Mayor, TMD Reach Accord On Frozen Marketing Funds

After weeks of bitter legal and political feuding over San Diego's Tourism Marketing District, an agreement in principle to settle the dispute was unveiled Thursday at City Hall.

"I have said from the beginning, of course, that I believe the (law)suits that claim the TMD is illegal will succeed,” Filner told council members during a special meeting. “But that's in court, that's neither here nor there today -- although I noticed the attorney for the TMD could not avoid calling it a tax."

The underlying issue is whether the Tourism Marketing District, a creation of the city's hotel industry, has the legal power to impose the 2 percent room surcharge that the city has been collecting at the rate of $30 million a year.

A promotional campaign that includes a snappy, music-themed TV commercial showcasing San Diego’s beach attractions has been delayed for lack of the money that's accumulated so far this year, because Mayor Filner has withheld the funds on grounds that the proceeds are unlawful taxes.

He also has objected to the private election in which a dozen leading hotels overpowered hundreds of smaller properties with a “'weighted vote” to establish the district and approve the surcharges.

Last week a judge ruled that Filner need not sign the district's contract with the city, because some language was too vague.

On Tuesday, during a boisterous hearing at City Hall, the Council approved specific wording ordering his signature – prompting him to warn that he might launch a veto/override cycle and fight the issue out in court for up to a year.

"It looked, certainly to the public view, that we were at each other's throats,” Filner told reporters Thursday after the Council referred the agreement in principle to the city attorney’s office. “ If that was a sad day, this is a good day -- because it shows that although we differ in our approach, we did come together."

The understanding incorporates concessions that the mayor – with Councilman David Alvarez acting as an intermediary since Tuesday -- bargained from the hoteliers, although not to the extent he originally demanded.

The so-called "term sheets" of the proposed agreement will be vetted by City Attorney Jan Goldsmith, who said he wants to “clean up” references to TMD spending and donations to Balboa Park's centennial celebration, and legal protection for the city if the room surcharges are found invalid, and guests sue for refunds.

The final document may take a couple weeks to finish -- leaving the funds frozen during the dispute unavailable for spending, to promote San Diego as a “destination” for visitors and conventioneers.

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