was already built for the Convention Center downstairs, then they can just extend the plumbing upwards.

An NFL stadium downtown would need to go deep underground to build a strong foundation, which means a lot of digging and concrete. Unless all of that was already done when they built the Convention Center downstairs.

I could keep going, but I won't.

In this plan, Dean Spanos and the Chargers only have to built a football stadium. That's it. The infrastructure would already be there for them to essentially plug-and-play. That dramatically drops the cost of the project for Spanos, likely making it a cheaper construction job than the Mission Valley project, while giving him the location that he desires.

So, what's the catch?

There's actually a lot of them, and they get ridiculously complicated (all the way down to what size pipe would be needed for the plumbing of a stadium vs. a Convention Center expansion).

The most important is this one:

This is a brilliant plan in that it skirts the system. It doesn't raise taxes for one specific project (that would require a 2/3rds vote!) but it gives those paying the taxes a break if they're willing to put the money into this specific area that would be perfect for one specific project that would help those that are paying the taxes.

Since the hoteliers are not (technically) in charge of the TOT tax, it can get raised with a vote of the people even if the hoteliers are against it.

However, this plan is so brilliant that it's never been done before. It might actually be too smart. At least as far as I know, nobody has ever successfully raised money for a project with a plan that isn't really meant to raise money for that project but kind of is.

Even if this thing passes in November, and that's a big if, expect this to end up in front of the California Supreme Court to decide whether or not it's legal.