A court of appeals on Friday dealt a serious blow to the San Diego Convention Center expansion with a ruling that said a scheme to finance the project through a hotel-room tax violates the state constitution and the City Charter.
The Fourth District Court of Appeals overturned a 2013 ruling by Superior Court Judge Ronald Prager that approved a hotel room tax to be used to finance the $520-million expansion. That tax was voted on by hoteliers, not by voters.
A state law says increasing taxes requires approval by two thirds of voters.
San Diego city officials tried to get around that requirement by forming a district of hotel owners who voted instead, saying the vote was only required by the people who own the land on which the hotels sit.
Mel Shapiro, represented by attorney Craig Sherman, and Cory Briggs, who represents San Diegans for Open Government, sued the city over the plan. On Friday, the state court of appeals sided with them.
"This is a huge victory for the taxpayers and the voters, and it's been a long and difficult fight, so we're just soaking it in," Briggs said after the decision.
The city could appeal the decision to the California Supreme Court.
A spokesman for the San Diego City Attorney's office said that decision "is up to the city council and mayor."
"As we stated in the 2012 briefing...the most reliable way to impose this tax is to place it on the general ballot," wrote spokesman Michael Giorgino in an email. "Two and a half years later, it still is."
Mayor Kevin Faulconer stressed in a statement the importance of the Convention Center expansion to the regional economy.
"It would create thousands of good jobs and ensure that we continue to attract large conventions like Comic-Con," his statement said. "We will be working with the City Attorney’s Office to review all options in moving forward.”
In a statement, former mayor Jerry Sanders, now the CEO of the San Diego Regional Chamber of Commerce, called the decision "a great loss for our city."
"It is unfortunate that this project will now be delayed even further, increasing the strain on our city’s ability to attract convention business that bolsters the economy and creates thousands of jobs for San Diegans," the statement said. "The Chamber is hopeful that the city can work to put together a new plan that will meet the necessary legal requirements and allow the expansion project to move forward."
Briggs said while the city could appeal to the higher court, "the Supreme Court doesn't have to take the case, and when you read the opinion and see how strongly and soundly worded it is, i think it's unlikely the city will have any luck there, but I don't put it past the city not to try."
The California Coastal Commission approved the expansion plans in October 2013.
The decision came just a week after San Diego Comic-Con, which about 130,000 people attended. Organizers of the annual celebration have been courted by other cities. The plans for the expansion would give San Diego's Convention Center the largest amount of contiguous space on the West Coast.
Appellate Justices Cynthia Aaron, Judith McConnell and Terry O'Rourke said they understood the city's desire to make the convention center bigger,
but were duty bound to uphold the constitution and City Charter.
They returned the case to Superior Court Judge Ronald Prager, who issued an initial ruling upholding the funding plan.
