The Superior Court of California has issued a tentative ruling dismissing a lawsuit filed over a hotelier-approved assessment on hotel room bills, which funds operations of the San Diego Tourism Marketing District.
Judge Joel Wohlfeil said the court found that San Diegans for Open Government, represented by local attorney Cory Briggs, does not have standing since it does not include parties currently impacted by the assessment. The ruling said proceeding to trial, which had been scheduled to begin on Sept. 1 “would be a waste of the Court’s and the parties’ respective resources.”
Briggs recently filed papers with the court indicating his client will not argue against the tentative ruling, which will become the final order in the lawsuit originally filed in 2012. Briggs has argued in part that the assessment was improperly imposed on property owners who had not approved it, but that argument was negated recently when San Diego City Council moved to exempt properties with fewer than 70 rooms from a 2 percent assessment.
At the time the lawsuit was originally filed, the city assessment called for properties with fewer than 30 rooms to collect a 0.55 percent fee, with larger properties collecting 2 percent. The court’s recent ruling will allow the city to distribute approximately $20 million in hotel tax collections for tourism promotion, which had been withheld pending results of the lawsuit.
“This case has been a distraction to the (San Diego Tourism Marketing District) board and membership, and we look forward to spending our time and energy in more productive ways,” said William Evans, the marketing district’s chairman, in a statement responding to the court ruling.
The tourism marketing district fee still faces two challenges at the ballot box this November, with voters being asked to eliminate the 2 percent assessment as part of proposals to raise San Diego’s total hotel taxes.
A citizen group led by Briggs and former City Councilmember Donna Frye has a measure calling for a three percent hike in total taxes, to 15.5 percent, to finance potential future projects including a non-waterfront convention facility and improvements to the current Mission Valley site of Qualcomm Stadium.
A separate measure, proposed by the San Diego Chargers, calls for a four percent hike, to a total of 16.5 percent, to finance the city’s portion of the cost of a downtown stadium with convention facilities. Both ballot measures would allow hotels to set aside a portion of tax collections for tourism promotion, but not necessarily through the current marketing district mechanism.
The current 2 percent assessment, which goes specifically to tourism promotion, is separate from the city’s 10.5 percent transient occupancy tax, which goes toward the general fund for basic city services.