Column: Looking back, San Diego voters deserve thanks for rejecting Chargers’ initiative
City finances already stressed by coronavirus pandemic would be even worse if forced to cover falloff in hotel tax revenuesNearly four years after San Diegans voted down the Chargers stadium-convention center plan seeking
$1.15 billion in hotel tax money, a few words are in order.
Thank you, voters.
Thank you very much.
And if Dean Spanos and family were given truth serum, they’d likely say thank you, too.
Football lovers who criticized San Diego voters for rejecting the ham-handed Chargers measure in November 2016 never were on the best footing, but amid the current economic crisis, their case has crumbled to dust.
San Diego city finances now under siege because of the coronavirus pandemic would fall under severe stress if the city also had to cover the steep falloff in hotel tax revenues meant to pay for an NFL palace.
Think of Junior Seau or Joey Bosa bearing down on an unsuspecting quarterback, already enfeebled. Someone call an ambulance.
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City leaders would have to make the choice: Do we pay this debt and then reduce services even further than they already have for loss of hotel tax and loss of sales tax, or do we choose not to pay off that debt?” said Haney Hong, president of the San Diego Taxpayers Association, on the task of reconciling the $1.15 billion in bonds. “Libraries. Firefighters. Parks. City services. Those things are already going to take a hit without the Chargers stadium.“This would have been Draconian squared.”
Lynn Reaser, chief economist at Point Loma Nazarene University, said the “dramatic decline in hotel taxes would probably not have allowed” the city to “cover the principal and interest payments due on the revenue bonds financing the project.”
“To avoid default,” she added, “the city would have been forced to tap its general revenues at a time when those funds are already strained to meet the city’s other spending commitments.”Said Hong: “San Diego would have been left holding the bag for Spanos.”
Of course the COVID-19 crisis couldn’t have been anticipated in November 2016 when San Diego voters filled out their ballots. Even so, Reaser said pondering the alternative scenario today — the measure having passed — is instructive as the current economic crisis comes to bear.
“This example underscores for voters and policymakers the importance of reading the ‘fine print’ in future financial commitments the city is contemplating as well as evaluating the downside risks or ‘worst case’ scenarios,” she said.
Hong, who opposed the Chargers measure in 2016, said even if a global pandemic hadn’t pummeled the plan’s underlying source of funding, the financing “would have been really bad for taxpayers.” He said four independent analyses all had concluded the proposed hotel tax increase might not cover construction costs for the East Village project.
“It would probably have been close to $2.5 billion in cost,” said Hong, a graduate of Stanford and Harvard whose opposition to Measure C was listed on the ballot.
Many football pundits and fans saw it differently.
They said San Diegans were dummies to vote down the measure.
They portrayed voters as refusing a free lunch.
“It won’t cost you a dime,” Chargers Hall of Fame quarterback Dan Fouts and other Bolts backers said in the campaign pitch for Measure C.
Not only Fouts but Marshall Faulk, the former San Diego State All-American running back who was working for the NFL Network, pointed out the hotel tax would fall on tourists.
Faulk and others also made this point: In other cities, hotel taxes built posh football venues.
It wouldn’t have been a free lunch to San Diegans, though.
At four cents, a hefty hotel tax hike for a stadium would all but eliminate the ability to raise that tax again to pay for other items. These would be “core” services. And if hotel taxes can’t be raised to boost the general fund, good luck trying to get voters to raise sales or property taxes to do it.
For sure, having the Chargers in San Diego for another 30 years was a goal well worth pursuing. A spreadsheet doesn’t wholly capture an NFL team’s immense value to a region. The Chargers had been in San Diego for 56 years, giving them rare generational value. The NFL platform was an incalculable but real benefit to San Diego, notably in its tourism industry. San Diego and the Chargers could have been a great fit, going forward.
For a number of reasons, the divisive Measure C wasn’t the best way to anchor the Chargers.
And maybe that was the point.
