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TMD Again Has Target On Its Back

Hoteliers and other advocates for the San Diego Tourism Marketing District were not happy in 2013 when Mayor Bob Filner began his brief and controversial tenure by choosing not to renew what was at that time a five-year-old program intended to support local visitor programs.

Those same supporters have likely experienced déjà vu in recent weeks, as the TMD has again gone into play as a political and legal football. This time there are implications for both a planned expansion of the city’s convention center and efforts to build a stadium that would keep the San

Cory Briggs

Diego Chargers in town.

The city-approved Tourism Marketing District, backed by hotel operators, was started in 2008 to support local visitor promotion, including the bulk of the tourism authority’s budget. It was partially restored following several weeks of negotiations between the Mayor’s Office — which sought better financial terms — and marketing district leaders. Nearly full distribution of TMD funding — collected from hotels via a 2 percent tax on room bills — was not restored until much later that year, after Filner had left office.

Donna Frye

The district has come under pressure again, this time on two fronts. One is a lawsuit led by attorney Cory Briggs, challenging the validity of its funding mechanism on the grounds that it was not approved by city taxpayers — similar to the argument that convinced a court in 2014 to sink the proposed funding mechanism for an expansion of San Diego Convention Center.

The other front could be fought at the ballot box. Provisions to eliminate the TMD, or significantly alter how its funds are earmarked, are included in two ballot measures put forward as alternatives to finance big-ticket projects — one by a Briggs-led coalition, and another by the Chargers.

Jan Goldsmith

At press time, there remained mostly uncertainty on all of those fronts. On April 12, Briggs announced that a settlement was imminent in the lawsuit filed against the city by his client, San Diegans for Open Government, over the TMD non-voter-approval issue. However, City Attorney Jan Goldsmith said the same day that he had no knowledge of any settlement.

A Briggs spokesman said specifics of a settlement would not be forthcoming until after a meeting that was slated to take place on April 15, involving the mayor and TMD leaders.

Separate from the lawsuit, but also involving the TMD, Briggs and former city council member Donna Frye are leading a citizens’ coalition seeking to raise the city’s current transient occupancy tax from 10.5 percent to 15.5 percent, while eliminating the 2 percent marketing district tax that goes specifically to tourism promotion. (The city’s 10.5 percent TOT goes to the general fund to support basic, nontourism services.)

The coalition is in the process of gathering the approximately 66,000 signatures needed to place its measure on the November ballot.

In a coalition statement, Briggs questioned what he called “the seriousness and veracity” of issues raised by Goldsmith related to six potential legal flaws in the coalition’s initiative plan, which Goldsmith said could place the city and taxpayers at risk. Goldsmith said flaws stem from a “poison pill” provision stating that the entire measure becomes invalid if any portion of it is found to be invalid by a court.

Fred Maas

“Many of the questions could be asked on most any initiative,” Briggs said of Goldsmith’s concerns. “Some, if valid, would be far more serious if directed to the Chargers draft.”

The reference was to a recently announced Chargers proposal to raise total hotel taxes from 12.5 percent to 16.5 percent, to finance a $1.8 billion downtown hybrid facility including a stadium and convention center space. That proposal, targeted for the November ballot, would also potentially eliminate the 2 percent TMD tax, at least in its current form.

Briggs said that what Goldsmith calls a “poison pill” in the coalition’s plan will actually protect residents from the possibility that special interests might “cherry pick” certain provisions at the expense of taxpayer-favored elements.

Meanwhile, leaders of the Tourism Marketing District issued their own statement April 12, saying district directors have taken no action related to a settlement of the TMD-related lawsuit.

“We have had and will continue to have productive conversations with (San Diegans for Open Government), but there has been no action taken by the board,” said TMD Board Chairman William L. Evans. “All our efforts are aimed at preserving the TMD and its demonstrated results in generating (transient occupancy taxes) for the city of San Diego’s general fund.”

For his part, longtime civic leader Fred Maas, who is now assisting the Chargers in the team’s bid to garner public support for stadium funding, said he is willing to meet in coming months with hoteliers, TMD officials, citizen groups and other stakeholders to discuss the financing issues.

Who’s Who

San Diego Tourism Marketing District — Nonprofit

mutual-benefit corporation formed in 2008 by the city and hoteliers to collect what is now a 2 percent tax on hotel room bills. Proceeds go to tourism promotion programs not covered by the city’s 10.5 percent transient occupancy tax, which goes to the general fund to support basic city services that are nontourism-related.

San Diego Tourism Authority — Nonprofit mutual-benefit corporation is the region’s primary tourism promotion agency and gets about 70 percent of its budget from the tourism marketing district. Also handles long-term booking of events at San Diego Convention Center under contract with the city. Publicly maintains support for a contiguous center expansion.

San Diego Convention Center Corp. — Nonprofit public benefit agency that operates the convention center on behalf of the city. Also handles short-term booking of events at the facility, and supports a contiguous center expansion.

San Diegans For Open Government — Local advocacy group whose leaders include former city council member Donna Frye and is represented by attorney Cory Briggs. Filed lawsuit challenging the validity of the tourism marketing district, on grounds that it was not approved by voters.

Citizens for the Responsible Management of Major Tourism and Entertainment Resources — Coalition backing the “Citizens’ Plan for San Diego,” targeted for the November ballot and seeking to raise the city’s transient occupancy tax from 10.5 percent to 15.5 percent, essentially eliminating the tourism marketing district in its current form. Leaders include Frye and Briggs.

San Diego Chargers — Team is preparing a November ballot measure that would raise total hotel taxes from 12.5 percent to 16.5 percent, to finance a $1.8 billion downtown hybrid facility including a stadium with convention space. It would also potentially eliminate the 2 percent TMD tax, at least in its current form.

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