City Panel Urges 2nd Hotel-Tax Rise to Pay for Park Repairs, Arts Fest

The crumbling buildings along Balboa Park’s historic Prado and Mayor Maureen O’Connor’s proposed Soviet arts festival would be the major beneficiaries of another increase in San Diego’s hotel room tax that was proposed Wednesday by an ad hoc city committee.

The panel recommended that the City Council raise the tax to 9% starting in June, using the revenue from an overall 2-cent-on-the-dollar increase to finance $45 million worth of improvements needed in the park, and as much as $3 million in expenses for the proposed 1989 festival.

The committee, made up of city officials and leaders of city institutions dependent on tourism, also recommended freezing the tax at 9 cents on the dollar for the next five years.

Thereafter, the tax rate would be limited to the average tax imposed by 15 major U. S. cities, in order to keep San Diego hotels priced competitively with those in other parts of the nation.

Greeted Enthusiastically

O’Connor and Councilman Bob Filner, whose district includes Balboa Park, greeted the recommendations of the so-called “Transient Occupancy Tax Allocation Committee” enthusiastically, noting that the plan would accomplish the same park renovations in four years that were included in two bond proposals voters narrowly rejected in November.

Paying for the renovations has been one of the most insoluble problems O’Connor has faced during her tenure as mayor. In addition to the failed bond proposal, city officials have at various times suggested state grants, a citywide assessment district and even a surcharge on tickets to the park’s theaters, museums and zoo as methods of paying for some or all of the improvements.

“What she is extremely happy about is that Balboa Park is going to get the money it needs,” said O’Connor spokesman Paul Downey. “We aren’t going to need any help from Sacramento. We’re going to be able to do it ourselves.”

In a statement released by an aide, Filner said that “utilizing tourists’ ” dollars offers an opportunity to restore the park quickly, rather than spending small amounts over many years on insignificant improvements.”

However, the plan to spend as much as $3 million over two years on the arts festival drew immediate criticism from Councilwoman Judy McCarty, who wants no city money spent on the event.

“I think this should be funded privately,” said McCarty, who had joined seven other council members and O’Connor in conceptually approving the festival Aug. 9. “It’s kind of old-fashioned, but I don’t think government should be funding the arts, any more than it should be in religion or the newspaper business.”

McCarty said the tax money should be spent on Balboa Park or to help plan the $1.5-billion sewage treatment system the city must build.

McDonald’s restaurant chain magnate Joan Kroc has donated $1 million to the arts festival, and O’Connor has pledged to seek other private grants. City Manager John Lockwood said Wednesday that the $3-million figure should be considered a ceiling that could be reduced if the full amount is not needed.

There is as yet no formal budget for the proposed festival, although the city’s newly appointed arts commission is expected to release its recommendation in coming weeks. A similar festival of Soviet music and dance in Boston cost $3 million to $4 million.

In June, the council raised the hotel room tax from 7% to 8%, effective Aug. 1, and told the ad hoc committee to investigate the effects of a second 1% increase. Under the committee’s recommendation, that tax rise would occur next June, several months before the city’s new convention center is scheduled to be ready for major conventions.

With $2 million available from this year’s 1-cent tax increase, the committee proposed spending $1 million to hire architects and planners for the Balboa Park improvements and to complete small-scale maintenance projects.

Penny Worth $4.1 Million

An additional $200,000 would be spent to market the convention center, and $800,000 would go to the arts festival. The council previously committed $1 million of the revenue to convention center marketing, promotional programs and art and cultural organizations.

Starting in fiscal year 1990, each 1-cent hotel tax increase will be worth $4.1 million, giving the city an extra $8.2 million in revenue each year if the second 1-cent increase is approved.

The committee recommended spending $3.8 million of that to start paying off the $45 million that would be borrowed to improve Balboa Park, including reconstruction of the House of Hospitality and House of Charm, building a Japanese Garden and beginning construction on a parking structure near the organ pavilion. All the renovations would be completed in four years.

In November, voters turned down two ballot propositions designed to raise $93.5 million and $73.9 million to renovate Balboa and Mission Bay parks. Although the smaller bond issue was approved by 61.4% of the voters, the city needed the consent of 66.7% to borrow the money.

Since that vote, O’Connor and other council members have repeatedly said that the substantial majority in favor of the bond issue demonstrates city residents’ strong desire to shore up the parks. The council has agreed to renovate Mission Bay Park, primarily with capital improvement funds over the next six years.

Besides the money spent on the Balboa Park loan, some of the revenue, $2.2 million, would be spent on the arts festival, $820,000 would be given to the San Diego Convention and Visitors Bureau for marketing, $480,000 would go to promotional programs, $800,000 would be handed out to existing arts and cultural organizations and $100,000 would be put away in a newly created trust fund for future major events such as the Super Bowl.