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City Council Shows Strong Support For Tourism Marketing District

Council declines to offer amendments to TMD agreement blocked by Mayor Bob Filner

San Diego City Council members today expressed strong support for the city's Tourism Marketing District and declined to offer amendments to an operating agreement that is being held up by Mayor Bob Filner.

Aired 2/25/13 on KPBS Midday Edition.

GUESTS:

Joe Terzi,President and CEO, San Diego Tourism Authority

Katie Orr, KPBS Metro Reporter

Christie Hill, Senior Legal and Policy Analyst for Center on Policy Initiatives

Transcript

Aired 2/25/13 on KPBS News.

Marketing San Diego’s sun drenched beaches may seem like an easy sell. But the city’s tourism industry says attracting people to the city is hard work. Today, tourism officials will make their case in front of the city council.

Document

San Diego Tourism Presentation

San Diego Tourism Presentation

A report on the benefits of tourism marketing.

The mayor has refused to release funds needed to operate the TMD, and since the agency is in limbo, a $5.3 million campaign promoting San Diego as a vacation destination has been postponed. Filner opposes four areas of the deal and says hoteliers could assess themselves without city involvement.

While Councilman David Alvarez expressed some concerns about the legality of the district, neither he nor his colleagues took up council President Todd Gloria's offer to introduce an amendment to the TMD deal.

The council extended the district for 40 years last fall.

"It's a disservice to San Diegans, and offensive to those who elected the eight of us, not to honor the council's legislative intent,'' City Council President Todd Gloria said. "To shoot ourselves in the foot, by not marketing our destination, only adds to our economic troubles.''

With no interest on the panel to amend the agreement or kill the TMD outright, the council members will go into closed session on Tuesday to discuss their third option, which would be to compel Filner to sign the operating agreement.

Gloria said such an action would be to "litigate with themselves.''

Several lawsuits have been filed against the way the TMD funds itself -- a 2 percent addition to the city's 10.5 percent hotel room tax.

According to Filner, a clause in the deal that indemnifies the city against any adverse court ruling is not strong enough. The mayor also wants more of the revenue to go toward public safety, the length of the term shortened to one or two years, and a provision that calls for hoteliers to pay workers a "living'' wage.

Brigette Browning, president of a union representing hotel workers, said a living wage in San Diego would be around $14 an hour. She said many hotel and restaurant employees make much less. She also said the hotel industry should focus in improving wages, not using public money to market the city.

"Not one of these hoteliers themselves are ponying up the money," she said. "And if they want to pony up the money themselves they are free to do that, it’s a free country. If the marketing is so great they should have no problem using their own profits to do that."

Browning's union filed a lawsuit against the district today. The TMD itself sued the city Friday to force the mayor to sign the agreement.

Most TMD opponents contended that it benefits large hotel chains at the expense of local employees.

TMD supporters said during a nearly three-hour public hearing that spending by the district is a crucial part of selling the city as a vacation destination in a competitive tourism marketplace. Las Vegas and Los Angeles are in the midst of two large promotional campaigns, according to Joe Terzi of the San Diego Convention and Visitors Bureau.

Terzi said the state of Colorado once eliminated its tourism marketing program and ended up losing 30 percent of its business.

"We can't spend zero and commit economic suicide like Colorado did,'' Councilwoman Lori Zapf said.

Such an action would cause "a downward spiral'' of less revenue, fewer jobs and reduced city services, she said.

Kris Michell, head of the Downtown San Diego Partnership, said tourism creates 168,000 jobs throughout the region. She said Filner’s delay in signing the marketing contract has already hurt the city.

"Because it’s not signed today, we’re concerned we’re going to lose visitors," she said. "And if we lose visitors, we lose jobs. So it’s not a Democrat or a Republican issue, or an independent issue. It’s really a jobs issue."

In his concluding remarks, Gloria reminded the audience that he was the son of a hotel housekeeper, and was willing to take up a minimum wage increase "directly,'' but not in a way tied to the TMD.

City Attorney Jan Goldsmith said the TMD wasn't empowered to impose a minimum wage on hotels and restaurants, anyway.

KPBS' Alison St John, Patty Lane and Peggy Pico contributed to this report.

Comments

Avatar for user 'laplayaheritage'

laplayaheritage | February 25, 2013 at 8 a.m. ― 1 year, 9 months ago

Goldsmith and the City Council gave the Hoteliers a blank check. The solution to increase hotel taxes is to put the issues before voters as required by law.

The issue is not just a 2 percent TMD Hotel Tax increase, it also includes the 3 percent Special Tax for the Convention Center Expansion, plus any incremental revenue increase on the existing 10.5 percent TOT.

If the Convention Center is never built, the 3 percent Special Tax revenue reverts back to the Hoteliers and Tourism Authority.

