TMD Files Lawsuit Over Funding Delay, Budget Analyst Says Delay’s Impact Hard To Quantify
Friday, February 22, 2013
The impact of the Tourism Marketing District on city of San Diego hotel room tax revenue is difficult to quantify, according to a report released today by the city's Independent Budget Analyst.
The TMD has been the subject of dispute since it was revealed that Mayor Bob Filner has refused to release funds needed to administrate the district.
The inaction has put programs advertising San Diego as a vacation destination on hold.
Voice of San Diego reported Friday that the TMD is filing a lawsuit over Filner's refusal to sign the contract.
The mayor has outlined four changes he wants in a 40-year renewal of the TMD approved by the City Council late last year.
TMD supporters, including hoteliers and some City Council members, say it is a vital part of marketing to prospective tourists -- and when more visitors come to the region, lodging houses and the city earn extra money.
But the IBA report said there is no way to account for how much the TMD accounts for the city's room tax revenue, known in government parlance as the Transient Occupancy Tax, or TOT.
"While TMD promotions and marketing does support hotel room night stays, which is the basis for TOT assessments, it is extremely difficult to quantify the TOT receipts directly related to the TMD's activities,'' the IBA report states.
"There are many factors that drive the choice of destination for travelers, such as local attractions, recreational opportunities, general economic conditions, visitor age and income, transportation costs and available alternatives. While marketing is surely one of these factors, it is very difficult to isolate its impact.''
According to the IBA report, the city of San Diego collected $724.3 million in hotel room tax income during a five-year trial period for the TMD.
Revenue from the TOT is split between the general fund, which pays for basic services like public safety and libraries, and a promotional fund.
The city's TOT is 10.5 percent. Hotels add an additional 2 percent to fund TMD programs.
Filner wants to indemnify the city in case judges rule against the way the TMD funds are collected; direct some of the TMD funds toward public safety; shorten the term of the extension to a year or two; and have hoteliers pay their employers a living wage.
At a news conference earlier this week, City Attorney Jan Goldsmith said the extension already offers the city indemnification and it would be illegal to redirect the money. Filner's last two concerns could be addressed by the City Council, Goldsmith said.