Kevin Faulconer and Katherine Stuart Faulconer (foreground)
Whether the city should impose a so-called “linkage fee” on new commercial development to subsidize low-income housing has been at the top of the list of controversies dominating the race for mayor between Kevin Faulconer and David Alvarez.
The split has generally been along party lines, with city-council Democrats, including Alvarez, backing the fee and Republicans, including Faulconer, opposing it as what he calls a "jobs tax."
The fate of that municipal levy is just one of many possible fees that could confront whoever prevails in next week's election, one of which could also impact the job of Faulconer’s wife.
So-called negotiated revenue fees, levied on corporate events that hold block parties on city streets, have been intertwined with the lucrative consulting business of Katherine Stuart Faulconer, who has long been the go-to person for setting up corporate block parties in downtown's Gaslamp Quarter.
Stuart runs Restaurant Events, Inc., which, according to her husband’s financial disclosure report, filed September 18 of last year, is worth between $100,000 and $1,000,000.
Faulconer's disclosure says the business has a gross income of over $100,000, though it is not clear from the report what period that covered.
Single sources of income greater than $10,000 to Stuart’s company have been the Cohn Restaurant Group, Dick's Last Resort, and Acqua 2, the disclosure says.
"Restaurant Events, Inc.," says the company's website, "was founded in 1996 to fill a very unique niche between the independent Restaurateurs of San Diego’s Gaslamp Quarter and the booming meetings industry."
A Restaurant Events specialty is helping coordinate large corporate block parties held in conjunction with conventions. A testimonial of Janice Krieger, identified as an event producer for the Biotechnology Industry Association, is listed among others on the company's website.
"Well, BIO '08 is over and wrapped up, and I want to thank you for your tremendous assistance in making our Gaslamp Street Party a resounding success! Without a doubt, you know how to make this happen!"
In order to close streets in the Gaslamp and elsewhere for block parties, applicants must obtain the approval of the city’s office of special events.
Led by director Carolyn Wormser, the office quietly negotiates the terms of downtown permits with event sponsors and a small group of local consultants, who earn a major part of their living by knowing the ins and outs of the city's obscure and undocumented "negotiated revenue" process.
Special-events office documents obtained by a request made under the state's public records act show that so-called negotiated fees for street closings since 2011 have ranged broadly, including those for "NAA Corporate Block Party" last June, $15,000; "Qualcomm Q on the Fifth," June 2012, $21,000; "Cisco Block Party," April 2012, $6000; "Solidworks World 2012 Special Event," February 2012, $15,000; and "Qualcomm Q Fest Street Scene in the Gaslamp," June 2011, $12,000.
Some corporate block parties haven't paid a negotiated fee at all, the documents show, including the "SLAS Corporate Block Party" in February 2012 and the "F5 Corporate Block Party," in November of last year.
An explanation for the wide range of revenue for the corporate events and details regarding how and when fee negotiations are conducted was not provided by the records furnished by the city.
Emails between Stuart and the city's events office show that the issue of who is charged what has been a matter of contention, with at least one five-figure fee waiver granted following multiple emails over two months sent to city officials by Stuart.
In December 22, 2009, according to the records, the city councilman's wife sent an email to city special-events staffer Cindy Benitez-Kodama requesting that the office waive the city's fee for a May 2009 corporate block party sponsored by the American Thoracic Society.
"For some reason the invoice for ATS was never settled. Can you please let Ms. Damon-Sanchez know that the invoice 13705036 has been waived for the $9,000 plus interest?"
A week later, on December 29, with the bill still outstanding, Stuart again emailed Benitez-Kodama and her associate Kathy Damon-Sanchez, asking, "Are we good here?"
Replied Sanchez, "Still shows due and payable in the Collection Department. Balance today is: $10,039.07."
Responded Stuart: “Please let me know what the process is for fixing this ASAP. Thanks.”
On January 5, 2010, Stuart again emailed Benitez-Kodama: "Can you please give me an update on this. I am obviously very concerned about have [sic] something in collections."
On January 6, Benitez-Kodama responded: "I did request that the invoice be voided." Replied Stuart: "Great — Thanks."
Wormser declined to respond to multiple phone messages left with her office regarding the city's fee-waiving policies.
Finally reached by phone at her residence, she said she would answer all questions the next business day but subsequently referred inquiries regarding the fees to Katie Keach, communications chief for the office of interim mayor Todd Gloria.
In an email, Keach said that the mayor's office and city council have given Wormser complete authority to negotiate the city's street closing and corporate block party fees with for-profit sponsors and their local representatives, including Stuart.
There is no schedule of negotiated fees, which leaves the ultimate decision on whether to levy fees and their amounts totally up to Wormser, Keach said.
"The Special Events Administrator is responsible for fee negotiations and communicates directly with the event organizer," according to Keach.
"The discretionary fee is negotiable. Although event organizers have historically paid similar negotiated amounts, there are not set amounts...no formal written document or policy providing guidance on the negotiations exist[s]."
According to a subsequent email, Keach indicated that Stuart obtained the $10,000 fee waiver for the 2009 American Thoracic Society’s Gaslamp Party because the 15,000 member physicians’ association, which grosses millions of dollars of revenue from its annual convention, according to published reports, is technically a nonprofit organization.
Keach said that as a result of a citywide fee review ordered by the administration of mayor Bob Filner, the city is not currently collecting any negotiated revenue for street closings and corporate block parties, potentially costing city taxpayers millions of dollars in lost income.
During the Filner administration, the decision was made to suspend the discretionary negotiation process for commercial events pending a citywide comprehensive review of all rate and fee structures.
Therefore, the last discretionary fee was negotiated in early 2013 and invoiced in June 2013, just prior to the event date. No other discretionary negotiations have occurred since that time.
Asked for documentation regarding how and when the negotiated fees were ended, Keach said in an email that the suspension had been "done verbally."
The question of whether and how to assess future corporate block party and related fees will be taken up by the new mayor and city council later this year, according to Keach.
"The city plans to conduct a comprehensive review of all rates and fees for review and approval by the City Council within the next year," wrote Keach.
"As part of this effort, the Special Events Department intends to evaluate and propose a fee and rate structure that addresses events hosted by commercial and non-profit entities."
Reached by phone, Stuart said her firm handles food, restaurant, and beverage coordination for the corporate event sponsors but has not negotiated with the city regarding street closings and fees. That task, she said, is done by other event contractors she works with.
Stuart added that she did not recall the email exchanges with the city's special-events department regarding the 2009 American Thoracic Society convention. While aware that the city is no longer collecting negotiated revenues, Stuart said, she is not tracking possible future plans by the city to resume the practice and does not know their current status.