TMD-City Deal Goes South; Legal Liabilities in Dispute

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    NEWSLETTERS

    A last-minute snag has held up the signing of last month's 'handshake' deal on tourism marketing between the city of San Diego and its hotel industry.

    As a result, millions of dollars in frozen promotional funds will not be released at least until next week.

    Mayor Bob Filner thought the hotels' Tourism Marketing District had agreed to protect the city from all legal risks if the courts decide that the TMD's room 'surcharges' actually are unlawful taxes.

    But their paperwork didn't match his understanding. So Tuesday afternoon, he urged the Council to reject it.

    "Theirs weakens the protections, says the city attorney; mine strengthens them,” Filner told the Council. “It provides for every single nickel. What those paragraphs say is that we shall be indemnified by 20 of the largest 25 hotels."

    "Why they don't want to sign this agreement is because there is a large risk-- and they don't want to assume it," the mayor said.

    For months, Filner has been withholding money the TMD needs to launch a campaign promoting San Diego as a tourist destination, including airtime for a TV spot targeted for broadcast in other cities throughout the West.

    He objects to the hotels adding two percent surcharges on guest bills, which are being challenged in lawsuits as violation of state law mandating a public vote on new taxes.

    The charges were approved in a private, hotel-industry election.

    Attorney Cory Briggs, who represents San Diegans for Open Government as plaintiffs, addressed this plea to the Council: "Make sure the General Fund is fully protected against that contingency. There is no risk to any of you politically by fully protecting every penny in the General Fund."

    Filner wants the hotels 'on the hook' for any damages awarded to guests if the levies are struck down.

    The TMD's lawyer says details of its indemnification agreement are still in the works.

    Councilwoman Sherri Lightner vented these frustrations: "Here we are again. It's getting to be a little bit like 'Groundhog Day' or an episode of 'Three's Company' where everyone mishears and misremembers things. So my comment is 'Enough!'"

    The Council wound up setting a Thursday “close-of-business” deadline for all details of the proposed agreements to be straightened out and filed with the city.

    A hearing is scheduled for Monday to take an up-or-down vote on whatever is presented.

    In a statement released to the news media in the aftermath of Tuesday’s hearing, TMD Chairman Terry Brown said that while the district is “disappointed” that a final agreement has been delayed, “we understand that getting the details right is necessary and we will make our best efforts to achieve a mutually acceptable resolution.”
     

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