City Council Takes Step To Renew Hotel Tax
Tuesday, September 25, 2012
The San Diego City Council took a step today toward renewing its Tourism Marketing District, which charges area hotels in exchange for marketing special events that attract out-of-town visitors.
If ultimately approved at the end of November, the TMD would be extended until 2053. The council members voted 7-1 to adopt a management plan and expressed an intention to keep the agency alive.
Final approval requires public hearings and a vote by member hoteliers.
"When more people come to San Diego, utilize our hotels, utilize all of our other services and spend money in our city, I do think that is a very good thing, and extremely important for our economy,'' Councilman Kevin Faulconer said. "I think the first five years of the TMD has shown that the process worked.
Councilwoman Marti Emerald, who cast the dissenting vote, said she was concerned that the financing arrangement did not meet the guidelines of Proposition 26, which sets rules for a government's taxing authority.
City Attorney Jan Goldsmith said it was unclear if TMD funding was legal, because not enough lawsuits challenging it had been filed, but he said the set-up was reasonable.
The TMD is funded by 176 hotels with 70 or more rooms. Under terms of the proposed renewal, the assessments would be extended to all San Diego hotels, nearly 1,400.
Lodging houses with up to 29 rooms would be charged 0.55 percent of their nightly room rates under the new management plan, while those with 30 or more rooms would pay 2 percent. Those costs are expected to be passed along to tourists.
Under the new arrangement, revenue for the TMD is expected to increase $1.4 million annually to about $30 million a year.
Former Councilwoman Donna Frye, one of several public speakers opposed to the TMD renewal, said tourists are being charged a tax without their vote.
According to the City Attorney's Office, the hotel will have to pay the fee and it is up to the management to decide whether to pass the cost to customers.
Public hearings on extending the TMD are set for Oct. 23 and Nov. 26.