Category: Who Runs San Diego?

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Who Runs San Diego?

Who Runs San Diego? Six False Premises for Convention Center Expansion

By Linda Perine

In 2009, then Mayor Jerry Sanders, the hotel industry, the Chamber of Commerce et al. decided that it was a really keen idea to expand the Convention Center.

They guessed that it would cost about $520 million to build and that there was a BIG market for expanded convention centers, and they warned us that Comic-Con would move on if we didn’t expand the Convention Center. They knew they could never convince enough people in San Diego to agree to pay for this idea so they created a special financing district comprised of just hoteliers.

Cory Briggs wrote about this financing scheme last week in our Who Runs San Diego? series. On August 1, 2014 the 4th District Court of Appeal declared the financing district violated both the state constitution and the city charter.

But Kevin Faulconer has said “Expanding the convention center is one of the most important actions we can take to grow our local economy and create thousands of new jobs for San Diegans. This is an opportunity to put this litigation behind us and move forward with a successful plan.”

So while that financing scheme, 6 years, 10 million dollars and a lot of credibility are down the drain, the idea that San Diego should expand its convention center lives on. It’s the Chargers and Doug Manchester’s turn to try to get your money.

We should talk.

Whether one supports the expansion or not, it is bad business, bad policy and bad governance to expend what will surely be more than a billion dollars of public money on premises that are more wishful thinking than hardnosed analysis. The convention center expansion is based on a number of assumptions that are at best questionable and arguably false.

SDCCFalse Premise #1. If you build it they will come.

From the Convention Center Task Force in 2009 to Kevin Faulconer today, the talking points for the boosters of the expansion include the factually challenged assertion that people are lined up at the city borders just waiting to book the additional space in an expanded convention center. This assertion flies in the face of the last 10 years of contraction in the convention center market.

For more than a decade experts at the Brookings Institute (2005), the Cato Institute, the Wall Street Journaland the conservative Manhattan Institute’s City Journal have challenged the assertion that expanding convention centers increase attendance or help local economies.

…the private sector wouldn’t touch such goofy investments.

One writer called the nationwide convention glut “gigantic” and then noted that the private sector wouldn’t touch such goofy investments.

A local activist website has an extensive catalog of articles and documents revealing the history of what it calls “the convention center scam”.

Perhaps the most powerful challenge to the use of public funds to benefit private enterprise in the construction of convention centers is made by one of the nation’s foremost urban development experts, Heywood T. Sanders. In his recently published book Convention Center Follies he gives wide-ranging examples from cities across the country as well as in-depth case studies of Chicago, Atlanta, and St. Louis.

“The question is whether you can get any appreciable increase in business. When the best cases I can find are Las Vegas and Orlando doubling the size of their centers and getting a 10 percent to 15 percent increase in attendance, I don’t think there will be much boost at all for San Diego.” Apparently, says Sanders, “San Diego is building into a perfect storm.”

Writers from Boston, Nashville, Washington, Baltimore, and Indianapolis, have challenged the assumption that just because a convention center expands attendance will increase. Even Las Vegas has seen a decline in the number of conventions since 2004.

Voice of San Diego has raised questions about the expansion in its ongoing Narrative about the Convention Center Expansion.

Don Bauder at The Reader has been particularly merciless in exposing the poor logic of expanding into a glutagain and again.

False Premise #2. Industry Consultants who are paid to say “Build It” are credible when they say what you paid them to say.

Would you take advice from a gaggle of consultants whose forecasts in the past two decades have been off by 50 percent?

The studies that the boosters use to support expansion are written by consultants who ALWAYS find a good reason to build or expand a convention center. It’s their job.

As The Reader’s Don Bauder asks “How Can Convention Centers Be So Dumb”?

“Would you take advice from a gaggle of consultants whose forecasts in the past two decades have been off by 50 percent?

‘Getting half the business [that was projected] is about the norm,’ says Heywood Sanders. [Author of Convention Center Follies] ‘The actual performance is a fraction of what it is supposed to be.’

But such warning signals are not flashed by consultants, who are paid fancy prices by cities. Who are these error-prone consultants? They are units of major accounting firms, such as Pricewaterhouse-Coopers, KPMG, Ernst & Young, and Deloitte & Touche. Then there are private purported research firms such as C.H. Johnson Consulting and CSL International. They crank out so-called studies for cities with the same conclusion: build!

Often they use the same verbiage: “They are remarkably adept at saying exactly the same thing to other cities in exactly the same words. Much of the study for Anaheim was word-for-word from the study for Baltimore,” says Heywood Sanders.”

Three heads in the sandFalse Premise # 3 If you are overly optimistic about a lot of really important numbers no one will notice.

“This is one of the sad things about San Diego: an obvious history of misrepresentation.”

The numbers used by these consultants are, let’s just call it enthusiastically optimistic. Their promises of streams of visitors with open wallets seldom come to fruition. The Independent Budget Analyst and the City Auditor called these consultants out on some whoppers.

The structure of the very complex convention center expansion financing has been declared a violation of both the state constitution and the city charter. But it is useful to examine the veracity of the numbers presented to the public.

The Independent Budget Analyst (IBA) reviewed an AECOM study that estimated an increase in TOT revenue of @$12.7 million. In what can only be described as masterful bureaucratic understatement the IBA stated her “analysis demonstrates some significant variances from the results of the AECOM study.” “The IBA estimates that total incremental City TOT revenue generated by the expansion may be anywhere from $5.2 million to $9.7 million. “

The consultant estimate of revenue was between a third and 2.5 times higher than the IBA’s estimate of revenue. Neither estimate took into consideration extra expenses for police, fire and use of facilities by these hypothetical conventioneers that would further reduce the estimated revenue.

In 2012, in response to allegations of fraud, a City Auditor investigation “determined that SDCCC misstated hotel room-night statistics in its annual reports and AECOM Report…”

Any discrepancy in published figures for attendance and/or hotel room-nights casts doubt on the veracity of all statistics reported.

Don Bauder chronicles the lack of rectitude by expansion backers in a 2011 article entitled The Convention Center Liars and a 2012 article entitled More San Diego Convention Center Lies, and quotes Heywood Sanders, “This is one of the sad things about San Diego: an obvious history of misrepresentation.”