Former Chargers center Nick Hardwick, a team broadcaster at the time, said after campaigning two years for the stadium measure that the football club’s leadership seemed less than committed to winning the campaign.City Hall strategist Jason Roe, who had stadium meetings with Chargers special counsel Mark Fabiani and Spanos, was of the same mind.
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Their efforts to get a stadium deal of any kind in any location were insincere from the beginning,” said Roe, a longtime NFL fan and former Chargers season ticket holder who headed Mayor Kevin Faulconer’s panel that recommended a Mission Valley site for a new Chargers stadium. “They had no intention of staying in San Diego. They constantly moved the goal posts and they designed a campaign to fail. Their efforts were more to prove to the NFL that they were trying to move or that they had exhausted all of the efforts in the San Diego market so they could get owner approval to move.”Fabiani put the blame on Faulconer and other local politicians, questioning not only their sincerity but their competence. Some of his critiques were withering.
The longtime Chargers operative was asked this month to consider the economic fallout in San Diego, if local voters had approved the 2016 stadium measure.
“It’s a trick question,” he said, “because today we would never be anywhere close to selling bonds or to stadium construction.”
Fabiani said the necessary relocation of a public bus yard from the targeted stadium site in East Village would not have happened by now, citing insufficient support among city, county and transit leaders, environmental hurdles, availability of an alternative site and lawsuits.
As a result, sale of the stadium bonds would have been delayed indefinitely, the lawyer asserted.
While those issues would have been challenging, supporters of the Chargers stadium would have had a powerful card to play: No less than 67 percent of the vote was needed for Measure C to pass. So, politicians who failed to launch the stadium project would’ve risked political payback for thwarting the will of the people.
In comparison, the SDSU West measure got 54.5 percent of the vote in November 2018. Responding, the Faulconer-led City Hall heeded the voters’ directive. This summer, lengthy negotiations yielded a complex deal that green-lighted the project despite numerous twists and turns and despite Faulconer having endorsed the competing SoccerCity measure. (In this case, the COVID-19 economic crisis may have been a boon to the land-use project; it placed pressure on City Hall to improve its much-reduced cash flow by selling land.)
Fabiani conceded when a crisis batters the tourism economy, the wisdom of the city funding a massive project with hotel tax hikes is worth revisiting. And he did so himself, while responding to the question about an alternate scenario in which the Chargers measure had passed.
“This question is far better asked of the hotelier cabal and its puppet elected officials, who have been trying to cram a convention center expansion financed by hotel taxes down the throats of voters for as long anyone can remember,” said Fabiani, a San Diego resident since 1996 who has held his current Chargers job since 2003.
“How would their newly expanded convention center be doing right now,” he said of the plan voters narrowly rejected March 3, “in a world of virtual meetings with travel at a standstill, and in which city programs would have been decimated to pay the debt on the bonds after the collapse of the local hotel industry?”
The Chargers are headquartered in Orange County, where they set up shop in July 2017 after Spanos and his three siblings decided to move the team to Costa Mesa. Their games will be staged in a privately financed stadium in Inglewood.
Price tag for the vast mixed projected is $5 billion and still climbing, a reminder that California land-use economics are far more challenging than in many other states where heavily subsidized NFL stadiums, many of them supported with state funds, have been built.
Under a stadium deal Fabiani described in November as “very favorable” to the Chargers, the Inglewood project’s cost overruns now exceeding $2.5 billion will fall on Rams owner Stan Kroenke. Notwithstanding their junior varsity status on the Los Angles sports scene and $650-million financed relocation fee, it’s certainly a better deal for the Chargers than the San Diego scenario Fabiani painted — the team languishing in Mission Valley, denied a voter-approved stadium in East Village, political gridlock prevailing, with the Padres also serving as opposition.
Let the record show: San Diego voters did many folks a big favor.
www.sandiegouniontribune.com/sports/chargers-rams/story/2020-06-25/chargers-stadium-san-diego-voters-reject-initiative-nfl