San Diego Superior Court Judge Timothy Taylor has ruled that San Diego Mayor Bob Filner has the discretion to not sign a contract that would release $30 million in funds to the San Diego Tourism Marketing District, according to a statement from Filner's office. The SDTMD had filed the suit against Filner because he had refused to sign the five-year operating agreement.
The controversy revolves around a 2 percent assessment on hotels that is specifically used to promote tourism. The assessment was approved and put into place prior to Filner taking office on December 3, 2012. But in order for the funds collected by the assessment to be released, Filner must sign an operating agreement governing the transfer of funds to the SDTMD.
"Without significant changes to this flawed contract, the taxpayers would be on the hook if a future court rules that the hotel tax is illegal," said Filner.
Also affected by this case is the San Diego Tourism Authority, which receives 80 percent of its funding from the SDTMD. The tourism authority has issued 60-day layoff notices to 85 employees, but the organization will be able to retain its employees if the funding comes through, said SDTA President and CEO Joe Terzi in an exclusive interview with Association News.
"It is inconceivable that San Diego would not have any resources to promote itself," said Terzi. "We're dealing with a mayor who has a whole different approach to tourism and ... what we see as challenging beliefs about the tourism industry."
According to the SDTA, travel is San Diego's second largest industry, contributing $18.3 billion in total economic benefit in 2012.
"Many of our staff have dedicated their careers to our organization and the local tourism industry, and this affects everyone from our accounting and IT teams to our award-winning sales and marketing associates," Terzi said in a press release.
The only SDTA department unaffected by the potential layoffs is the citywide sales team, which books major conventions and trade shows at the San Diego Convention Center, according to the SDTA. "The responsibilities and roles of the citywide sales team remain intact and are not impacted by the SDTA's current funding challenges," said the SDTA statement.
Terzi also indicated that the expansion of the San Diego Convention Center would not be affected.
"The mayor is a supporter of the convention center expansion and has not challenged the funding of the convention center," said Terzi.
On March 11, a California Superior Court judge ruled that the $520 million collected from a hotel-use tax to fund the expansion of the convention center was collected legally. Terzi said the next step is a review of the planned expansion by the California Coastal Commission and, of course, any appeals that may come from the judge's ruling. Concerning the review by the commission, Terzi said, "A lot of us feel very confident that that will be a positive declaration, probably with some opinions, but I think it will be more positive and get us prepared to start building in the future." The review by the commission is expected in June.