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Did the Citizen's Plan just kill the Chargers' Stadium Initiative?

Cory Briggs appears to have negotiated a settlement with the downtown hotels which comprise the Tourism Marketing District. What does this mean for the Chargers' Stadium Initiative?

An older rending of the proposed downtown joint-use facility
An older rending of the proposed downtown joint-use facility

In a word... kneecapped.

Understanding how exactly this happened will require a few minutes of looking at the current political situation, the Citizen's Initiative written by attorney Cory Briggs, and then looking at how that impacts the plan the Chargers intend to present to the public.

While the plans share some similarities, there are other elements which present conflicts - and by extension, confusion at the ballot box in November.

So, let's try to untangle this situation and make it a little easier to understand.

A Brief History

This all comes back to the debate about the Convention Center. Remember that the hotel industry downtown wants a contiguous Convention Center expansion. They also want money for tourism marketing. However, California has the two-thirds vote requirement for any raising of taxes for specific purposes.

Therefore, instead putting an increase of the Tourism Occupancy Tax (TOT) on the ballot, the hotels downtown instead decided to put a "self-assessment" on hotel bills. One assessment was enacted by the Tourism Marketing District (TMD), for a 2% fee above and beyond the existing TOT of 10.5%. Another assessment would've raised the money for the contiguous expansion...

Until Briggs filed a lawsuit against the convention center expansion. His lawsuit charged, among other things, that the self-assessment was in-fact an illegal tax. Briggs won this lawsuit in August in 2014, and the Convention Center expansion has been stuck in limbo ever since. Another lawsuit by Briggs challenges the expansion on the grounds that it restricts waterfront access (although the expansion plan was given the green light by the California Coastal Commission).

Author's Note: This where I have repeatedly said in other posts that I don't object to the contiguous expansion, but there's no realistic path forward for making it happen at this time. There's no way to pay for it, Briggs' lawsuit regarding coastal access hasn't been decided, and the City no longer controls all of the land between the bay and the existing facility - plans are being fashioned to put up a new waterfront hotel on the site.

Briggs had also filed a lawsuit against the TMD for the 2% fee they have been "self-assessing" for tourism marketing, again on the grounds that this was an illegal tax. The TMD's attempt to dismiss this lawsuit was overruled by the courts a few weeks ago (i.e. the challenge is moving forward).

The Citizen's Plan versus The Chargers Plan.

I discussed the Citizen's Plan last fall when it was first announced. Here's essentially what it does:

  • Raises the TOT from 10.5% to 15.5%. Further, as the tax is general and not defined for a specific use, the threshold would be 50% +1 instead of two-thirds.
  • Eliminates all "self-assessments" for tourism marketing or convention center elements.
  • Provides a means for the hotels associated with the TMD to contribute towards tourism marketing, or an off-site convention center expansion, and receiving a TOT rebate in exchange.
  • Prohibits any future expansion of the existing Convention Center along the waterfront.
  • Creates a stadium and convention center zone east of Petco Park - which means any structures built there conforming to that description would not require an Environmental Impact Report (EIR).
  • Prohibits any public funding for a stadium built downtown without a separate public vote.
  • Allows for multiple potential uses of the current Qualcomm Site in Mission Valley, including a new stadium, parkland, or a college campus.

At this point, according to Briggs, his Initiative has gathered nearly 90,000 signatures and is close to having enough signatures to guarantee its place on the November ballot. Remember, an initiative in San Diego must have at least 10% of all registered voters in the City to guarantee that the City Council cannot kill it outright - as they were urged to do by City Attorney Jan Goldsmith.

I've discussed the Chargers' Initiative over the last few weeks. For comparison's sake, let's review what the Chargers Initiative does:

  • Raises the TOT from 10.5% to 16.5%. 5% is dedicated to a fund for construction of a joint-use stadium and convention center east of Petco Park. 1% is dedicated to a tourism marketing/promotion fund.
  • The Chargers and NFL contribute $650 million toward the stadium costs downtown.
  • The public - via the TOT increase - pays the remaining $1.15 billion for the remainder of the stadium costs ($350 million), the entire convention center ($600 million), and land acquisition ($200 million).
  • Part of the TOT increase, after construction costs, is dedicated to a fund for facility operation and maintenance.
  • The Chargers are responsible for all stadium cost overruns.
  • Eliminates all "self-assessments" for tourism marketing or convention center elements.
  • Does not prohibit any future Convention Center expansion along the waterfront.
  • Does not address what happens with the Qualcomm site in Mission Valley.

So, what we have are two competing plans for increasing the TOT. The Citizen's Initiative has the carrot of a lower overall TOT, and a lower threshold for success at the ballot (I'm putting aside the possibility of the Chargers' Initiative only needing a 50% + 1 to raise taxes for specific purposes after a recent California Appellate Court Ruling).

So... Who's Settling What?

Earlier this morning, Briggs announced that he has settled his lawsuit with the TMD regarding their 2% "self-assessment", and that as a condition of the settlement, the hotels associated with the TMD will support the Citizen's Plan. This is significant for the following reasons:

  • Put simply, if the hotels associated with the TMD are on-board with the Citizen's Plan, the elected officials in San Diego who rely on them for campaign funding will be on-board as well.
  • The Citizen's Plan has a lower overall tax of 15.5%, which makes it an easier sell to both the public and the convention industry.
  • The rebate offered by the Citizen's Plan allows them to get their 2% back, which is more than the 1% guaranteed to them by the Chargers' Plan.

Update: Scott Lewis of Voice of San Diego tweeted out this response from Bill Evans, Chairman of the TMD. Evans indicates the TMD has not taken any action on a settlement...

Where Does This Leave the Chargers?

With this settlement, their current stadium plan is all but dead.

Part of the team's calculation was that guaranteeing the TMD at least 1% of the overall TOT increase would be sufficient to get them on-board, especially with Briggs' lawsuit against their "self-assessment" still pending. Obviously, the settlement kills that possibility.

As explained in more detail by NBC7's Derek Togerson in this piece, the Chargers will be left with a few options...

  1. Proceed with their current Initiative, now facing a competing Citizen's Plan which is backed by a (now) much larger and more politically powerful coalition, and likely needing to meet a higher threshold for success.
  2. Withdraw their Initiative, and re-draft it to fully accommodate the Citizen's Plan. This is unlikely, as the Chargers would face incredible time constraints in getting a new initiative drafted and made public in enough time to reach the November ballot.
  3. Withdraw their Initiative and support the Citizen's Plan. Remember, the Citizen's Plan removes all EIR-related concerns from both Mission Valley and Downtown. The question then becomes how will the Chargers come up with the additional $350 million in financing needed to make the joint-use facility a reality? They could then try for a special election in 2017 or regular election in 2018 to get the remaining $350 million in public money, or come up with a combination of partners to get that $350 million and satisfy the "no public money" element of the Citizen's Plan.

It should be noted that rumors are swirling that Las Vegas is not a smokescreen for the Raiders - if they do decide to leave Oakland for Las Vegas, it removes the time pressure element for the Chargers to get something done in San Diego before having to make a decision on Los Angeles.

In Closing

Just when you think you know what's going on...

All the cards get reshuffled, and the power of each player shuffles with them.