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Thursday, Mar 28, 2024
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City OKs Changes to Hotel Approval Process

The San Diego City Council has taken the first step in a controversial move to give itself a final say in the approval of downtown hotel projects with 100 or more rooms, down-shifting the role of the agency that has overseen those developments for the past 30 years.

The council voted 6-2 on Sept. 14 to have staff draw up amendments to current land development codes, essentially to require the council’s ultimate sign-off on site-development permits for projects with 100 to 199 rooms, and the more comprehensive planned development permits covering those with 200 or more rooms.

The measure was approved in May by the council’s Land Use and Housing Committee. City attorneys and staff of the Centre City Development Corp., San Diego’s designated downtown redevelopment agency also known as CCDC, will draw up amendments to be presented to the council for a final vote within 90 days.

For the past three decades, hotel projects have been approved by CCDC, based on established standards for elements such as architecture and design.

Proponents say changes are needed to make the downtown hotel development process more accountable to the public, and to allow elected leaders to consider factors such as quality-of-life issues, similar to the way projects are considered elsewhere in the city.

Union Representation?

Opponents contend that the new policy will inject issues into hotel reviews, such as union representation of employees, that could scuttle proposed projects by making them financially unfeasible, costing the city jobs and tax revenues.

For about the past year, changes to the hotel review process have been supported by groups including organized labor and affordable-housing advocates, while vehemently fought by the local hotel industry and business development organizations.

Council member Donna Frye, who backs the changes, said the amendments under discussion make no reference to worker wages or requirements to install organized labor at future downtown hotels. She said the issue at stake is putting all potential impacts of hotels, including environmental and economic matters, up for discussion by an elected body, rather than just by CCDC, whose members are appointed by the mayor.

“We want to make sure that all residents can weigh in on proposed hotels in the downtown,” Frye said. “We are not breaking new ground. We should make sure that we are answerable to the public.”

Frye said opposition moves are deceptive and designed to “scare people,” and that the proposed changes would not impact hotels that have already been approved for the downtown area but not yet built because of the economy.

Impact on Work Force

Council member Carl DeMaio, who opposes changes in the hotel approval process, said San Diego needs to avoid a repeat of what happened in 2008, when Gaylord Entertainment canceled plans for a waterfront resort in Chula Vista, which would have created thousands of jobs, partly because of demands from organized labor.

“We have a room filled with labor unions,” DeMaio said during the Sept. 14 council meeting at City Hall. “At the end of the day, that’s what’s driving this process.”

Council member Kevin Faulconer, who joined DeMaio in voting no on the amendment move, said toughening the process could kill jobs. The timing is especially bad, he said, in light of financing issues that are already holding up hotels proposed throughout the downtown area.

“Adding this uncertainty is the wrong thing to do,” Faulconer said. “We should be incentivizing job growth.”

On the eve of the council meeting, a coalition of groups, including the Downtown San Diego Partnership and the San Diego Regional Chamber of Commerce, reiterated its opposition and called on Mayor Jerry Sanders to veto amendments if they are eventually passed by the council.

Financial Feasibility Study

The downtown partnership released revised results of a study, conducted earlier this year by The London Group, indicating that hotel projects in the pipeline could be made financially unfeasible even if they are required to make only partial use of union labor.

Potentially at risk, the study said, are up to 12 proposed hotels comprising 3,142 rooms. If all 12 were to be scuttled, it projects, the loss would include $207 million in transient occupancy tax revenue during a 10-year period.

More than $8.2 million in sales tax revenue would also be at risk during that time, along with more than 10,000 construction jobs and 1,500 permanent hotel service jobs.

Groups opposing changes in the hotel approval process also include the San Diego County Hotel Motel Association, the California Restaurant Association, the San Diego County Building Industry Association and San Diego Regional Economic Development Corp.

During the meeting, Phil Rath, deputy director of policy for Mayor Sanders, called the proposed changes “a solution in search of a problem,” adding that he did not know of any current hotel projects that could have been improved by the measures now being discussed, since projects already undergo a series of public hearings.

He said the changes will create uncertainties in the development community as to what the city wants from projects.

That contention was countered by Ben Hueso, a council member who favored broadening project discussions beyond city appointees. “There’s no empirical data that our actions today would chill projects or prevent them from happening,” Hueso said.

Labor and housing advocates at the council meeting said there are already hotels operating feasibly in the city with at least partially unionized work forces, including downtown’s Hilton San Diego Bayfront. Even if project labor agreements are not enforced, they said, worker wages and living conditions need to be discussed, in light of rising housing costs in the city.

“These are the people who are generating (transient occupancy taxes) for this city,” said Brigette Browning, president of Local 30 of the hotel union Unite Here, pointing to hotel workers attending the council meeting.

Supporters of the proposed amendments at the meeting also included representatives of the Affordable Housing Coalition and the Employee Rights Center.

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