Convention Center Tax Election

Big Hotel Firms Hold Huge Sway

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    NEWSLETTERS

    GL Brannock
    San Diego's major hotel owners are in the midst of voting on a self-taxing scheme to help underwrite the expansion of the Convention Center.

    San Diego's major hotel owners are in the midst of voting on a self-taxing scheme to help underwrite the expansion of the Convention Center.

    Until now, it's been a secret process.

    Convention Center Tax Election: Big Hotel Firms Hold Huge Sway

    [DGO] Convention Center Tax Election: Big Hotel Firms Hold Huge Sway
    Andrew Donohue from Voice of San Diego talks to NBC 7 reporter Gene Cubbison about obtained city documents that show how much control a handful of hotel corporations have in the industry-backed election of San Diego's Convention Center (Published Friday, Apr 13, 2012)

    But the curtains have just been pulled back a bit.

    Under a Public Records Act request filed by NBC-7's online media partner, Voice of San Diego, the city attorney’s office has produced documents that shed some light on the clout held by a handful of big, out-of-town hotel companies.

    The self-assessed, room-tax surcharges of up to 3-percent they're voting on apparently won't be a drag on their business.

    "What the Port (District) has said, basically, is that there's really little to no risk for the 'big dogs' to do this," says Voice of San Diego editor Andrew Donohue. "And if it does go through, they're going to gain an absolute windfall."

    And, according to the Port District, three bayside hotels closest to the Convention Center stand to generate $273 million in extra revenue within six years after the facility is expanded.

    "This is a powerful lobby," Donohue says. "It's interesting, if you look at it, the voters have already rejected this tax increase twice. So they found a way to get this on their own ballot, their own private ballot."

    More than 200 hotels are involved in a revenue-based, weighted-vote election in which a two-thirds majority is needed to pass.

    A Voice of San Diego analysis indicates that three major ownership companies comprise about one-third of the weighted votes.

    It's an approach pioneered by backers of a convention center expansion in San Jose, and not contested in court -- so far.

    If this one in San Diego passes, challenges are waiting in the wings.

    "This should be a public vote," says Evan McLaughlin, spokesman for the San Diego-Imperial Counties Labor Council. "These are going to be taxes on anyone who comes and stays in San Diego. This is not the hotels' money. If it was the hotels' money they would just go and pay for it themselves. Obviously, they don't want to assume the risk."

    Because there's no established 'case law' on the issue, San Diego City Attorney Jan Goldsmith says he'll bring a so-called 'validation' action to court to test its legality if it passes here.

    "If San Diego is successful in testing the law and saying, 'Yeah, you can do this,' it would be a tool that would be available all over the state," Goldsmith said in an interview Friday. "If it's stopped in San Diego, it will not be a tool.”

    If the ruling is appealed, Goldsmith predicts: “I will guarantee you there will be 'friends of the court' briefs all over this state. Because, having lost redevelopment, having lost money to the state, requiring a two-thirds vote to increase taxes generally, cities and counties are looking for ways to raise funds for specific projects -- like a convention center expansion."

    The “affirmative” side of test case would be argued by outside counsel, a San Francisco attorney who handled the San Jose hotel industry's process.

    The voting deadline in the San Diego industry's election is April 23rd.

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