False Premise #4. Calling the expansion an economic engine, when it is more like an economic nudge and not a particularly effective one.

…nearly 60 percent of the newly created jobs will be in industries that pay poverty wages and offer employees few health or other benefits.

Expansion boosters like to claim the convention center would be an “economic engine” for the region, asserting the expansion would create 6,885 new jobs.

Vladimir Kogan, co-author of Paradise Plundered, flatly states that Convention Centers Are Not Economic Engines and points out that if job creation is the goal, there are other far more cost- effective methods to increase employment in the area.

In another analysis, Murtaza Baxamusa says that expansion boosters economic impact report “inflated the numbers in several ways. The report relied on outdated data about spending patterns by convention attendees, overestimating their impact on the local economy by a substantial margin, and incorrectly included economic impacts that will actually be realized outside of the region.

Baxamusa’s more appropriate estimate suggests that the expansion will create only 4,500 permanent jobs in San Diego. Even if one uses the consultant’s own numbers, they show that nearly 60 percent of the newly created jobs will be in industries that pay poverty wages and offer employees few health or other benefits. Indeed, a large share of workers filling these new positions will qualify for taxpayer-funded healthcare and other welfare benefits.”

comic-con2014False Premise #5. Using the Con (Comic-Con) to justify a billion dollar expense.

…it is not at all clear that Comic-Con is a big money maker for the city and certainly not one that economically justifies a billion dollar expense

Everyone loves Comic- Con: the costumes, the fantasy, the celebrities. It is so SoCal cool.

The convention center boosters, who know a thing or two about shaping a message, realized that when bonds and amortizations and tax revenues and TOTs and financing districts are being discussed, most voters tune out. Comic-Con staying = good; Comic-Con going = bad. That’s the extent of the message most folks got.

But when you look at the numbers it is not at all clear that Comic-Con is a big money maker for the city and certainly not one that economically justifies a billion dollar expense.

A New York Times article revealed that Large Crowds Spend Little at Comic-Con.

As VOSD pointed out in The Problem With Comic-Con’s Money-Making Numbers, the numbers used by the expansion boosters were –here we go again– overly optimistic.

“Sure, there’s a $178 million figure that’s been floating around, but “it’s based on outdated information. It includes assumptions of visitor spending from events that aren’t anything like Comic-Con. And it counts certain effects on San Diego’s economy twice.”

It is also not clear that size is the determining factor in Comic-Con’s decision. Comic-Con International’s David Glanzer said in a statement, “Any decision to remain in San Diego has always been based on a variety of issues, including hotel room rates, available meeting space and other concerns, none of which necessarily override the other.”

Even at its current size, the San Diego Convention Center dwarfs the venues available in other cities that have made bids, including Los Angeles and Anaheim.

False Premise # 6. This is the best way for the City of San Diego to spend its money.

Who thought this was a fair shake for the taxpayer?

Even if you use the demonstrably overblown, cherry picked, out of date numbers used by expansion boosters, you will see there is a very good reason nobody wanted to take this white elephant to the voters.

Even if you took the best case scenario, it was kind of a sucky deal for the taxpayer.

  • The city’s rate of return of (best case) $12.7 million on $575 million dollars is not anything an investment banker or a hedge fund analyst would write home about.
  • Best case, the city makes $12.7 million, the hoteliers make $121 million. Who thought this was a fair shake for the taxpayer?
  • If things don’t work out as planned, it was the city on the hook to pay off the bonds, not the hoteliers. So most of the benefit, and none of the risk went to the hoteliers. Seven members of the 2012 city council, including self-proclaimed fiscal watchdog Carl DeMaio and soon to be iMayor Todd Gloria, thought this was just fine.
  • Since the hoteliers were going to literally make out like bandits, why didn’t we get concessions: a higher minimum wage for workers at the hotels? Maybe they could have paid for child care for their workers or additional parks or parking or library hours, or security for the additional visitors or in some way, any way, give back to the community that was footing the bill.
  • How accurate is the $520 million dollar cost number? Were there competitive bids, an actual counting the nuts and nails of what it would really cost to build this behemoth. The last convention center expansion had enormous cost overruns.

And there were a couple of unpleasant details we never really talked much about:

    • We still owe $200 million on the last expansion and have $30 million in deferred maintenance on the current convention center. What’s up with that?
    • Even if the convention center didn’t end up underwater financially, there is a real possibility the rising sea level from climate change could put it under water–literally. Is this a risk we should be taking?

 

Credit: Nickolay Lamm. Data: Climate Central

What other options are out there? If we are talking about spending a billion dollars…

  • What if we just raised the TOT by the 3% we were discussing and put that roughly $5.5 million per year into the general fund to use for services like police and firemen and libraries and parks and potholes?
  • If the city borrowed $575++ million dollars and did infrastructure work would that create more, better jobs than housekeepers and cabana boys?

There is a tried and true format that the folks who run San Diego use.

So dear reader, if you are not shaking your head and mumbling to yourself, “Wadda they think we are, idiots?”, I have not done my job, or you have skipped over what you thought were the boring parts. In any event, the answer is yes.

There is a tried and true format that the folks who run San Diego use. It is very clever, very smooth, very predictable and very effective.

First, someone, maybe the Mayor, sets up a blue ribbon panel, task force, exploratory committee, concerned citizen group, what have you. It is populated with some or all of the usual suspects from the relevant non-profits, industry groups, the Chamber, San Diego County Taxpayer Association, Down Town Partnership, Labor, etc. You have not been paying attention if you cannot guess who is not represented at these confabs.

Then some highly scripted “public” meetings convene where the incredibly well spoken and well prepared presenters from the task force introduce glossy brochures and hip videos with enthusiastic talking points, well vetted for marketability, if not veracity.

…wouldn’t it be great if we had folks looking out for us as taxpayers and citizens from the get go, so we didn’t have to rely on the kindness of judges to save us?

There is a very professional website, and the talking points are echoed on the websites of the concerned groups who populate the task force. Certain media is waiting for the call and soon those talking points are on the news. They become the news.

These folk are very good and some variation of this scenario works most of the time. It worked for Proposition B. It worked for Plaza de Panama. It worked for the TMD. It worked on the deconstruction of Bob Filner. And it worked on the convention center expansion. But facts are pesky things, and they keep showing up, and attorneys and activists keep winning lawsuits setting aside bad policy decisions. Whew.

