A financing mechanism to raise money for expanding the San Diego Convention Center is on uncertain legal ground, the city attorney said today.
In a memo, Jan Goldsmith said he would file what's called a "validation lawsuit" regarding the plan, in which a Superior Court judge would rule on the proposal to have area hoteliers increase their room taxes.
State law prohibits tax increases unless they're approved by two-thirds of the electorate. In this case, the electorate is the owners of hotel properties, who are scheduled to hold a vote in April, Goldsmith said.
Limiting the vote only to the hoteliers "tests the boundaries of the law" and there are arguments both for and against the idea, even among lawyers in his office, Goldsmith said.
City officials want a bigger convention center because San Diego is losing the largest meetings to other cities. The city nearly lost the biggest local event, Comic-Con International, which was wooed a couple of years ago by rival towns with larger facilities.
If the financing plan is approved, a room tax surcharge of 3 percent would be levied on downtown hotel guests because they are the ones most likely to be involved in convention business. Those in Mission Valley and around Mission Bay would be charged 2 percent, and outlying hotel taxes would climb by 1 percent.
The city attorney said a similar but not identical method was used to fund expansion of the San Jose Convention Center, which a judge there validated. However, there was no legal opposition in that instance, and opponents are expected in San Diego, he said.
Goldsmith said city officials should proceed with their eyes open.
"We do not know if this is a reliable plan to finance the convention center expansion," Goldsmith said. "In addition, a validation action is litigation and it may not be quick, particularly if there are appeals, and it could be expensive."
He said it could be quicker and more legally reliable to submit a ballot proposition on financing to all San Diego voters.
Mayor Jerry Sanders supports the city attorney's plans, according to spokesman Darren Pudgil.
"Asking for a validation action has been part of the mayor's plan from the beginning," Pudgil said. "He looks forward to the court's decision."
