South County Report: Is Immigration Policy Dampening City Budgets?

Budget watchers in the city of Chula Vista received an unwelcome surprise this week. A quarterly city financial report projected lower than anticipated property and hotel tax revenue for the current fiscal year. 

That’s despite the recent gala opening of the 1,600-room waterfront Gaylord Pacific Resort and Convention Center – as well as the reputation of Chula Vista’s pricier east side neighborhoods as an aspirational destination for regional homebuyers. 

Why the decline, I wondered? I asked Sarah Schoen, Chula Vista’s director of finance (who on Tuesday was appointed deputy city manager by the City Council). 

Two reasons, she said. First, hotels on the city’s west side are booking fewer guests, especially from across the U.S.-Mexico border. And home prices are falling as high interest rates dampen the real estate market. 

“It’s an uncertain economic time,” she said. 

Earlier this year, I reached out to the Gaylord hotel to find out how business was going nearly a year after the hotel opened in May 2025. After much back and forth, a hotel spokesperson told me Gaylord executives had decided not to comment. 

“The team…shared that they do not have the bandwidth to move forward here,” Erin Brown, the spokesperson, said. 

Schoen said she could not disclose tax revenue from individual businesses. City finance figures show hotel tax revenue from the city’s bayfront-area hotels accounted for $1.1 million of the total $3.4 million decline from what city budget analysts initially predicted they’d earn in hotel taxes. 

Tax revenue from the Gaylord hotel does not directly impact the city’s general fund budget because those taxes go directly to repay bonds issued by a joint powers authority established by the city and the Port of San of Diego to finance hotel construction, Schoen said. 

Regardless of the precise numbers, if hotels on Chula Vista’s west side are feeling the pinch from a decline in cross-border traffic, that suggests broader political and economic trends might be starting to impact local government budgets. 

Figures from the Deportation Data Project show immigration-related arrests rose sharply in some parts of South County last year, especially Imperial Beach and San Ysidro. (Other cities, such as National City, showed a decline.) 

A database maintained by the San Diego Association of Governments also showed northbound vehicle traffic from Mexico also declined last year, though the number of pedestrians rose. 

School officials I spoke to recently in the Chula Vista Elementary School District described a climate of fear for some families, especially those with cross-border ties or uncertain immigration status. 

A reluctance to travel, venture out to shop or splurge on a pricey vacation (weekend rooms for two at the Gaylord currently start at $386 per night) might be combining with other economic headwinds to dampen business across the South County region. 

Both Schoen and Jim O’Callaghan, president and CEO of the South County Economic Development Council, described what they called a “wait and see economy.” 

In addition to the decline in cross-border traffic, O’Callaghan said businesses are grappling with rising gas prices, California’s sky-high labor costs and a growing wariness among consumers to spend, especially on big-ticket items. 

“Expendable income appears to be down,” O’Callaghan said. “There’s a sense of uncertainty about what is on the horizon.” 

Schoen said sales tax revenue in Chula was flat last year. Imperial Beach Mayor Mitch McKay said the same of his city. He also described what he called “a general wait and see feeling” among businesses and consumers. 

Schoen said Chula Vista “has done a lot to put itself in a position to weather” a potential economic downturn. 

“We have reserves and we’ve been funding our reserves,” she said. 

Other cities, such as National City, are not so well positioned. Local school districts also are struggling. 

If federal and state policies continue to make life hard for businesses, South County residents could see more financial reports like Chula Vista’s recent budget update. 

For local governments, that could mean a rough few years ahead. 

Wanted in I.B.: That Perfect Selfie Spot 

Over the past year, local leaders in Imperial Beach have been on a campaign to boost their city’s image. 

While city officials have not let up in their efforts to bring state and federal attention to the ongoing sewage crisis in the Tijuana River, they have looked for ways to remind residents and visitors that the city’s motto – “Classic Southern California” – remains true even when beaches are closed. 

The latest proposal: An “Iconic Art[work] or Landmark for Imperial Beach,” as a City Council agenda item this week termed it. 

Recently appointed Councilmember Mariko Nakawatase raised the idea at a Council meeting in late January. After researching possibilities, city staff presented some initial ideas to councilmembers on Wednesday. 

Speaking at Wednesday’s Council meeting, Nakawatase said she proposed the idea because she was “excited [to get] something special in the community.” 

She singled out one concept in particular: A replica of a Woody car that viewers can sit in for photographs. 

“That’s so classic I.B.,” she said.  

In an interview before the Council meeting, Mayor Mitch McKay cited an analogous example: A collection of angel wings murals in Los Angeles that have become international magnets for selfie-seekers. 

Imperial Beach already has a rich trove of public art, much of it shepherded by the Imperial Beach Arts Bureau, which maintains an interactive map of murals and other artworks around the city. 

“There’s so much Imperial Beach has to offer,” Mayor Pro-Tem Jack Fisher said on Wednesday. “It’s hard because it’s outweighed a bit by what we deal with on a consistent basis [from the sewage crisis]. But this does add back to the charm of Imperial Beach and helps us push forward.” 

Councilmembers on Wednesday directed City Manager Tyler Foltz to continue researching and refining possible concepts, locations and funding options for the art project.  

In Other News 

• The Chula Vista City Council on Tuesday made a series of appointments in closed session rounding out the city’s top leadership team. The Council appointed two new deputy city managers: Current Finance Director Sarah Schoen and current Director of Development Services Roy Sapa’u, who will keep his current role while also serving as deputy city manager. The Council also appointed Assistant Director of Public Works Angelica Aguilar to director and promoted Assistant Director of Finance Adrian Del Rio to take Schoen’s place as director. 
• In other Chula Vista news, planning is underway for the city’s Earth Day celebration April 18 at Bayfront Park. The event will feature live music, a fix-it clinic for electronic devices, a tie-dye workshop, children’s activities and more than 40 vendors of environmentally friendly products. 
• Officials from National City and the Port of San Diego on Thursday celebrated the opening of the first phase of improvements at Pepper Park, a key source of waterfront recreation in the city. The $8 million port-funded rehab includes a splash pad, a pirate themed playground, picnic areas and improved lighting. 
• South County leaders moved swiftly to respond to a recent New York Times story documenting what the paper said was a yearslong pattern of sexual abuse of women and minors by the labor leader and cultural icon Cesar Chavez. Officials at Southwestern College pried Chavez’s name off a student services building Thursday and state Assemblymember David Alvarez issued a statement condemning Chavez’s conduct and voicing his support for victims of abuse. 
• San Diego County Supervisor Paloma Aguirre on Friday plans to host California gubernatorial candidate and former State Controller Betty Yee for a tour of sewage problems in the Tijuana River. Earlier this month, Aguirre hosted gubernatorial candidate and current San Jose Mayor Matt Mahan on a similar tour in an effort to raise statewide awareness of the issue. 
• Imperial Beach Mayor Mitch McKay, along with the city’s other four City Council members, will deliver a joint State of the City presentation next week at 6 p.m. Thursday, March 26, at South Bay Union School District headquarters, 601 Elm Ave. 

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