San Diego Ocean Beach attorney Lewis Wenzell is one of the plaintiff's lawyers in the Supreme Court case seeking to force a public vote on San Diego's $200 million convention center expansion. He sat down last week for an interview.
Q: What is this case about?
A: The San Diego City Charter says that whenever the city goes into debt, long-term indebtedness - it can be revenue bonds or general obligation bonds or anything - it has to get a vote of the public, two-thirds vote. The state legislature has passed a set of laws, at least which, the City says, allows them to create JPAs and finance these projects by funneling the money through the Joint Powers Authority, avoiding the two-thirds vote. Our position is that you can't use that circuitous route to avoid the vote, number one; and even if that were what the legislature intended to happen, that it's a violation of the home-rule provisions of the California Constitution, which say that when you have charter cities, which ours is, that the charter is the constitution for the city, and it can't be interfered with by the legislature except in very limited circumstances, and we're saying financially, public works projects are not one of those circumstances.
Q: How is the city council trying to avoid a vote?
A: The whole idea is, the way you avoid the vote is to get somebody other than "The City" to do the financing. And so you create these agencies, these Joint Powers Authorities - JPAs is what they're called - in this case, the Convention Center Expansion Authority, which is nothing other than a paper entity. But it does have a name different than the city of San Diego, and so by funneling the City fund through that agency, the city is supposedly not acting, and therefore the city charter doesn't apply. It's a ruse, and everybody knows it's a ruse. In fact, the Oregon State Supreme Court in a case not dissimilar to this one - and declaring this kind of scheme invalid under Oregon law - the closing line to their opinion was, "It's a scheme that could only fool a lawyer."
Q: The Union-Tribune has editorialized, saying, "We don't think there should be a vote on any big public debts."
A: Right. I don't understand that position. There is among the power elite and civic elite an attitude that the public is stupid, and we best know how to spend your money: "It's not your money in the first place; it's our money, and we know how to spend it better than you do." And I think that kind of attitude just prevails. But for a newspaper that's generally conservative, I just don't understand it. I don't understand how people who are Republicans or Conservatives can get into a position where they can say the public is generally incapable of making decisions about important projects. So I don't understand that. I have my own theories, but it involves some of the personalities, and I'm not sure that I want to bring this thing down any farther than it already is.
Q: And I guess they would come back and say, "Well, this is for the greater good, that we need these public works"?
A: I know, but that's the thing that I have a problem with: that somehow the people at the Union-Tribune know better for me than I do. And know better for you and the rest of the citizens what's good for them. I think most citizens would say, "Well, you know, I think I'd rather not have my car wrecked every time I drive down Bacon Street [because of potholes] and not have to have the beaches closed half the time than to see some people from Chicago cavorting at the convention center every January."
Q: Historically speaking, what is that charter provision calling for a two-thirds vote all about?
A: The history is being replayed a hundred years later. These provisions actually got started when, prior to the California Constitutional Convention in the late 1890s, cities and counties went into debt primarily for railroads, water canals, and water projects to benefit the mining interests. All of these projects went broke, then there was the Depression in the late 1880s and 1890. California went bankrupt. California cities and counties went bankrupt, and it was an economic catastrophe. The people went to the constitutional convention and formed our present constitution, at least in the convention in the late 1890s, and said, "We can't do that. It's got to be..." - and the words they used were - "Pay as you go." It's cash. When you want to build these things, you either raise taxes to build them or you pay for them with cash, so that we don't get cities and municipalities into this situation where they are so indebted for the projects that they can't meet the present needs of the public for public safety, et cetera. That's what it was for. The whole idea was we don't trust the politicians to make decisions in the long-term best interest because of the controlling special interest of the time. So we're going to require whenever they do one of these jobs that they come to us and get our permission so that we know we're being indebted for the next 30 years.
I mean, how much clearer and applicable to present day could that be? And now the situation is that instead of the city council having to come to the public and say we want your approval because this is a really good deal, now it's the public that has to go to the city council and say, "Please, please, please don't tax us anymore but don't get us into a public works project that could raise our taxes in the future." I mean, if the populace, the people that passed these constitutional and city charter provisions, were alive today, they would be shouting at the top of their lungs how wrong it is. I think they're turning over in their graves, to tell you the truth.
Q: Your opponents say, "Well, we're not raising your taxes, we're just incurring debt." How does that work?
