Proposition L - Use of Hotel Surcharge to Preserve Single-Screen Movie Theaters

Voter Guide
November 1, 2004
This measure appeared on the November 2004 San Francisco ballot.

 

What it does

This proposed ordinance, placed on the ballot by petition, would set aside a portion of hotel tax surcharge revenues to be used to purchase neighborhood single-screen movie theaters and promote the local film industry. The City administrator would contract with a private non-profit agency, Save Our Theaters, which would receive and spend the funds.

Why it is on the ballot

San Francisco imposes a tax on occupancy of hotel rooms, commonly known as the hotel tax. There is an eight percent tax, and an additional six percent surcharge, on the cost of hotel rooms. The eight percent hotel tax is by law allocated to specific uses, including support of convention centers, tourism programs, arts programs, and cultural facilities. The six percent surcharge goes to the City's General Fund, to be used for government programs as determined by the Board of Supervisors and the Mayor through the budget process.

San Francisco has a number of single-screen, neighborhood movie theaters that have played an important role in neighborhood commercial districts for many years. Many have closed or are struggling in part because of competition from larger multiplex theaters and competing demands on their space or the land they occupy. At the same time, the changing economics of movie theaters mean that independent filmmakers often lack spaces to show their films, and prospective audiences lack the opportunity to see the vast number of independently produced films which fail to find distribution and exhibition through the usual means.

Pros

Those who support Proposition L state:

  • Single-screen neighborhood theaters and independent films have important cultural and neighborhood benefits, but the structure of the film industry prevents these theaters from thriving without public aid. This measure would provide a means of maintaining neighborhood movie theaters in San Francisco .
  • It would be done without any new taxes, using the portion of the hotel tax that is not currently used to support the arts.
  • The measure would attract filmmakers to the city, create jobs, attract tourism, and encourage the development of an independent filmmaking industry in the city, which eventually could yield additional tax revenues.

Cons

Those who oppose Proposition L state:

  • This proposal is fiscally irresponsible. It hands over $8 million per year in public money to "Save Our Theaters," a new and virtually unknown organization that has no credible plans as to how the money would be used.
  • This measure would set aside revenue now going to the City's General Fund. Therefore, the project would take away funds currently being used for parks, public health, or other more pressing community needs.
  • There is insufficient evidence that a public subsidy would be effective in developing an independent film industry in San Francisco . To know whether this is possible requires a comprehensive economic study, which should clearly be done before we invest public funds.
  • Any plan to acquire theaters, though public or private means, should be accompanied by a realistic plan to attract an audience capable of sustaining them. Save Our Theaters has no experience operating theaters and does not have a detailed plan demonstrating how single-screen theaters sustain themselves.
  • This measure is not realistic. It assumes that small theaters can be purchased, but there is no assurance that the current owners would be interested in selling. It is not clear that there would be sufficient funds to buy the theaters if they were available, as hotel tax funds would need to be supplemented by large private loans.
  • By law, an ordinance cannot designate a City contractor, nor can it require a two-thirds threshold to overturn. This measure attempts to do both. The City Charter, our local constitution, states that an ordinance is adopted or amended by a simple majority vote. Thus, this provision is contrary to the Charter and therefore illegal.

SPUR's analysis

This measure would allocate 15 percent of the 6 percent surcharge on hotel occupancy, which currently goes to the City's General Fund, to a specific nonprofit organization (Save Our Theaters) to provide the means of purchasing and operating single-screen theaters and promoting the film industry in San Francisco . Based on the fiscal year 2003-04 budget, this would amount to between $8-$9 million per year. The ordinance directs the City administrator to use the money to enter into a contract with Save Our Theaters, a nonprofit organization with little history or track record, but which would presumably be run by the proponents of this measure. If it was determined that the City administrator could not contract with Save Our Theaters, the money would be used to contract with another organization.

In either case, the funds would go to a nonprofit that would acquire and renovate as many theaters as possible; give preference in programming to filmmakers who live or work in San Francisco; hire local talent and local businesses for their enterprise and film in or around San Francisco; share receipts with filmmakers; provide access for film festivals and competitions; provide access to community groups, seniors and students; have a board of directors made up of individuals who have lived in San Francisco at least 5 years; and submit a plan to the City administrator for how funds will be used. The ordinance could only be modified or repealed with a subsequent two-thirds vote of the people.

Although no such provision is contained in the measure, its proponents claim that the tax revenues would be used to leverage other financing for theater acquisition and related activities.

While maintaining neighborhood theaters and supporting independent filmmaking are worthy goals, this proposal is not the way to achieve them.

There is a large amount of money at stake in this measure, particularly at a time when the City is struggling to find ways to fund basic public services through cost cuts and tax increases. But the real problem is that this measure does almost nothing to make sure that this large amount of money would be used appropriately. While SPUR will assume that this measure was born of the best of intentions, it is simply irresponsible and unethical to give public dollars away without strong safeguards and assurances that the money will be used in a beneficial way. In addition, the measure raises very serious ethical questions, as its proponents are using the initiative process to redirect public funds into their own organization.

There are serious and legitimate attempts to preserve single screen theaters and promote the film industry in San Francisco that deserve our support. Film continues to grow as an important artistic and cultural medium in our society, and many of these theaters are important parts of the city's neighborhoods. But to be successful, this effort needs to be approached in a way that lends credibility and public confidence to its goals over the long term. Proposition L is not the answer.

SPUR recommends a "No" vote on Proposition L.