A San Diego Superior Court judge today gave his tentative blessing to a plan to fund the expansion of the downtown convention center.
San Diego last year voluntarily asked a judge to rule on whether the chosen funding method for the Convention Center expansion was valid. According to City Attorney Jan Goldsmith, the plan to charge owners of hotel properties a percentage of room rates on a sliding scale entered a gray area of the law.
A citizens group called San Diegans for Open Government and civic activist Mel Shapiro joined in the court action to challenge the plan.
Judge Ronald Prager ruled that the election of hoteliers to assess themselves "conformed with all applicable constitutional provisions, statutes and ordinances.'' His tentative ruling turned aside nearly all of the opponents' arguments.
However, the judge is scheduled to hear oral arguments on Wednesday. Afterward, he will issue a final ruling.
Under the plan, hotels would charge an additional 1 to 3 percent fee depending on how close they are to downtown. Those closer to the Convention Center would charge more. The money would go toward the $520 million Convention Center expansion.
When the construction work is complete in three or four years, the San Diego Convention Center will have the largest amount of contiguous floor space on the West Coast, according to the city.
Area tourism officials say organizers of the biggest trade shows have been bypassing San Diego because the local facility is not big enough. Comic- Con International, which originated here, had been courted by other cities but chose to remain when an expansion was promised.
The question is whether the fee amounts to an illegal tax because the public did not vote on the plan. Instead, city hotel owners approved it. Opponents of the financing plan contended that the assessment was a tax, which requires two-thirds approval in a public vote. The judge, however, agreed with the city's argument that since the tax applied to the hoteliers, they were the ones who should cast ballots.
City Council President Todd Gloria said in a statement he is grateful that the judge's ruling allows the Convention Center expansion to move forward.
"The expansion will greatly benefit our local economy, the city’s budget, and expand job opportunities in our region, with 4,000 construction jobs and 7,000 permanent new jobs anticipated," the statement said. "I was confident that the City Council moved forward appropriately with our approval of the expansion’s financing last year. The judge’s validation confirms that the hotel room surcharge agreed to by local hoteliers is a legal and viable way to improve our Convention Center and further strengthen San Diego’s economy.”
City Attorney Jan Goldsmith said he's pleased with the ruling, but won't comment further until a final ruling is issued.
A hearing on the tentative ruling will be held on Wednesday.
This fee is separate from the 2 percent surcharge hoteliers are assessing to market San Diego. If both plans are found to be legal, hotel taxes in downtown could run at about 15 percent.