But wouldn’t it be great if we had folks looking out for us as taxpayers and citizens from the get go, so we didn’t have to rely on the kindness of judges to save us?

As we like to say in Texas, the fat lady ain’t sung yet on the convention center. Stay tuned.

Linda Perine is the President of the Democratic Woman’s Club. She was chair of the LGBT Redistricting task Force in 2011 and served as Mayor Filner’s Director of Community Outreach.

This article first appeared in the San Diego Free Press September 12, 2014.

Categories
Who Runs San Diego?

Who Runs San Diego? The Use and Abuse of the Transient Occupancy Tax

By Cory Briggs

TOT – this small word may bring to mind a cute little child, a deep-fried mashed potato, or a dash of your favorite adult beverage. But in San Diego, TOT, an acronym for Transient Occupancy Tax, stands for missed opportunities, fiscal irresponsibility, and a shameful abrogation of civic responsibility to the moneyed interest of hoteliers.

The recent implosion of the convention center expansion and what I hope will be the legal rejection of its elder, uglier stepsister, the Tourism Marketing District (TMD) tax, are primers on how the people who run San Diego seek to use your money to line their pockets with the help of a complicit mayor and city council.

Let’s start with a quick look at the one tax that should be nothing but good news and a blessing for our city coffers. Transient Occupancy Tax is a tax paid mostly by tourists; by definition these are people who are here for a short time, don’t vote, don’t have a voice in how the money they pay is spent, and use fewer city services than residents. In a way, the TOT is an invisible tax. How many times do you ask what the TOT is when booking a hotel for your vacation? For most travelers to big cities, TOT is a foregone conclusion.

This money, collected from non-residents, is meant to flow into the city’s general fund to provide services to city residents: e.g., libraries, parks, fire fighters, lifeguards, street repairs. San Diego’s beautiful coast, proximity to Mexico, and near-perfect year-round climate make us a major tourist destination, and at 10.5% San Diego’s (entirely lawful) TOT is substantially lower than that of many other competing cities.

Even the notoriously tax-averse San Diego voters should like a tax they don’t have to pay but get the benefit of, right? Let’s raise that puppy and get us some more city services or retire some of our debt! (TOT is paid by those relatively few San Diegans who have to stay in a hotel while their homes are being remodeled, fumigated, etc.)

Well, not so fast. As it turns out, nothing is simple in San Diego.

When you are talking about the TOT in California, you also have to talk about Proposition 13. Prop 13 requires that an increase in taxes be put before the voters. If the tax receipts flow into the general fund, then the tax has to pass by a simple majority. If, however, the movers and shakers (read “hoteliers”) want to fund a specific item (e.g., paying for a bigger convention center or to advertise their hotels) then this is a “special” tax that must pass by a 2/3 vote. As you can imagine, it is really hard to get two-thirds of voters to agree on anything. Getting a tax approved by that margin in San Diego is even tougher.

…a proposal to use other people’s money to keep our parks and libraries open and to hire the people to keep them safe was opposed by the San Diego County Taxpayers Association and the Lodging Industry Association.

Back in 2004, the hoteliers tried to pass a special-tax increase of the TOT to give themselves a sizable advertising budget that they would control. They came close: 62%. Later that same year, some civic-minded folks fielded Prop J, an increase in the TOT to put money into the general fund. They thought it would be simple given that the previous special increase had garnered much more than the 50%+ needed to pass a general tax.

But the hoteliers were having none of it. Apparently a tax that put money in the general fund, where paying for advertising to put “heads in beds” would have to compete for funding with firefighters and libraries and police officers and parks, was suddenly economically unwise and would have a “chilling effect” on tourism. Just to be clear:a proposal to use other people’s money to keep our parks and libraries open and to hire the people to keep them safe was opposed by the San Diego County Taxpayers Association and the Lodging Industry Association. This opposition defeated Prop J soundly.

Fast forward to 2009: then Mayor Jerry Sanders, the hotel industry, the Chamber of Commerce et al. decided that it was a really keen idea to expand the Convention Center. They guessed that it would cost about $520 million to build and that there was a big market for expanded convention centers, and they warned us that Comic-Con, which may or may not bring a lot of money to San Diego, might move on if we didn’t expand the Convention Center. (The verisimilitude, or glaring lack thereof, of all these assertions will be the topic of a withering take-down in next week’s Who Runs San Diego).

A logical way to fund the expansion would be to increase the TOT. But no one thought for a split second that 2/3 of the voters of San Diego would approve a tax increase to build this whitest of elephants. As Mike McDowell, head of the Lodging Industry Association, a chairman of the board of the San Diego County Taxpayer Association, and a chief architect of the Convention Center expansion, put it: “a two-thirds vote threshold is too risky. Having learned that lesson and going down that road, would you come back and call me stupid?”

Legal activists,community leaders, regular folks with common sense—all of them said this financing district is bogus. “No, no, it’s not a tax on tourists, it’s a self-assessment we’re imposing on ourselves,” said the hoteliers.

So what do you do if you know you can’t convince folks to vote for a tax increase to fund your grand scheme? Our intrepid expansion boosters had a very creative answer. Create a special financing district comprised of just hoteliers. Have the hotel owners vote, instead of the registered voters of San Diego, to assess themselves (read “the tourists who stay at their hotels”) 3 or 2 or 1% based on proximity to the convention center. Use that special tax to repay the loan that the city will take out and, at the end of the day, will have to pay back from the general fund if these hypothetical increased bookings in an already glutted market don’t pan out. Pay no attention to the wizard behind the curtain.

“Gosh,” you say to yourself, “that sure sounds a lot like something we should all get to vote on.” Don’t feel bad, because the city Attorney thought the plan seemed iffy. The law firm that gets paid millions in legal fees to give opinions about the legality of municipal bond issues refused to vouch for such an untested plan. Legal activists,community leaders, regular folks with common sense—all of them said this financing district is bogus. “No, no, it’s not a tax on tourists, it’s a self-assessment we’re imposing on ourselves,” said the hoteliers.