A: Well, that's true; the taxes aren't being raised. But the fact is that for the next 30 years, if the convention center expansion goes through, the City is going to have to find, depending on your point of view, anywhere from 15 - excuse me - anywhere from $12 to $20 million a year to pay off these bonds. Those are funds that would otherwise be available for general purposes - for streets, salaries, more policemen, et cetera. So if eight or ten years from now the police department comes in and says we need 100 more officers or the public employees need a raise in salaries or we need new libraries, they can say, "I'm sorry, we don't have the money to do that." So, you have to either raise taxes or do without. And the library thing is incredibly clear. For exactly the same amount of money that they are going to take out of the general fund to expand the convention center, they could have done the library projects that the public voted down.
If the public thinks about it, and what the media ought to be saying is, "We have traded a convention center for the libraries." It's almost, if you work it out, it's almost dollar for dollar. Why wasn't that put on the ballot? Well, obviously because if the choice is between convention centers and libraries, the people are going to choose libraries, because they know that is in the public's best interest. And that's the way it works out. In effect, you can't get something for nothing: the City can't print money, nor can the state or county, and so somewhere down the line, something's going to have to be given up. And in this case we have a very nice present-day example. We're giving up modernizing our library system in order to have a convention center expansion. That's what it amounts to, dollar for dollar.
Q: What about the argument that somehow this is going to be a huge economic generator?
A: First of all, if you sprinkle, once a year for the next 20 years, $1.5 million in $100 bills off the top of the city center every April 1, you'd stimulate the economy just as much as a convention center would. The only difference being that there would be no insurance that the people that collected the $100 bills would contribute it to political campaigns of the city council. That's the only difference. But the other fact is, assuming for the moment that this is a gigantic economic benefit to the city, it seems to me that one of the things we ought to be thinking about - and I don't want to get into the political end of this - but one of the things we ought to think about then is cash financing. If we raise the sales tax for six to eight months for a half a cent, we could pay it off in cash. And that would cost us $200 million. The way it's being done now, it's going to cost us $600 million of funds. So the price you pay to avoid a public vote is about $400 million. If it is really a good deal, then it seems to me the city council could say, "Okay, we're going to raise your sales tax for a half-cent for eight months, and we're going to build this convention center, but for that you're going to get this giant economic benefit." And that's the way it should be done. Cash financing is so much cheaper.
But I think the problem is they don't think they can make the case, because the figures are pretty speculative and bogus. The people that are doing these figures are exactly the same people that told the city of Los Angeles that their new convention center was going to raise this kind of money, and of course it has not done that and is costing the county of Los Angeles $21.5 million per year. It's going into a black hole to pay off those bonds. You know there is some bias there. My point is, if it's an entirely good deal, then we ought to be thinking about how we do the financing and isn't there a cheaper way to do it. And there certainly is. There is a way that is a third the cost with relatively little injury.
Q: The municipal bond people say, "Well, the people of California are tying our hands with all these anti-tax measures. First there's Prop. 13, then you've got Proposition 218, you've got all of these things coming in, and now there's this lawsuit. And geez, it's going to be really hard to run our cities now." Do you have a thought about that?
A: Look, the municipal bond people are in it obviously to make money, selling municipal bonds. The bottom line is that the idea is we cash finance and that we balance our budgets. It's what's really required. And it's a matter of priorities. It's not going to hurt the cities. The fact of the matter is whether the convention center is built, whether Jack Murphy Stadium is expanded is not going to make one bit of difference as to the quality of life for the people of the city of San Diego. What makes a difference are projects that are traditional governmental projects. The only thing that this has done is not allow politicians to spend money they don't have. And I think most Californians like that; they're acceptable to that idea. And that's what the balanced budget movement is all about. Fortunately since the cities, counties, and state can't print money, we have to balance our budgets. And all this borrowing and municipal bond business is a way to allow politicians to spend money they don't have. If they can't spend money they don't have, things aren't going to change. Things are not going to change as far as quality of life. It's just going to be harder to pay off their political patrons, that's all.
Q: But they say our infrastructures are all breaking down - water lines bursting, roads deteriorating.
A: Yeah, but the reason there's infrastructure issues is because the money isn't being spent on the infrastructures. It's just that simple. I mean, if you took the money that was being spent to expand the stadium, that was being spent to do the convention center expansion, and a number of other public projects and used that money for streets, roads, highways, you wouldn't have this problem. It's a priorities problem, not an amount problem. There's plenty of money, if it's spent on the right things.