Thinking narrowly, not bigly: San Diego's tourism tax revenue stream debacle
Tourism taxes are a tried and true revenue source for cities to pay for stadiums and convention facilities, as well as tourism marketing efforts and visitor centers, and landing large conventions and meetings.
The taxes are usually a combination of fees on hotel rooms and rental cars primarily, and sometimes with an add-on meals tax.
Often such fees are used to help fund large hotels proximate to a convention center, to serve as "the headquarters" for meetings. It's not uncommon for such hotels to lose money ("City-owned Hilton Baltimore lost $5.5 million in 2016," Baltimore Business Journal), which means they require ongoing subsidy.
Local officials like tourism taxes because tourists don't vote. But the hotel and restaurant community often has mixed feelings because they see "too high" taxes as a discouragement to potential visitors and making it more difficult to land conventions.
Most communities don't require that such taxes be approved by the citizens in a referendum, because for the most part, such taxes aren't paid by the residents (excepting meals taxes, and local use of rental cars).
San Diego does require such votes, and there has been a lot of controversy, for years, over increasing the hotel tax, and what it should be used for. More recently, citizens voted against funding a combined new stadium for the San Diego Chargers football team and an expanded convention center ("Stadium measures lose badly," San Diego Union-Tribune).
It was an ersatz proposal because the convention center element was satisficed in favor of the stadium.
With the defeat of that proposal, the city's convention center is proposing a referendum on funding improvements and an expansion. But Balboa Park Heritage Association--Balboa Park is an awesome multi-facility park and cultural destination--plans to put forth a competing proposal. (There are also other proposals for the stadium, involving a local university, soccer interests, and others.)
The San Diego Union-Tribune's headline, "Convention center or Balboa Park: Where should tourist taxes go?," puts it best, "where should tourist taxes go?" except that I believe both the Convention Center and Balboa Park are getting it wrong.
It's not either/or: San Diego needs a comprehensive tourism management plan. The issue is something I bring up a lot in DC, that there needs to be better "tourism management and development planning."
Cities where tourism comprises a significant segment of the local economy are irresponsible if they don't have a tourism element in Comprehensive/Master Plans. These plans should discuss and make recommendations about how to use the tourism tax revenue stream "more broadly" so that a wide range of cultural destinations and attractions are supported, serving more segments of the local community.
Charleston, SC is the best example nationally of a Tourism Management Plan although separately, the city's historic preservation program and urban design initiatives have broadened the benefits of tourism for the wider community.
"We are all destination managers now" | c. 2005. In fact, one of my earliest posts from 2005, "Town-City branding or 'We are all destination managers now'," makes the point that "commercial district revitalization" professionals and stakeholders need to think of what they are doing more broadly, that they need to think of themselves as "destination managers," and be less parochial.
Relatedly, by making places great for residents, they also become attractive for visitors.
Clearly, given the competing proposals San Diego (and DC) needs a broader plan for how to use tourism taxes.
Metropolitan approaches to funding cultural facilities are an example of how to do this. While not hotel taxes per se, Denver and Allegheny County, Pennsylvania provide good examples of a comprehensive broader approach.
Denver has a regional sales tax to fund cultural assets mostly located in Denver termed the Scientific and Cultural Facilities District ("Denver metro’s arts and cultural tax, 4B, passes easily, extends to 2030," Denver Post).
The Regional Asset District in Allegheny County funds cultural institutions across the entire county, recognizing that the bulk of the area's cultural institutions are based in Pittsburgh, serving the region, but had only been funded by the City of Pittsburgh, and this was unsustainable.
Other counties across the country has a similar approach to Allegheny's, such as Salt Lake County's Zoo, Arts & Parks (ZAP) Tax and the Great Parks of Hamilton County park tax district in Ohio.
Public Improvement Districts are another tool for sub-districts in a community. Colorado also allows the creation of add on sales taxes for "micro-districts" to fund local urban design and other improvements such as for the Larimer Square district of Denver.