Seven members of the 2012 city council, including self-proclaimed fiscal watchdog Carl DeMaio and soon to be iMayor Todd Gloria, ignored the legal experts and common-sense and approved the financing district. A big lawsuit ensued, and last month the local Court of Appeal put an end to the madness by finding the financing district violated both the state constitution and the city charter because the tax was not approved by the voters, explicitly rejecting the “superficial” claim that it was a “self-assessment.” Six years, more than $10 million, and some serious political credibility down the drain.

But before we leave the scene of this civic train wreck, let’s spend just a moment looking at why these presumably bright and well informed people would spend so much time and money trying to convince us, as the country song goes, not to “believe our lyin’ eyes.”

For the hoteliers, it’s a no-brainer. The Convention Center expansion was a no-lose situation. By their own reckoning, a successful expansion would increase their gross income by $121 million per year. That is a roughly $60 million increase in profits. According to the financing plan they came up with, they would not be liable for a single penny of the $575 million principal or the interest on the debt incurred to build the expansion.

Comic-Con staying = good; Comic-Con going = bad. That’s the extent of the message most voters got.

The servicing of the debt would come from the “self-assessment” (read “3/2/1% special tax”) paid by the people who stayed at their hotels (supplemented by at least $5.5 million per year from the City and the Port). If things went as planned, the hoteliers made a LOT of money. If things didn’t go as planned, the city was on the hook and the hoteliers would have zero liability. This is great work, if you can get it.

For the council members, it is very difficult to tell the hoteliers “no.” They are wonderful friends and fearsome enemies; just ask Bob Filner. When bonds and amortizations and tax revenues and TOTs and financing districts are being discussed, most voters tune out. Comic-Con staying = good; Comic-Con going = bad. That’s the extent of the message most voters got.

The benefits of reading the fine print can be, at best, theoretical for a council member’s career–especially when term limits mean, Yahweh willing, that one will be in another position by the time the fiscal chickens come home to roost. Kudos to David Alvarez for reading the fine print, standing up for the taxpayers, and voting against this boondoggle.

Tourism Marketing District

Let’s now look at the 2% TMD “tax” on hotels with at least 30 rooms. The word “tax” is in quotes because the hoteliers tell us it isn’t a “tax.” They claim it’s a “self-assessment,” that it’s coming out of their own pockets. The claim is laughable. The mayor, the city council, and the hoteliers agreed on a “management plan” that allows the “self-assessment” to be added to a guest’s bill as long as it is “separately stated from the amount of rent charged and any applicable taxes”—as if separating it on the bill means that the guest is not paying it.

In some ways the TMD tax is even more egregious than the Convention Center tax. The Convention Center tax was at least to pay for a municipal asset.

Because the politicians and the hoteliers decided that the additional 2% “self-assessment” did not have to be paid by the hotel guest, they are taking the position in court that registered voters had no right to vote on the TMD tax and have no right to sue to challenge it, that only hoteliers have “standing” to complain about it. The money is set aside by law for a single purpose—this time to finance advertising and promotional materials that will bring more guests to San Diego’s hotels—and it therefore waddles and quacks like a special tax that requires registered-voter approval.

In some ways the TMD tax is even more egregious than the Convention Center tax. The Convention Center tax was at least to pay for a municipal asset. The TMD tax is being used to pay for advertising to draw guests to San Diego’s hotels. I’m the only one who pays to advertise my business, and I suspect that you’re the only one paying to advertise yours. If the hotels want higher profits from more hotel guests, why don’t they form their own private advertising club with their own private monies?   (Could it be they don’t trust their competitors to pay their fair share of the bill, so they want the government’s help in enforcing the collection of the money?)

The Convention Center tax was to be administered by elected officials. If there had been a problem, taxpayers and voters would have had recourse at the ballot box. That’s not the case for the TMD tax. The hoteliers wrote into the law a provision that gives the private non-profit corporation they formed the exclusive right to administer all the money that comes in each year if the City elects to outsource marketing functions to it. (San Diego Mun. Code § 61.2522.)  Not surprisingly the City has done just that, and now the San Diego Tourism Marketing District Corporation doles out the TMD tax revenues as its board sees fit.

Screenshot Atlas Towne & Country (Click fort Larger Image)

Of course, the board is comprised exclusively of hoteliers including Terry Brown from the Town and County Resort (Atlas Hotels) and Bill Evans from the Bahia Hotel (Evans Hotels), whose online bookings charge a “tax” instead of a “self-assessment.”  Only hoteliers can vote for board members or run for a seat on the board. (San Diego Mun. Code § 61.2521(e).)

What’s worse, the City Council may change the private corporation’s spending plan for the coming year, but it has no legal authority to go after the corporation or its directors if malfeasance is discovered, and no authority to do anything that would impair the flow of money toward a marketing contract that has already been made. ( San Diego Mun. Code § 61.2521(c).)

Screenshot Evans Bahia (Click for Larger Version)

Apologists argue that the 2% TMD tax frees up TOT revenues that the City would otherwise have to spend on promoting itself. But that is simply not true. You see, the hoteliers are really good at making sure the public doesn’t stop subsidizing hotel advertising. That’s why they inserted—and the city council approved—a provision in the TMD law to require the City to continue spending the same amount of TOT revenues promoting the City in addition to the new TMD tax revenues that the private corporation is spending to promote its hotelier members. (San Diego Mun. Code § 61.2518(a).)

When the TMD tax was renewed in 2012, hoteliers estimated that it would make $26-$40 million in new revenues available for additional marketing and promotion of the City. The hoteliers are currently collecting this 2% tax. Every dollar they collect is a dollar that a tourist is willing to pay to enjoy a hotel stay in America’s Finest City. It is a dollar that the hoteliers do not have to shell out of their pockets to pay to advertise their own hotels, and a dollar that is not available for any general municipal services.

When it came to the Convention Center, San Diego’s hotels were hoping to use the City’s credit to pay for improvements that they were unwilling to finance themselves, despite being the primary beneficiaries of the improvements. Now the public is subsidizing one of the largest expenses that any business faces: advertising.

By the hoteliers’ own calculations, their guests would be willing to pay another 5% to enjoy America’s Finest City (i.e., the TMD tax plus the now-dead 3/2/1% special tax). That amounts to $50-$75 million per year that could be spent on any number of the City’s backlogged infrastructure projects or to provide a host of community services. The hoteliers refuse to share any of that—not even a penny—with the public.