The 2 percent TMD and 3 Percent Special Tax in an annual $80 million x 40 years = $3.2 BILLION.

The Incremental Revenue on the existing 10.5 percent over 40 years is incalculable

By California law the maximum for a new assessment is 5 years, not 40 years.

Giving money for Civic events like the Rock and Roll Marathon which although is a great cause that should be supported, makes the TMD into a Tax instead of a Fee to Visitors sleeping in Hotels.

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Avatar for user 'philosopher3000'

philosopher3000 | February 26, 2013 at 6:25 a.m. ― 1 year, 8 months ago

A voluntary Tourism Market District is fine, but it doesn't make ANY sense to join in a 40 year tax deal with the hotels. That locks the City into a deal that will short change us. We need the ability to adapt to changing conditions.

Sounds like the Hotel Developers and Corporate Owners are going into a long unnecessary legal fight, and the will lose, either in courts or in public opinion. They should just agree to share the wealth with their employees, fund the safety services that help tourists (like Lifeguards), and pay their fair share of the City's logistics. Time for the corporations to become good citizens.

It's not just about slave wage jobs cleaning up after tourists, it's about good union jobs, that can support citizens who live and work downtown. The City Council will either evolve, or be replaced as the economy stagnates. Votes beat money, again and again. Welcome to the new era if cooperation.

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Avatar for user 'marasmom'

marasmom | February 26, 2013 at 6:44 a.m. ― 1 year, 8 months ago

"Mayor Filner’s insistence that the tourism industry should be obliged to pay living wages is a righteous argument. His belief that industries that get public subsidies give back is also a just and eminently reasonable position. And his concern that any deal that benefits the tourism industry also needs to be clearly good for the city legally and economically is both correct and a breath of fresh air. If he is successful we’ll get a deal that will help create better jobs and lift all of us up at the same time." http://sandiegofreepress.org/2013/02/why-mayor-filner-is-right-to-stand-up-to-the-real-bullies/

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Avatar for user 'marasmom'

marasmom | February 26, 2013 at 6:50 a.m. ― 1 year, 8 months ago

Would be nice if this KPBS article referenced its own reporting from last Friday: "But the IBA [Indpendent Budget Analyst] 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.''

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Avatar for user 'Eyesopen'

Eyesopen | February 26, 2013 at 7:14 a.m. ― 1 year, 8 months ago

So ...
KPBS and VOSD should put some perspective on this discussion.
The TOT was initially established to fund tourism related expenses includung marketing. So whatever happened to the TOT funds that went to ConVis? In fact, what ever happened to Con Vis?

Year after year the TOT funds intended for visitor related purposes were redirected by the city for other purposes.

Now the hoteliers establish a self funding mechanism that allows them to see that the funds are actually used for the purpose that was promised ... And it's controversial.

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Avatar for user 'dialyn'

dialyn | February 26, 2013 at 8:08 a.m. ― 1 year, 8 months ago

Frankly I'm with Filner on this one. A 40 year contract is a ridiculously bad deal for the City and there is no proof that visitors will stop coming to San Diego just because we don't have some overpriced, cheesy advertising campaign. What a waste of money, yet gain. I agree with the woman who said the hoteliers should be paying for their advertising themselves. Why are they getting a government subsidy?

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Avatar for user 'Kapich'

Kapich | February 26, 2013 at 11:41 a.m. ― 1 year, 8 months ago

This is a public-private partnership. Get the facts at www.sandiego.org/WhyTravelMatters. Transient Occupancy Tax was established in 1964 solely for tourism promotion. As the City needed more general fund monies to pay for pensions, police, fire, they struck a deal to keep 100% of TOT for the general fund. The City partnered with tourism to create the Tourism Marketing District so that a self-assessment could raise marketing funds to promote San Diego. The TMD was approved for 39.5 years with operating contracts (requiring the Mayor's signature) of only 5 years. All destinations must market to attract visitors - look at Las Vegas who spends $90 million a year in media and Los Angeles with $14 million. Support our 160,000 tourism jobs.

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Avatar for user 'dialyn'

dialyn | February 26, 2013 at 5:02 p.m. ― 1 year, 8 months ago

I doubt if Las Vegas would stop getting tourists if they stopped running annoying commercials. Every time there is a weather report showing sun in San Diego when it is snowing elsewhere, San Diego gets free advertising. I would bet most tourists come here because they already know about San Diego, not because of some ad where most of the money is going to management and very little is used to improve the production values. My guess is that the people who make the most money from this scheme care more for their bank accounts than they do San Diego. Locking in the City to a 40 year contract for marginal results is ridiculous in a universe where individuals are doing their own forms of free advertising though various media. I'm more likely to follow the recommendation of a neighbor than pay any attention to a commercial. It's is too bad the Council buys into the old school arguments when the world is moving quickly past outmoded commercial models.

