Originally published April 24, 2012 at 1:10 p.m., updated April 24, 2012 at 2:12 p.m.
A legally questionable plan to fund the expansion of the San Diego Convention Center with a self-imposed room tax hike was overwhelmingly approved by hoteliers, the city clerk's office announced today.
The increase was backed by 92.03 percent of hotel owners, City Clerk Elizabeth Maland said.
The money is expected to pay for the bulk of the project, estimated to cost more than $500 million. City officials want the businesses that will benefit the most by expansion to pay for its cost.
The next step will be to take the funding plan to court.
City Attorney Jan Goldsmith said he believes the legality of the method for initiating the room tax hike is uncertain, so he intends to ask a judge whether the plan meets legal muster by filing a validation lawsuit. Under California law, tax increases require a public vote, but the jump in the hotel room tax was only weighed by the affected property owners.
The city of San Jose used a method that was similar, but not exactly the same, for its convention center, according to Goldsmith. He also said the San Jose plan was unopposed, unlike the San Diego funding mechanism, which is disliked by area labor unions.
If the plan is implemented, room taxes in downtown hotels closest to the convention center would increase by 3 percent. Those a little farther out, like Mission Valley and Mission Bay, would go up by 2 percent. At more outlying facilities, the tax would climb by 1 percent.
City officials want a bigger convention center because San Diego is losing the largest meetings to other cities. The city nearly lost the biggest local event, Comic-Con International, which was wooed a couple of years ago by rival towns with larger buildings.
The tax increase would generate $35.7 million annually to pay off construction bonds. The city of San Diego is set to contribute $3.5 million annually of its room tax income and the Port of San Diego is set to contribute $3 million per year.