A mudslide of voter approval is certain to propel Proposition A to victory on Election Day, March 26. The initiative, which calls for financing the $157.5 million, 300,000-square-foot expansion of the Moscone Convention Center with an increase in the hotel tax from 12 percent to 14 percent, is virtually uncontested. The usual crowd of bond-haters -- Quentin Kopp, Joel Ventresca, and San Francisco Tomorrow -- is protesting, but every other power center in the city -- from the supes to the mayors (past, present, and presumably future) to the two major political parties to the unions to the "tourist infrastructure" to the Chamber of Commerce to the dailies -- is foursquare behind Prop. A.
Such unanimity is very un-San Franciscan, and if left unchecked could damage the city's reputation. This, after all, is a place that is world-renowned for placing higher value on process than action. Roberts' Rules of Order, the environmental impact study, and needlepoint weren't invented here, but they could well have been. Proposition A surely deserves more scrutiny.
The simplest explanation for Prop. A's acclaim, of course, is that it satisfies the innate human desire to obtain something for nothing. And as Prop. A's backers claim, the measure is as close to free lunch as you can get. If it passes, local construction workers stand to reap 20-odd months of high-paying employment; also, say the backers, up to 2,000 permanent new jobs in the hotel/restaurant/transportation industry will be created, at no immediate direct cost to San Francisco residents. Then there are the promised "multiplier effects" produced by tens of thousands of new convention visitors who will blow money in restaurants and shops, not to mention the sales taxes they'll pay.
That's the pretty truth. The ugly truth is that Prop. A is a welfare program for the convention industry and the unions that work in it. (Community activist Calvin Welch once called convention center builders "cargo cultists" -- people who believe that if you build these monuments to confabs, the confabulants will descend from the skies.)
And it's a cynical tax. San Francisco voters, who are too cheap to directly subsidize the convention business, are all too happy to export the city's tax liability to folks who can't vote in our elections. (In the old days this was called taxation without representation and caused people to start revolutions.)
To some it may seem only fair to export the convention center tax to the wallets of convention attendees from Albuquerque, Alabama, and Australia. They use the facility, not us. But that's not how the hotel tax works: Instead, it is the everyday business schmoes and working-class vacationers clogging Pier 39 who occupy most of San Francisco's hotel rooms and cover the lion's share of the current subsidy.
Consider: The city's hotels boast an annual capacity of about 11 million room-nights (30,000 rooms times 365 days) and a 70-plus percent occupancy rate (about average in the industry), which means that about 7.7 million room-nights are consumed in San Francisco each year. But according to a study commissioned by the Office of the CAO, only a paltry 750,000 to 800,000 of those room-nights are generated by "Moscone-based meeting groups." Constituting a mere 10 percent of the hotel trade, conventioneers pay only 10 percent of the total hotel tax and hence cover only 10 percent of the convention subsidy.
Talk about freeloaders!
If the current hotel tax is a bad deal for non-convention visitors who make up 90 percent of the hotel clientele, Prop. A only makes it worse. The two percentage points added to the tax by Prop. A will be dedicated solely to the Moscone expansion, which means that non-convention visitors will pay an even higher proportional share to build and maintain a facility they'll never set foot in. (Currently, about 28 percent of hotel tax revenues are spent directly on Moscone Center, Brooks Hall, and the Civic Auditorium. The remaining 72 percent funds the arts, Candlestick Park, tourism promotion, low-income housing, and the General Fund.)
The increase of any tax poses the question: Cuit bono? -- Who benefits? In the case of Prop. A, the campaign disclosure statements filed by a committee called San Franciscans for Proposition A make it patently clear that the San Francisco hotel establishment is convinced it'll benefit. Of the $200,000 raised by the committee in the first 41 days of the year, more than $87,000 was donated by hotels, who will collect the higher toll for the city. Giving $12,500 each were Spectacor Management Group (the Philadelphia company that currently manages Moscone for the city) and FMIC Food and Beverage (a Spectacor subsidiary). The union that represents exhibition workers -- Sign Display & Allied Crafts Union Local 510 -- takes Prop. A so seriously that its 900 members intend to drop $30,000 on the effort, according to Local 510 business manager Mike Hardeman. Even the Yellow Cab Co-op has given $250 to the cause.
The hotels are big on Prop. A because they want to increase their occupancy rates from 70 percent; the existing Moscone buildings aren't much help because they're already 95 percent booked. But how much help will the construction of a $157.5 million hall provide? Under the best-case scenario posited by the CAO-commissioned study, when the new hall becomes fully operational in 2003 it will generate a measly 250,000 new room-nights by additional conventiongoers. That's only a 3 percent increase in total room-nights. It's not much to crow about, but as the hoteliers aren't paying the tax, they're happy to see it levied.