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Avatar for user 'maren'

maren | February 27, 2013 at 1:48 p.m. ― 1 year, 8 months ago

Dialyn: I would love for you to look into the facts surrounding this discussion more: www.sandiego.org/whytravelmatters. Tourism marketing is a standard, not a luxury. If the TMD funding is not released, San Diego will become the ONLY major city in the US to not have a destination marketing organization. This would hurt San Diego’s economy greatly. Read the very famous case study in Colorado, “What Happens When You Stop Marketing? The Rise and Fall of Colorado Tourism” by Dr. Bill Siegel of Longwoods International. It illustrates what happened when Colorado cut its $12 million promotion budget to zero. As a result, Colorado’s domestic market share plunged 30%, representing a loss of over $1.4 billion in tourism revenue annually and countless jobs. We don’t want that to happen in San Diego!
Please also realize that the San Diego Tourism Authority (the non-profit that receives 80% of the TMD funding in order to promote San Diego) does not only run commercials, it handles a wide variety of sales and marketing initiatives in order to keep San Diego top choice in the minds of travelers through every medium possible. We have a Public Relations team that produces more than $15 million a year in UNPAID media (How do you think the New York Times heard about Chicano Park and Barrio Logan?) as well as a robust social media presence. Our Sales team makes sure conventions keep choosing to come to our city instead of our neighbors such as Anaheim or Las Vegas, and last year produced 740,000 room nights through their hard work. This type of work is not a scheme that makes rich people richer; it is a viable piece of San Diego’s tourism industry with a proven track record of success. As an employee for the SDTA, I love San Diego VERY much. I eat, sleep and breathe this city. I also make a happy-but-humble middle class income. Please, read more facts, and feel free to ask me any questions you may have. I love San Diego and wish only to serve it and generate more new dollars in San Diego's economy through my work.

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Avatar for user 'lovecalifornia'

lovecalifornia | February 27, 2013 at 6:29 p.m. ― 1 year, 8 months ago

While its fine to believe that your hoteliers should pay to market themselves, you all should consider this. By creating this modest 2%fee to create a private non profit destination marketing organization it allow San Diego to join with 74 other TMD's currently in existence operating within California doing the same thing who are raising over $150 million to market their destination along with Visit California's $50 million also raised by the fees paid by the travel and hospitality industry now joined by Brand USA which is a private non profit created by President Obama using a fee on international airline ticket sales designed to raise $100 million to for the first time to market the USA. Why? To quote the president :The more folks who visit America, the more Americans we get back to work.Its that simple". So the president wants to market the USA, because people don't know where we are? No because the US has never marketed itself and now for years the USA has lost a leisure travel market share which has equated to thousands and thousands of jobs and millions and millions of travel related revenue. So now LA and San Fran (sorry I have to say this) because they have very smart mayors who understand the importance of travel as an economic driver and jobs engine) are busy putting their TMD dollars together to market their destinations with Visit California and Brand USA on an international platform to attract the international traveler knowing they stay longer and spend more. Did you know that for every 90 additional international travelers that come to California it means an additional job for a Californian. And that the international travel spends almost equally in transportation, retail, restaurant, attractions and hotels? Except of course the Chinese traveler who is poised to come to California in a big way and they just want to go shopping! That's right they just spend a ton of money, do not tax local infrastructure, employ lots of local Californians and go home. But that's ok San Diego you go ahead and talk to your neighbors. I am sure you will get the same results as LA and San Francisco after all everyone knows where you are. So tell me again why companies spend $4 million for a commercial to air on the super bowl oh ya marketing doesn't work. Oh and the TMD in Las Vegas that spends $230 million to make sure that everyone knows "What happens in Vegas,.................... Ya we all know the end of that line now don't we.

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Avatar for user 'philosopher3000'

philosopher3000 | February 28, 2013 at 1:20 p.m. ― 1 year, 8 months ago

I'm reading these comments and see those who work in the tourism industry posting advertising links to their web propaganda, but their arguments are specious. If you think tourism in San Diego will die without a PUBLICLY FUNDED multi-million dollar ad campaign you're nuts. If the big hotel corporations really want to maximize their potential they will shell out for the ad funding. That's why they are paying these shills above to make fake accounts and publish their propaganda.

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Avatar for user 'maren'

maren | February 28, 2013 at 3:31 p.m. ― 1 year, 8 months ago

Hi philosopher3000. I am not a fake account. My name is Maren and I am a real person. I work for the non-profit organization that has marketed San Diego for the past 60+ years, the San Diego Tourism Authority (formerly known as the San Diego Convention and Visitors Bureau). I am posting because I believe what we do (marketing San Diego as a destination for potential visitors) is important for the city of San Diego and benefits everyone who lives here.

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