If, as I hope, this funding of the TMD tax goes the way of the Convention Center special tax, the City has the opportunity going forward to use any increase of the TOT to benefit the general fund and thus all San Diegans, not just the moneyed few.

The hoteliers, sports franchises, entertainment conglomerates, developers, and construction-related businesses all have very talented, very adept, and handsomely paid professionals to represent their interests at the negotiating table. The taxpayers? Not so much. As we will see going forward, time and time again, assets that belong to the citizens of San Diego – the coasts, the bays, Balboa Park, the downtown waterfront—are used and abused by those who run San Diego.

Author Note: The views expressed above are my own and do not necessarily reflect the views of my clients.
Cory Briggs frequently represent San Diegans for Open Government in litigation against public agencies. Mr. Briggs has represented the plaintiff in lawsuit concerning the convention center tax, the tourism marketing district tax, business improvement district taxes, and other illegal activities by the city’s leaders.  Mr. Briggs’ clients have also filed a number of lawsuits in order to ensure transparency in politicians’ electronic communications, and to ensure that the city was not deleting electronic communications prematurely. Mr. Briggs notes that his clients rarely if ever sue to recover money for themselves; almost always the lawsuits seek to change government conduct. For more information please visit the Briggs Law Corporation website at http://www.briggslawcorp.com.

This article first appeared in the San Diego Free Press September 3, 2014.

Categories
Who Runs San Diego?

Who Runs San Diego? The Role of Community Weeklies

By Doug Porter

There are more than two dozen community weekly media outlets in San Diego.  Most appear on printed tabloid-sized newsprint editions. Some have a rather tenuous relationship with internet editions.

Nationally speaking, paid circulation weeklies outnumber daily papers by a 6 to 1 margin. And nobody even keeps track of the smaller free papers. Depending on who you’re talking to, weeklies are the lights at the end of the media tunnel or just a few years away from being doomed to digital extinction.

What they have in common is their focus on a limited audience. Geography, ethnic background, social and/or sexual orientation are the target markets for these publishers, who range from corporate overlords to retirees. This week’s column will focus on those serving limited geographic areas. (A future installment will cover the non-geographic weeklies)

A perusal of the weeklies in the San Diego market reveals one big difference between the weeklies and our Daily Fishwrap: these supposedly below-the-radar newspapers generally have a robust amount of advertising.

blah blahThe more personal connection with their readership offered by the weeklies makes them the rarity in this day and age of sensory overload: a place where advertising can still be noticed. The dirty little secret about media in general and advertising in particular is that consumers have learned to tune out what they see and hear.

According to one article in the New York Times, we’re bombarded with up to 5000 messages per day. I’m told about a dozen of those are likely to make enough of an impression. Turn that number around and it means that 4988 entities wasted their money on most of us. A major corporate advertiser may be inclined to say the cost of reaching out to a dozen customers in a small newspaper isn’t cost effective. A dogwashing service will be thrilled at gaining a dozen news customers.

So the higher odds of an ad getting noticed (and that is how the bills get paid) in a weekly paper makes them an important player. All those things I’ve said about advertising are also true when it comes to content; it’s important for you as a user(and potential contributor)  to see things as the publisher likely sees them.

newspaperPapa Doug Manchester has recently scooped up nine or so weeklies and even started a free distribution one in Encinitas just two months ago. Unlike the (daily) North County Times, these papers are continuing to publish. The UT‘s absorption of the NC Times was a ploy to add one more notch on the volume button of the Manchester megaphone.  It failed, as the vast majority of subscribers declined the offer to pony up for Papa Doug’s mothership.

A bevy of UT execs have been dispatched to oversee the weekly operations. And when Papa says “jump”, these minders do just that. During the primary campaigns this past spring, coverage in those weeklies of candidates competing with those blessed by the boss-man ended abruptly once the word came from Mission Valley.

Manchester’s newest media minions are: The Encinitas Advocate,  La Jolla Light, Del Mar Times, Rancho Santa Fe Review, Carmel Valley News, Solana Beach Sun, Poway News Chieftain, Rancho Bernardo News Journal and Ramona Sentinel. Many of these titles exist online as sections of another, ie the Del Mar Timesincludes Solana Beach and Carmel Valley. Word is that Papa’s tiring of handing out cash for operations; look for more consolidation as time goes on.

The San Diego Community News Group covers San Diego’s beach communities. Their papers are distributed door to door and include: Beach & Bay Press, Peninsula Beacon, and La Jolla Today.  The company has a hands-off relationship with the internet. While you can find replicas of their pages online, to communicate with the editor you’re expected to use snail mail: “Please send letters to:1621 Grand Ave., Ste C San Diego, CA 92169″

uptown-14890The San Diego Community News Network has papers covering a wide swatch of central San Diego all the way out to La Mesa. Its newspapers include:Mission Times Courier, La Mesa Courier, Mission Valley News. Uptown News, Downtown News and Gay San Diego.These folks get it. Their depth of coverage, original/interesting content, community engagement and internet friendliness is remarkable.

The Community Media Corporation owns twenty media outlets throughout Southern California. The weeklies they run in this area include the East County Californian, the Alpine Sun and the Chula Vista Star News. These papers have limited original content punctuated with assorted press releases. The CV Star News does have some good reporting from time to time.

Finally, there are an assortment of independently owned weeklies including The Coronado / Imperial Beach Eagle & Times, East County Gazette, The Bonsall/Fallbrook Village News, Clairemont Times, The Valley Roadrunner, The Julian News and The Coast News. 

In the context of a “Who Runs San Diego” essay it would be easy to assume that the market is so fractured as to render these entities powerless.

While they generally(the Manchester-owned ones use omission) do not function as a blunt force tool for local plutocrats, their attention to the details of community activities–along with the willingness of some of them to print press releases–make them an important “small ball” player.

Town councils and planning boards are sometimes incubators for up and coming politicos and nobody’s more willing to cover these entities than community weeklies. And they provide a pathway for smart citizens to get involved. Little victories count.

Winners and Losers

NorthParkSignAngle1-150x150The personal connection between small weeklies–as opposed to the abject impersonal nature of mass media–and  the people they serve means that your voice as a citizen is more likely to be heard. Their dependence on small business advertising also means they’re often reluctant to serve up much in the way of controversy.

