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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.

San Diego Tourism Authority Makes Case For Marketing Money
GUESTS:Joe Terzi,President and CEO, San Diego Tourism AuthorityKatie Orr, KPBS Metro Reporter Christie Hill, Senior Legal and Policy Analyst for Center on Policy Initiatives

ALISON ST. JOHN: San Diego in turmoil over who should get the benefit of 30 million in tourism dollars. This is KPBS Midday Edition. San Diego city Council is taking up this issue this afternoon. The mayor is opposing a contract the Council agreed to last year to allow tourism dollars to be earmarked for marketing only. It is a hot issue that caused a flare up between the mayor and the city attorney just last week. What is at stake. Justin Bieber is more than a heart throb he's affecting youth in ways that could run much deeper than sex and love. We will talk of the author of the book believer the faithfully and heart of Justin Beiber plus everybody either loves or hates bugs some of the weirdest and most wonderful bugs coming to the San Diego natural history Museum. That is all coming up right after the news. A legal battle heats up over how to spend millions of tourist dollars in San Diego will it affect benefit San Diego as a whole or just hotels? Justin Beiber's diverse faith and how it is affecting his fans. And the most astonishing bugs on earth. This is KPBS Midday Edition. Today is Monday, February 25. I'm Alison St. John in for Maureen Cavanaugh and here are today's headlines. A celebration at Balboa Park to mark the completion of repairs to the iconic lily pond. The pond that is nearly 100 years old was severely damaged last summer after midnight water gun fight got out of control. Repairs ran about $15,000 worth it. Returning to MCAS Miramar today after deployment to Afghanistan. The third aircraft. Work on for about a year. The trend of increases in the average price of a gallon of self-serve regular gasoline in San Diego County ended today. It stayed at $4.29.3 cents. So, today in San Diego the mayor and city attorney have a flareup last week. It is a tussle over tourism dollars and there are millions at stake, 30 million per year to the second. The question is to get the bit of the money to the city Council looking at the impact of this on to the budget so here to help us figure it out is our metro reporter Katie Orr. KATIE ORR: Hi, Alison. ALISON ST. JOHN: I should mention we have Joe Terzi from the tourism authority did a short interview with us earlier we will play for you andChristie Hill is the legal policy attorney for the center for policy initiatives that advocates for working families. So Katie, let's start off with what is happening today. Why is the city Council taking this matter up? I thought they already approved . Explain what is going on KATIE ORR: They have, less publicity Council voted to extend was called the tourism marketing district basically it now it puts all the hotels and rental properties, vacation rental properties in San Diego the people stick to the size hotels with groups of 30 or more rooms what at a 2% surcharge on to the bill and that money generates as you said $30 million a year. Last fall the city Council approved the deal and they approved it for nearly 40 years so it seems like a duck deal. No, Mayor Filner can't get selected it comes to office that he has to sign off on the deal to release the money. He has said he will not do that. He says he thinks the deal should not be 40 years, he thinks that the hotel workers should receive a living wage. He thinks that city should get a bigger cut of the money and I would also like to see the city have legal protection from a lawsuit that might be found because of this. So that has put the whole deal in limbo. Nothing is happening. The hotel years have sued we saw there has been another lawsuit today so the city Council is taking up this issue today although it is just an information item they are not scheduled to take any actual action. ALISON ST. JOHN: There is a lot of money at stake and what is the difference between the surcharge and the TOT, everyone knows the transient occupancy tax is what a tourist pays on top of the hotel room, what is the difference? KATIE ORR: The 10% transient occupancy tax goes to the city general fund it's one of the city's general streams of revenue. This is this is on top of that. With the 2% surcharge, would make the total taxes, and I use, that word is a very charged word in this debate because the hotel years and people in support of this say it is not a tax, it is a fee, it is an assessment. So regardless, it would make the tax or the fee 12% on the hotel rooms instead of the 10. The base 10 goes to the city the 2% would go to the tourism marketing district purely for marketing San Diego. ALISON ST. JOHN: Okay so now the argument you told us what the mayor's arguments are, and in the meantime, the tourism industry is saying we need this money to market the city. KATIE ORR: Right, you know a lot of