Tue. Sep 27th, 2022

Elected officials in San Diego have feuded for years now over regional planners’ proposal to charge drivers for however much they drive to fund the county’s transportation system.

The state, not local electeds, will ultimately decide whether county drivers somehow pay for how much they drive – and the official in charge of all transportation says it’s coming, like it or not.

“It’s important to start with the fact that, it’s inevitable that we’re going to have to make this transition,” said Toks Omishakin, the state’s secretary of transportation, during a trip to San Diego to see the groundbreaking for the new Port of Entry in Otay Mesa. “Some people are basically stuck in the idea that we’re going to be able to maintain the rate we’re going at, but we’re not. We are going to have to transition at some point to a new way of collecting revenue to maintain our transportation system.”

The issue facing both San Diego and California is the gradual – and slow – decline in gas tax revenue the state expects to collect, as more drivers shift from cars with internal combustion engines to electric vehicles.

The San Diego Association of Governments last year passed a new, long-term transportation plan that assumed the region and state would both roll out a “road usage charge” – an undefined system of tracking how much drivers drive, and charging them for it – by 2030. Planners relied on it to both tamp down on congestion, helping it meet state climate mandates, and to fund all the new transportation projects they wanted to build.

It quickly became a political controversy, with Republican, North County and rural electeds railing against SANDAG Director Hasan Ikhrata for proposing it. Mayor Todd Gloria led Democratic allies to pass the plan, along with a motion pledging to remove the assumption as soon as possible, but nine months later the agency has made little to no progress pulling the assumption of a driving fee out of the plan. County Supervisor Jim Desmond appeared to be on strong footing earlier this month when he told KUSI that SANDAG had no real plan to remove the fee, after agency staff came back to the board to ask whether they really wanted to remove the fee, six months after the board directed staff to come back in six months with a plan to remove the fee.

All the while, though, SANDAG was really along for the ride, and the fight mostly came down to symbolism. It’s the state that has the power to impose a driving fee, and it would need to make a legal change to allow it, while also choosing a technological solution and associated logistics to implement it. After all that’s done, SANDAG could then try to piggyback on the state measure with its own, local version.

And Omishakin said that’s definitely going to happen.

He wouldn’t commit to the 2030 timeline that SANDAG assumed in its plan – a timeline that allowed the math to work for both the plan’s GHG reductions and finances.

“I’m not going to say on that,” he said laughing, aware of the practical and political implications. “I appreciate that they’ve embraced innovation. Eight years out, to make a transition like that, sounds aspirational, but when you think about where we’re headed today, where electric vehicles are 13 percent of every vehicle sold in California. In another eight years, you’re talking about into the 40 percent area. So if half of the vehicles being sold in the state are no longer using gas, you need to be thinking about how you’re going to be paying for our transportation needs. We’re essentially 12 to 13 years away from every vehicle being sold in the state (being electric). Now, the fleet is still going to have combustion engine vehicles using gas, but by that point, you’re going to see a significant shift. So, again, it’s inevitable, and you’re going to see it on the trucking side as well.”

Asha Agrawal, director of the Mineta National Transportation Finance Center, who has been working on state discussions to implement some sort of driving fee for years, told me last year that while it’s inevitable that something will need to replace the gas tax, it’s actually a fairly long way off. One study she co-authored estimated the state would still bring in some $8.6 billion through gas taxes by 2040.

Opposition to SANDAG’s proposal has largely been pitched in cultural terms: urban progressives are trying to punish our suburban lifestyle so they can socially engineer a shift to dense, transit-supported urban living.

But gas tax replacements have also faced scrutiny from civil liberties advocates, concerned with how the monitoring mechanism could impact privacy.

Omishakin does not share those concerns.

“There have been some concerns about things like Big Brother, watching over people,” he said. “The fact is, when you look at the trucking industry today, these systems largely exist and how their business model operates. Everywhere they go, the stops they make, all those things are tracked. Our cell phones, no matter how much we say we don’t want someone to be able to watch us, a lot of the data we use to model how transportation moves in a region, we’re using cell phone data. When you use a map on your phone and you see a red line indicating traffic, that’s cell phones creating that data. A lot of this information collection, it’s largely there already.”