The increasing focus on community identity in the city of villages known as San Diego, bodes well for the future of small publishers. The danger here is that these weeklies will be bought up by bigger players with the goal of sustaining a favorable (to their interests) climate of opinion within which decisions were taken. The economies of scale, combined with the ever-increasing costs of production are factors threatening the future of the independent weekly.

The ability of small publishers to merge their traditional role as local guardians with the demand for a 21st century “Town Crier” functionality will, I think, determine their future viability. Each niche is different; therefore the means of communicating must be relevant.

Being able to let people know about an upcoming street repair project and keeping them informed of when they can expect the water to be turned back on after a contractor screw-up will create an unmatchable value for the community media of tomorrow.

Here’s What You Need to Do

soapboxIn a world of big media and spectacular events it’s often easy to overlook the value of community media. Not only do I encourage people to read and support local outlets, I think it’s important to interact with them.

Write letters and op-eds to the outlets relevant to your own community, keeping in mind the audience and platform you are dealing with. Most  weeklies are thrilled to get original content. Realize that you can often–okay, almost always–be more persuasive on a more personal basis in a small newspaper than with a megaphone via mass media, especially if you are polite.

Follow them on Facebook and Twitter. I have to say as a North Park resident that the Uptown News’ twitter feed is often informative. Of all the scenarios possible in the future of the media, my personal favorite is the one where weeklies become multi-faceted community “platforms” and are encouraged, nurtured and just profitable enough to make a decent living for a few folks with a passion for journalism.

This article first appeared in the San Diego Free Press on August 27, 2014.

Categories
Who Runs San Diego?

Who Runs San Diego? The Grand Experiment at Voice of San Diego

By Linda Perine

When Voice of San Diego (VOSD) began online publication nearly a decade ago the excitement in progressive San Diego was palpable. Here, finally, was an answer to the biased reporting that had been a hallmark of the UT for years (even before it was purchased by Doug Manchester).

The world of journalism was being revolutionized as the print media model became too expensive and cumbersome to compete in an instant access world. Slate and Salon opened their digital doors, and it seemed a new dawn of accountable news reporting was upon us.

San Diego journalist/entrepreneur Neil Morgan and Buzz Woolley founded VOSD. Those were the days of Enron by the Sea, pension underfunding, indicted council members, resigning Mayors and special elections (sound familiar?). Heady stuff for this newly minted, but brashly confident, team of young reporters including Scott Lewis, Andrew Donahue, Will Carless and Evan McLaughlin.

Indeed, for a time, VOSD was a beacon of hope for readers, mainly progressives, who longed for journalism that was smart, informed, a little sassy and not afraid to call out San Diego’s particularly self-reverent grand poobahs. There was a dare-to-hope feeling that this online start-up might live up to its ambitious mission statement “to consistently deliver ground-breaking investigative journalism for the San Diego region.”

And lord knows San Diego offered a target rich environment for investigative journalism.

During those halcyon years VOSD had the luxury of extensive financial backing from Buzz Woolley.

Show Me the Money

VOSDBox1-258x300
Source: voiceofsandiego.org/about-us/

But public non-profits have to keep bringing money in. In order to maintain its 501c3 status the organization had to make sure its money came from a wider base. Scott Lewis began to write less and work more with the nuts and bolts of running a web based non-profit dependent on donations. He took on the title of CEO. His tasks were to grow a membership, find generous foundations and donors, create strategic alliances and develop a functional website as the foundation of the enterprise. By all accounts he has done a credible job.

VOSD sponsors a number of conversations, breakfasts, forums and events throughout the year. Its annual Politifest has a permanent spot on the calendar of the politically interested. While many of the reporters from the 2005-2009 period have gone on to other endeavors, the finances of the group are improving over a tough 2011. Its 2012 IRS990 report shows a 41% jump in contributions/grants and a more than doubling of cash on hand over 2011.

The list of its top 20 contributors includes several funds from the San Diego Foundation, the continuing generosity of Buzz Woolley, Price Charities and $150,000 from Irwin and Joan Jacobs. Its community partners include American Medical Response, Hughes Marino, and SDG&E. Of the $1,372,714 in contributions and grants received in 2012, $366,877 was from memberships.

The idea of a non-profit, online news organization, one specifically created to provide “accountable” journalism, is a relatively new and untested concept. Indeed the idea was so intriguing that in 2010 the Columbia School of Journalism did a Case Study entitled “Not For Profit? The Voice of San Diego Experiment”

The success of the experiment will be determined by how VOSD deals with two related issues, inextricably linked to the question “Who Runs San Diego?”.

Two Critical Questions

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Source: voiceofsandiego.org/about-us/

First of all, it’s all about the money. Some may think that non-profits somehow rise above the struggle for the legal tender. Of course this is not the case and non-profits spend a very large amount of time and energy in search of the kindness of strangers. VOSD has many energetic and innovative efforts to raise money: its Meeting of the Minds program, Community Partners Program, and Politifest, to name a few. Just this week it began an attempt to crowd fund a new investigative reporter covering housing and development.

Just as for-profit journalistic enterprises face questions about how much advertisers (and owners) influence what gets covered and how it gets covered, VOSD has faced questions regarding how it covers, or doesn’t cover, news involving high end donors and large corporate entities. Its coverage of the Plaza de Panama controversy, involving Irwin Jacobs, was criticized. Many readers took Lisa Halverstadt to task for what they perceived as a less than balanced reporting of issues involving orca captivity at Sea World. Others, myself included, thought VOSD overlooked some very important relationships and motivations in telling the story of the political demise of Bob Filner.

These and other concerns have taken some of the bloom off the rose of the hopes of the progressive community that VOSD would take on the powers that be and do the ground-breaking investigative reporting it promises in its mission statement.

Which brings us to the 2nd major issue: bias. Scott Lewis, the CEO of VOSD, is very clear when he speaks about bias in reporting. He does not even pretend not to be biased. The VOSD website guidelines for reporters states in oversized letters There is No Such Thing as Objectivity.

Many would agree with that assessment, and even give VOSD a shout out for the sort of world weary hipster-noir blatancy of that statement.

But here’s the thing: to just poke your cyber thumb in your journalistic chest and say “I’m biased. Everyone is.” is not enough. If you claim your bias, but fail to identify what your bias is, you’ve left off the most important part of the conversation.

