San Diego, CA – San Diego’s plans to expand its waterfront convention center appeared to remain on course, thanks to a tentative court ruling that upheld the legality of a planned self-imposed room tax increase by the city’s hoteliers.
A San Diego County Superior Court judge held oral arguments on the issue on March 13, but insiders say Judge Ronald Prager is unlikely to change the conclusions of a written tentative ruling issued March 11. That ruling found the special assessment would not have to be approved by the voters in a city with a long history of opposing tax hikes on general principle.
The goal of the expansion project is to add 225,000 square feet of exhibit space to the current 615,701 square feet of prime exhibit space. The SDCC is presently the 22nd largest exhibition center in the U.S., according to Trade Show Executive’s World’s Top Convention Center rankings. The plan also calls for a new ballroom and 101,000 square feet of meeting space. The end result would be the largest contiguous exhibit hall on the West Coast.
Both sides in the argument have said they would appeal whatever formal decision was handed down by San Diego County Superior Court.
A favorable ruling by Prager means the hotel industry can begin increasing room taxes another 1% to 3%, depending on the hotel’s proximity to the downtown convention center. The added revenue will be used to help finance the $520 million project, which would be completed by the end of 2016.
“Only those whose property would be subject to the tax are eligible to vote,” wrote Prager. “Hotel property and transitory occupancy of hotel rooms are not residential properties or residential uses.”
A taxpayer advocacy group had challenged the hotel assessment on the grounds it constituted a tax and therefore had to go before the voters. But Prager agreed that the hotel assessment district that created and approved the tax was legal under the Mello Roos Act and no different than water districts and other special-assessment districts in California where only the landowners within the district are eligible to vote.
San Diegans for Open Government countered at the March 13 hearing the “special district” covered the entire city and was therefore bound by city law and California’s Proposition 13 to be approved by a two-thirds majority of the general electorate.
“The city is free to define landowners as they see fit,” Prager countered. “It hasn’t been done before but it doesn’t mean it’s (a violation of) city law.”
At stake is San Diego’s ability to retain expositions, such as Comic-Con, which has outgrown the facility, and attract events that need more space than the SDCC can presently offer.
Reach Joe Terzi, president & CEO of the San Diego Tourism Authority, at (619) 232-3101 or jterzi@sandiego.org
