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Details Emerge About the Chargers Downtown Stadium

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We don't have the full plan yet. But we do have some important details about the financing, along with what appears to be an exquisitely timed and highly (for the Chargers) fortuitous court decision.

A 2014 rendering of the proposed JMI Joint Use Facility
A 2014 rendering of the proposed JMI Joint Use Facility

According to this article by Scott Lewis of Voice of San Diego, the Chargers are on the verge of releasing their financing plan for the downtown stadium / convention center hybrid (Convadium) they want to build with JMI Realty and put up for a public vote in November of this year.

There's also some juicy tidbits of political intrigue involving the Mayor and the folks who support a contiguous Convention Center expansion.

Maybe, most importantly, there's also a bombshell (as Lewis puts it - and he might be underestimating the potential statewide ramifications) court ruling which may directly impact the financing plan the Chargers put forward.

Here we go, for the moment:

What We Know About the Chargers' Plan

  • The Chargers are going to propose a plan of their own which is not the Citizen's Plan pitched by Cory Briggs and his coalition.
  • The Chargers plan calls for an increase in the Transient Occupancy Tax (TOT). The tax currently sits at 10.5%, and does not include a controversial 2% additional fee for Tourism Marketing.
  • The new TOT would increase to 16.5%, and eliminate the 2% additional fee. At least 1% (possibly up to 2%) would go to a tourism marketing trust fund (and replace the existing additional fee), while up to 5% would go toward funding the Convadium.
  • As with the Citizen's Initiative used in the Carson and Inglewood Stadium projects, the land would be entitled for the new facility without requiring an Environmental impact Report (EIR).
  • The Chargers would be required to pay the City of San Diego $650 million and agree to a 30-year lease with non-relocation agreement before any TOT money could be released for construction.
  • The Chargers would cover all stadium related cost overruns.
  • The remaining $350 million for the stadium element comes from City sales of tax-exempt bonds backed by the TOT increase.
  • The TOT increase directly covers the $800 million needed for land acquisition and construction of the Convention Center element of the structure.
  • The City would own the facility, and would likely form a Joint Powers Authority (JPA) to manage financing and operations. The JPA would receive all non-NFL revenues.
  • The Chargers would contribute $15 million annually to an operating and maintenance fund. The proposed JPA would contribute the remaining $10 million annually for the Convention Center, with 2% annually going to a capital fund for stadium upgrades.

How's the Mayor and Downtown Establishment Taking It?

According to the article, and not a surprise, the Mayor and hotel industry leaders were lobbied by the Chargers for their support. Apparently, the Mayor and industry leaders balked at supporting the measure but have not yet officially decided to oppose it.

This point was deemed critical because a plan including a TOT increase was known (hold this thought) to require a two-thirds yes vote to be successful at the ballot. Without everyone's support, such a ballot proposition would rightly be considered dead-on-arrival (if not slim under ideal circumstances).

But earlier this month, the 4th Appellate Court of the State of California weighed in with a decision which not only threatens to change the TOT game for the Chargers, but also promises huge changes for California tax law (if upheld).

Special Taxes Might Only Need a 50% + 1 Vote to Pass? WTF?!

Here's the pertinent paragraphs. First, California's Constitution, Article 13C, Section 2d:

"No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote."

Now, from the 4th Appellate Court's ruling, from Page 17:

CCC (California Cannabis Coalition, the plaintiff in the case) argues that Article 13C does not apply to the Initiative because it is limited to taxes imposed by government. We (the 4th Appellate Court) agree. Article 13C, section 1(e) defines a tax as "any levy, charge, or exaction of any kind imposed by a local government." Article 13C, section 1e does not expressly include fees imposed by initiative. Because Article 13C is silent in this regard, we decline to construe Article 13C as applying to taxes imposed by initiative.

Yes folks, you read that right. According to this decision, a tax increase via Citizen's Initiative does not appear to require a two-thirds affirmative vote.

So, with this Chargers plan, we potentially have a TOT increase for specific purposes, which requires only a 50% + 1 vote. That's a game changer, and as Lewis points out in his article, it means the Chargers may not need the Mayor's support in pursuit of their downtown project.

In Closing

We should be seeing the full plan presented within the next few days.

In the meantime, we have these juicy bits to chew on. As always with the Chargers and their quest for a new stadium, just when you think you know how this is going to play out, the narrative changes.

And this narrative change has nothing to do with Mark Fabiani.

Author's Note: This post has been updated to include information from a U-T San Diego article by Dan McSwain and Lori Weisberg