Source: voiceofsandiego.org/about-us/
Source: voiceofsandiego.org/about-us/

In seeking the answer to the media segment of our series “Who Runs San Diego?” we got a pretty clear picture of where Doug Manchester and John Lynch stand. They told us when they bought the UT that they really wanted to advance their extremely conservative agenda, that they really liked making money and they bought that nice little newspaper and the land it sits on to do just those things.

VOSD does not provide that level of clarity. Certainly they have a nice turn of phrase: “We are guided by an ability to be transparent and independent, to clearly assess what’s going on in our community and have the courage to plainly state the truth”.

It would be good, given that there is no such thing as objectivity, to provide some clarification as to which truth it is that will be plainly stated.

Who are the Winners and Losers?

San Diego wins having an online publication that works hard to bring the interested citizens information and venues to share information and ideas. Could it be fiercer? Yes.

San Diego loses if we don’t address the undue influence of money in our public discourse. In the VOSD circumstance crowdfunding may help offset the possibility of undue influence by large donors. If many give a little, it clears the path for “ground-breaking investigative journalism.”

What Simple Thing Can You Do to Address the Problem?

Give a couple of bucks to crowdfunding. Give VOSD the opportunity and encouragement to be a little fiercer.

Write an opinion piece. I am astounded at the expertise and concern demonstrated by many activists in San Diego.

Tell your story. Tell it at VOSD. Tell it at San Diego Free Press. Tell it at OB Rag. Tell it at your non-Manchester-owned community weekly (which we’ll be covering next week).

Linda Perine is the President of the club, an avid cyclist and tennis player.

This article first appeared in the San Diego Free Press on August 21, 2014.

Categories
Who Runs San Diego?

Who Runs San Diego? Papa Doug the Kingmaker

By Eva Posner

Last week we provided an overview of Doug Manchester, the U-T, and the influence this combination has on the electorate of San Diego County.

This week, the goal is to delve a bit deeper, using a recent issue to illustrate the intensity of collusion with the publisher of the region’s largest paper and other powers that be.

From Voice of San Diego:

“It was Saturday, Aug. 31. No Republican had announced his or her intention to run to replace Mayor Bob Filner, whose term in office ended quietly the night before.

“A group of about 30 of the city’s most influential conservatives and right-of-center business representatives assembled at developer Tom Sudberry’s La Jolla estate.”

The roster was impressive: Doug Manchester, Jerry Sanders (Chamber of Commerce and former mayor), Tony Krvaric (San Diego County Republican Party), Bill Lynch (Lincoln Club), Kris Michell (Downtown Partnership), Kelly Burt (New Majority San Diego), Bill Geppert (Business Leadership Alliance), Carl DeMaio (former councilmember, failed mayoral candidate, and current congressional candidate), Ron Roberts (County Supervisor), and of course Kevin Faulconer.

Long story, short: “The group decided to support Faulconer and everyone pledged to try to get their organizations to support him.”

Two days later, out of fear that DeMaio’s ambition would get in the way of his team spirit, the Manchester controlled editorial board wrote a not-so-friendly piece warning DeMaio away from the race:

“DeMaio will announce Tuesday whether he will remain a candidate for Congress or demonstrate his own political opportunism by switching to the race for mayor. His decision will mark him as a future Republican star, or could end his political career. The U-T editorial board urges DeMaio to stick with his congressional candidacy; he can count on our editorial support if he does so.”

The next day, DeMaio announced that he would stick with his congressional race, and a GOP star was born.

The wagons quickly circled around Faulconer—Manchester and his allies leading the way. Endorsements came quickly from the Republican Party, The New Majority, and the Chamber of Commerce. The Downtown Partnership’s political action committee, San Diego Jobs PAC, did its part.

U-T San Diego published glowing editorial after glowing profile after glowing story. Polls were commissioned. And the money started flowing. And so did thehit pieces.

Manchester himself donated $356,000 to the cause throughout the course of the primary and general elections. The donations were divided between the San Diego County Republican Party and The Lincoln Club (remember Tony Krvaric and Bill Lynch from the candidate-picking party in La Jolla?) as well as the Faulconer campaign. (It is also worth noting that Manchester is a member of The Lincoln Club.)

But why? From boltsfromtheblue.com:

“According to a Voice of San Diego Member Report, Manchester and Lynch were scheduled to host a private luncheon with assorted movers and shakers in San Diego, with the express purpose of ‘strategizing how we can best move San Diego forward in support of Kevin Faulconer as Mayor.’

“The agenda for this luncheon was as follows:

“’We all know the need to preserve and protect San Diego from losing the Chargers, fix the pension system, and create incentives that will allow San Diego to reach its full potential and recover from what we have experienced over these past several years….

“Notice the focus on the Chargers in this agenda. It seems clear that Manchester’s and Lynch’s enthusiasm (and possibly a fair share of support from the paper) is directly tied to Faulconer’s willingness or ability to get a stadium deal done.”

After the election Manchester Financial Group, owned by Papa Doug, also donated $5,000 to the $150,000 celebration for Falconer’s inauguration. (So did Thomas Sudberry, whose home in La Jolla hosted the above-mentioned gathering. So did New Majority. And San Diego Jobs PAC. Seeing a pattern?)

It is highly likely that Manchester will get a healthy return on his investment. With two huge development projects coming down the pipe— the $1.3 billion Navy Broadway Complex and the redevelopment of U-T San Diego’s prime Mission Valley property—it is easy to see that Manchester would be thrilled when one of his own was chosen for a position on the City’s Planning Commission. (The commission oversees community plans, zoning, and land use issues and is extremely influential. This series will go into more depth about it in the future.)

In April, Faulconer appointed architect Doug Austin to the commission. Austin had been hired by Manchester to design the Mission Valley development. According to the Reader, Austin was also a high dollar donor to the GOP, donating $5,000 to Faulconer’s mayoral bid and $1,125 to Republican Councilwoman Lorie Zapf in 2010. (Zapf will take Faulconer’s District 2 council seat after defeating Democrat Sarah Boot in the June 3rd primary.)

It’ll be interesting to see how this all plays out in relation to the Convention Center expansion and the Chargers’ stadium, which the City will inevitably have to deal with soon as court cases threaten the current Convention Center plans and pressure from the NFL and others are pushing toward a new stadium.

