An important bit of misinformation has been circulating about Measure C – the Spanos ballot referendum to raise the hotel tax (transient occupancy tax – “TOT”) in the City of San Diego from 12.5% to 16.5% to build a $2 billion-plus downtown combined stadium and convention annex. Most news stories and conventional wisdom have it that 2/3 of the city’s voters must vote in favor of it in order for it to pass. While some of these articles acknowledge that there is a potential second path to passing Measure C via litigation, it is mentioned only as something that is remote, uncertain, and difficult. As a result, some opponents of the measure have had a somewhat lackadaisical attitude. The hoteliers in particular have remained relatively silent. This circumstance is surprising given the potential impact on the demand for hotel rooms from the rate increase and the hoteliers’ opposition to a non-contiguous convention facility expansion.
In reality, a greater than 50% vote is likely Spanos’s primary objective. His team and surrogates have told various officials that the percentage of the vote they receive, even if less than the 2/3 voter requirement, is important to Spanos as some sort of showing of support; To make him feel as if San Diego loves him? This message, at best, seems disingenuous. More likely, Spanos is employing a strategic feint designed to secure the support of Charger fans who don’t support Measure C but believe it doesn’t stand a chance of gaining a 2/3 voter approval. He hopes these fans will vote in favor of Measure C thinking their vote is just a symbolic affirmation of Chargers fandom on a doomed ballot measure. In fact, the belief that Measure C is doomed because of the 2/3 passage requirement is the conventional wisdom.
Going unreported is the fact that a greater than 50% vote is a relatively simple, streamlined, and high probability path toward securing passage of Measure C. A state appellate court has already ruled that only 51% is sufficient for special tax ballot initiatives that are not placed on the ballot by a local city council, as is the case with Measure C. California Cannabis Coalition, et al. v. City of Upland , et al. The Howard Jarvis Association, on behalf of the City of Upland, petitioned the California Supreme Court to review this appellate decision, and the Court granted review. Id., Supreme Court Case No. S234148. The issue before the Court, at least on its face, is a relatively straightforward question: Are the words “imposed by local government,” as used in California Constitution, article XIII C, section 2 (Prop. 13) limited to taxes legislatively “imposed” by a local governing body or do they include taxes legislatively “imposed” via a “citizens” initiative and enforced by local government?
If Measure C receives more than 50% of the vote, Spanos will almost certainly file a lawsuit. However, such a lawsuit will be largely a formality. It will likely be stayed pending the outcome of the Supreme Court decision in the Upland case. The Upland case has already been fully briefed by both sides and is merely awaiting an oral argument date and a decision. Spanos needs only to wait for that decision.
Moreover, Spanos’s prospects via the California Supreme Court look pretty good. The appellate court has already ruled in his favor. Additionally, The California Supreme Court has become, at least theoretically, more liberal in its composition due to recent appointments by Governor Brown replacing outgoing conservative justices. While Measure C itself is no liberal cause, the decision before the California Supreme Court is a tax issue, which involves the question of the height of the bar for raising a tax by a “citizens” initiative. Historically, conservatives have sought to make raising taxes more difficult. Certainly, that is the case here in which the decision involves the scope of Prop. 13. This posture is further confirmed by the fact that the Howard Jarvis Association is arguing the appeal and amici curiae support for the appeal includes groups such as the conservative Pacific Legal Foundation. Additionally, the San Diego Republican party has endorsed the No on C Coalition because of its broad policy against raising any and all taxes. In contrast, the San Diego Democratic Party Committee remained neutral on Measure C.
Unlike appeals from the trial court to the appellate divisions, petitions to the California Supreme Court are discretionary. That is the Court does not have to accept the appeal. When it does, as in the Upland case, it is usually an indication of both their interest in the case and of its legal importance. Overall, the Court reverses appellate decisions between 57 and 65 percent of the time – so at least those statistics mitigate against Spanos. The average time between granting a petition for review and deciding it is a little under two years. In the Upland case, review was granted on June 29, 2016. Thus, a decision could be expected by June 2018, though it could come earlier due to a letter from City Attorney (San Diego) Jan Goldsmith requesting expedited review and the need for cities across the state for clarity on the issue. After the California Supreme Court issues its ruling, it will most likely be the end of the road for the case. There will likely be no petition for review to the U.S. Supreme Court, and almost certainly no granting of such review. The issue is one of interpretation of the California Constitution – a subject uniquely within the exclusive purview of the state’s highest court. Additionally, there is no federal issue, and thus no basis for U.S. Supreme Court review.
Accordingly, those San Diegans taking comfort in a 2/3 vote requirement may want to rethink their comfort. In contrast, disheartened Charger fans who would grant Spanos’s desire for a tax funded downtown stadium in order eliminate the chance of Spanos moving the team to become Stan Kroenke’s tenant in his new privately funded Los Angeles stadium can raise their hopes. Finally, for those more interested in the tax and initiative process, it is worth noting that in this day and age of $15 per signature for upwards of 100,000 signatures in San Diego, “citizens'” initiatives are more often “Citizen Kane” initiatives – only very wealthy special interests can afford to put forth such initiatives. If the Supreme Court upholds the distinction between tax initiatives placed on a ballot by a City Council vs. those placed there by an outside entity – it would result in an ironic perversion of the intent of Prop. 13 and the anti-tax movement behind it. As in the case of the Spanos organization, the primary motive behind such Citizen Kane initiatives will typically be to divert public funds for private financial benefit. Moreover, via such ballot initiatives, these Citizen Kanes are able to avoid negotiated give and take processes with local government, instead using populist messaging and advertising to avoid the details required for a fair and well-constructed legislative enactment. This scenario would be a huge blow to the ideals of representative government and particularly the representation of the public when monied special interests seek to divert public funds to their private benefit.