people say it is San Diego sunny most of your beautiful beaches how much do you really need to spend to market the city and the marketing folks will tell you a lot, it's actually a very competitive market. We are dealing with LA, other cities on the West Coast, other cities in Hawaii, places with Florida beaches all are trying to get a share of the tourism industry and if we don't get San Diego's name of their people will not think about it to come here. ALISON ST. JOHN: About an hour ago we spoke with Joe Terzi who is at the city Council this afternoon I believe adhesive the San Diego tourism authority here's that interview. Joe Terzi is president and CEO of San Diego tourism authority formerly known as the convention and visitors Bureau thank you so much for joining us. JOE TERZI: Thank you very much I appreciate it. ALISON ST. JOHN: Mayor Bob Filner is fighting the tourism authority over the $30 million in tourism marketing district dollars he says it is like a money grab by the private sector of money that should be my rights available to the public sector for example to spend on public safety why would you say that more of the money should not go to public safety? JOE TERZI: I think unfortunately Mayor Filner doesn't really understand or at leastI don't think he understands what is happening today in San Diego. Factually there is 101 $50 million that went to the city's general fund from the TOT tax collected by hotels. And the $30 million is an additional assessment that the hotels agree to assess themselves for the purpose of advertising and marketing the city of San Diego. Factually, that money gets actually put back into the marketplace to promote San Diego as a destination. The mayor ALISON ST. JOHN: Difficult to see how the surcharge filters back through the TOT, But I want to just ask you one of the other points the mayor is making is that workers in hotels should be, he says that hotel your should agree to pay them a living wage with the city also guarantees to city workers so San Diego does need higher wage jobs to let workers-high cost of living area, why is that not something that the tourism authority would be on board with? JOE TERZI: We are not in a position to dictate our support or tell individual businesses what they should or should not pay their employees. I think factual if you take a look at the tourism industry a significant portion of the jobs in the tourism industry benefit by gratuities either by restaurant or through customers that actually are tipping employees in the industry. The San Diego did a survey this past year and found the annual average wage for four tips for employees which a good portion of the people in the industry is almost $29 an hour. Actually if you look at the amount of money that is earned by a number of people in the industry they are way beyond a living wage ordinance that the mayor is speaking about so there are a lot of different factors in here and there are no businesses in San Diego that do not take care of their employees from a wage scale that is appropriate to their experience and actually the other part of that is the industry does offer a lot of opportunities for people with part-time work there's over 80,000 college students San Diego, a good portion of them are earning. Come to get to school through a lot of the jobs in the tourism industry so there's a lot of opportunities in the tourism industry for people in San Diego. ALISON ST. JOHN: We will have a chance to get response to that from people in the industry but I wanted to move on to a third point that the mayor is making it 40 years is too long he wants to make the contract shorter. A lot of the water is under the bridge and 40 years, why not agree to a shorter contract? JOE TERZI: Again I am not the TMD, I'm a recipient of funding through the TMD, so that is not my prerogative to determine whether a four-year deal is appropriate or not. I could tell you the first TMD which was five years just completed at the end of the past year we started a new TMD in January. Part of the discussion I think that took place prior to the mayor coming it was that there needed to be a longer-term to coincide with some of the long-term commitments that were being made on promotion and marketing of the city that had to do with the expansion of the convention center at the end of five years could have a discussion about the agreement with the TMD from a management standpoint. ALISON ST. JOHN: The issue of management is very important the mayor says there is not enough oversight of the money and you have said there is too much oversight from the city. JOE TERZI: Yeah that is a pretty interesting, and one I think we are probably the most audited organization that I know. We get audited by the TMD first and all of the submissions ALISON ST. JOHN: The tourism marketing district the one that raises the money. JOE TERZI: Right we submit the budget to that which is approved we submit a plan that is approved and then the plan has to go to the city and city finance committee