Manchester stands to profit from both, whether separate projects or a combined project. As a hotelier and developer, he was a driving force behind building the Convention Center in the first place, and could make millions from the expansion. And even more from the stadium. Add in the Navy Broadway Complex and the Mission Valley Project and suddenly $356,000 seems like a small investment.

When you follow the money and the relationships, it seems that Manchester is stacking the deck to use taxpayer-funded government positions of influence to line his pockets, and using his media bullhorn to distract the voters from realizing it. It is a long standing pattern and this is just the most recent example.

We cannot continue to allow that to happen.

This is an installment of the Who Runs San Diego? series, a project of the Democratic Woman’s Club published weekly in the San Diego Free Press. The Democratic Woman’s Club mission is to promote Democratic Party principles including equality of opportunity, a level playing field, and fair and equal treatment for all.

Eva Posner

Eva Posner is a freelance journalist and Southern transplant passionate about politics, current events, travel, her son and her dog. @evaposner

This article first appeared in the San Diego Free Press August 13, 2014.

Categories
Who Runs San Diego?

Who Runs San Diego? Douglas Manchester and U-T San Diego

By Eva Posner

U-T San Diego, formerly the San Diego Union-Tribune, is the largest daily newspaper in the region. According to the U-T advertising rate book, U-T San Diego reaches 29.9% of the adult population of San Diego during the week, and 41.2% on Sundays. U-T San Diego.com receives 29.5 million page views per month.

The U-T Community Press, which consists of 8 newspapers that formerly brought communities hyper local and independent news but was bought by the U-T’s owner Doug Manchester, has a weekly readership of 221,905. One of those newspapers is the North County Times, which was the U-T’s biggest competitor.

Even assuming these numbers are inflated to sell ads, it is obvious that the management/ownership have incredible influence over the information taken in by a large portion of the population of San Diego County and the surrounding region.

Who is Doug Manchester?

“Papa” Doug Manchester is a hotelier, developer, philanthropist, media mogul and Republican super donor who fills a role in San Diego similar to that of a local Rupert Murdoch. He is a driving force behind the debate over a new Chargers stadium, has built some of the tallest buildings Downtown, and chose Kevin Faulconer as the Republican candidate for mayor in the mayoral special election to replace Bob Filner. He is anti-government, anti-tax, and anti-marriage equality. He donated $125,000 to support Prop 8 and over $100,000 in support of Mitt Romney.

He and his business partner, John T. Lynch, a radio executive, bought the paper in 2011. They made their motives for buying the paper unusually public. Lynch told the New York Times:

We make no apologies. We are doing what a newspaper ought to do, which is to take positions. We are very consistent — pro-conservative, pro-business, pro-military — and we are trying to make a newspaper that gets people excited about this city and its future.

A look into the long line of abuses of power by the U-T, including investigating the Port Commission when it didn’t agree with Manchester’s development plans and firing sports columnist Tim Sullivan when he didn’t agree with the new stadium plans, David Carr concluded in his NY Times column:

In San Diego, there’s a strong weekly, The San Diego Reader, and a great news Web site, Voice of San Diego. But The U-T has the brawn and ubiquity of a daily newspaper. As the only game in town, it seems determined to not just influence the conversation, but control it.

The logic for Manchester is simple: What better way to line your pockets with cash than to use the region’s largest news source to advocate for your causes? Want development that will lead to more business at your hotel? Convince the public that’s what they want too. Don’t want to pay for affordable housing the next time you are building a skyscraper or pay a living wage for your hotel employees because it will hurt your bottom line? Convince the voters it will destroy jobs.

These moves may not be in San Diego’s best interest, but they certainly are in Manchester’s.

Why Does it Matter to Me?

Where do you get your information? If you came to this article from the San Diego Free Press site, or the Democratic Women’s Club, perhaps you don’t get it from the U-T. But the numbers in the beginning of this piece show that some people—many people—do.

A functioning democracy depends on an informed electorate. I know. It sounds cliché—even naive. But it is true.

The fact is that people make daily decisions based on information: how to dress, what to buy, whom to be mad at, or how to vote.  Americans rely heavily on their media consumption to determine what is best for them. And San Diegans rely heavily on the U-T. What stories it chooses to cover or not, the people and projects it chooses to advocate or demonize have an effect on public opinion.

How are you going to know what policies, politicians, projects, or public use of funds are looking out for your best interest if you are getting bad information? And how are you supposed to take the word of a multimillionaire developer, when chances are you’re just trying to get by?

Who are the Winners and Losers?

Winners: Manchester’s pet projects and allies. Pension Reform. The Chamber of Commerce and Jerry Sanders. The Navy. The Chargers and the Spanos family. The Lincoln Club and Carl DeMaio. The Republican establishment.

San Diego is purple. Although voter registration numbers favor the Democratic Party, military and business influences have created the lone holdout for a Californian metro area where the Republican Party still has influence. That means San Diego is still in play for both parties at all times. When it comes to city and county politics, Republicans seem to have a slight advantage in spite of their numbers. The scale tipping influence of the Manchester bullhorn is certainly helpful in that regard.

Losers: Those Manchester deems unworthy of his “great vision” for San Diego. Poverty wage workers. Unions. The LGBT Community. People who need affordable housing. Barrio Logan. San Diego taxpayers. Community newspapers.

When a newspaper has enough muscle to threaten to destroy the Unified Port of San Diego for simply making a deal with a fruit company, our media environment is in a bad place. U-T knows how much influence it has, and isn’t afraid to abuse it.

How Do I Fix It?

Do not subscribe to the U-T. Don’t pay for the pay wall. Print is dying. Let it die.

And if you do happen to read something in the U-T, try taking the opposite position. Chances are it’s better for you.

*Fun fact: Manchester’s 70th birthday, May 31, 2012 was declared “Papa Doug Manchester Day” in San Diego County by the Board of Supervisors. We will revisit the incredible local political and economic force that is Doug Manchester and his relationships with other power brokers later in the series when we discuss developers.

More detail on Doug Manchester and the U-T next week.

Eva Posner

Eva Posner is a freelance journalist and Southern transplant passionate about politics, current events, travel, her son and her dog. @evaposner

This article first appeared in the San Diego Free Press August 6, 2014.