Pilot programs in Utah and Oregon now rely on systems in which a private third-party – rather than the state – collects travel data on the state’s behalf, then imposes privacy restrictions on the information.

Appraisal Concerns Linger Over Hotel Purchased Under Alleged Conflict of Interest

The San Diego Housing Commission recommended Friday that the City Council approve a proposed settlement with Jim Neil, the real estate broker who the city sued, alleging that he helped the city purchase a Mission Valley hotel after investing in the parent company of the hotel’s owner.

But the recommendation came with reservations from two of the commissioners.

Namely, there are still concerns about how much the city paid for the property, and the appraisal process that led to that price being paid.

The Housing Commission purchased the property in 2020, to house formerly homeless residents who were then living in the San Diego Convention Center because of the pandemic. State and local officials recognized a need and an opportunity, believing they could cheaply acquire hotels that were floundering due to pandemic-related travel restrictions, and turn them into housing. With the help of state funds, San Diego bought a Mission Valley hotel for $67 million, and another similar property in Kearny Mesa.

The Housing Commission and the city later learned that Neil, working for Kidder Matthews, had bought 40,0000 shares in the parent company of the Mission Valley hotel’s owner after presenting the property to the city, but before negotiating the purchase, as Voice of San Diego revealed last year.

Last August, City Attorney Mara Elliott brought a lawsuit alleging 13 causes of action against Neil and Kidder Matthews, including fraud and a violation of a state law prohibiting officials from benefiting from contracts they help create.

Her office has now negotiated a settlement of that lawsuit. The Housing Commission’s board recommended approving it, and now the City Council – acting as the Housing Authority – will be asked to do the same.

Among the city’s allegations against Neil was that he and his company had their commissions on each transaction capped at $250,000 – even though the deals eventually netted them over $500,000 each. The settlement is structured to recoup the commission paid in excess of that cap, and to collect the money the city spent on the lawsuit.

“The settlement recovers the overpaid commissions and attorneys fees, and sends a strong message that public corruption will not be tolerated, and will be met with costly and embarrassing consequences,” said Meghan Ashley Wharton, the chief deputy city attorney.

The Housing Commission’s board then voted four to one, with one commissioner abstaining, to approve the settlement, but not until two commissioners expressed reservations with what the settlement didn’t address.

“I’m going to be very limited in what I say here, because I don’t want to stray in public discussion in an issue of litigation,” said Commissioner Ryan Clumpner. “The settlement has a very limited scope, and I have concerns about aspects outside the scope of this settlement that I think require further public explanation before this issue is resolved. And so, for that reason, I will not be voting to recommend approval of the settlement. I want to make it clear on the front end that that’s not because I see something wrong with what is in the settlement, but because I think the settlement is in a larger context that needs to be addressed.”

Board Chair Mitch Mitchell, who voted for the approval, was more circumspect.

“I will make the comment that I share some of the concerns of Mr. Clumpner,” he said. “I will express my aye vote, but I think my fellow commissioners understand the next steps for us on this matter.”

Reached after the meeting, Mitchell elaborated on his comments, saying his apprehensions related to the appraisal that the agency commissioned for the Mission Valley hotel to support the purchase.

The Commission purchased both hotels simultaneously – but the appraisals conducted for the two properties, by the same company, treated the two hotels very differently. The appraiser assessed the value of the Kearny Mesa hotel, in which Neil made no investment, as of the summer of 2020 when the purchase was underway, and after the pandemic had already cratered hotel values. But the appraisal relied on a backdated estimate of the Mission Valley hotel’s value, determining instead how much it was worth in early 2020, before the pandemic.

“I would say this: We want to make sure that we are never in a situation where there is a doubt about the process over a transaction, especially as it relates to the value of a property, and the appraisal that valued a property before a transaction is closed,” Mitchell said in an interview, about what he meant during the meeting.

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