reviews and approves the budget. So we have a budget in place that talks about the expenditures. What is applicable, what can't be reimbursed. Then we spend money, that the bill goes to the TMD, they do an independent body review of that based on the budget in hand in the qualifying expenditures. They then send that to the city, the city go through the same process. Looks at the expenditures, comparison with a budget that is approved by the city and appropriate expenditures that qualify and then eventually we get a check back. ALISON ST. JOHN: Okay so the history is the second 2008 the city took over much of the responsibilities of the convention and visitors Bureau, what the tourism authority used to be called because of accusations of mismanagement. But, all the processes that you have just described have come into play since then, I guess. JOE TERZI: No, the city never took any responsibility for promoting San Diego. He might be speaking about the transfer of responsibility for selling the convention center. That is a different issue. ALISON ST. JOHN: Okay all right that's good to clarify that. So what about the status of your plans to file suit against the city. JOE TERZI: Again I have no plans, I am not part of the suit. You are talking about the tourism marketing district and the San Diego tourism authority is an independent nonprofit organization. We are different from the TMD, so I'm not filing any suit against the mayor. We've had discussions with him personally and his staff on the impact this is going to have on unemployment and economic impact, negative economic impact to the city and to our community and we are very concerned about that, but ALISON ST. JOHN: This is followed by the tourism marketing district? If they file the suit, they are the ones who raise the money if they file the suit you are the one that spends the money, would you support this it? JOE TERZI: I mean I have a concern if we do not have funding, which allows us to stay in place, we close our doors eventually, so yes we have a vested interest in getting this issue resolved. Whether we support them so you're not we want the two parties to get together and figure out how to make it work because we have over 100 Associates in place today that will lose their job if it is not resolved which would be criminal if we can figure out how to get this done. ALISON ST. JOHN: Great, Joe, thank you very much for joining us. JOE TERZI: I appreciate the opportunity. ALISON ST. JOHN: That was Joe president and CEO of the tourism authority of the city of San Diego. Okay and we are here and a roundtable with Katie or, our Metro reporter and we also have Kristi Hill who is the senior legal and policy analyst for the Center and policy initiatives with us on the phone. Now neither Joe Terzi nor Christie Hill in CPI are actually parties in the lawsuit that they both are very much connected to the winners or losers. And Christie Hill, you know the private sector doesn't have to pay a living wage and in fact it was a major victory forced families when they pass a living wage ordinance for city workers so what about the argument that it would be unfair to acquire the hotels to abide by such a commitment because it would make them less competitive? CHRISTIE HILL: We don't understand the argument. We believe that post public funding should not be used to subsidize poverty jobs. No one is debating whether or not the tourism industry is a vital part of the life and economy of the city. It most certainly is, but we do think that we have a nearly 40 year deal that will bring and $30 million annually and there is public scrutiny that's needed, so we are saying that hotel owners have a responsibility to be a responsible employer and do right by their workers. A report that CPI release last year showed that in the economy in the industry they have the lowest median rages among major industries in the County. Half of their full-time employees made less than $24,400 a year. That is not enough to live on. So the numbers that shows shared, we are not sure where he's getting back. To live self sufficiently in San Diego a single person needs to make a little over or almost $14 an hour. Or $29,000 year. Just to meet basic expenses like rent, utilities and putting food on the table. Working in the tourism industry, that is my reality for many workers and families. ALISON ST. JOHN: Just to clarify from the perspective of the party, but who is engaged in a lawsuit over the money? CHRISTIE HILL: We are not a party to any lawsuits taking place. There is a lawsuit that the union that represents hotel workers is filing today and they are going to be holding a press conference this afternoon to talk about the details of that I cannot speak to that. But we are all concerned about the idea of using public funding to subsidize poverty jobs. You know, we believe that the folks that are cleaning our rooms and surfing our food deserve to be able to go home and take care of their families. For many of the workers in this industry, the hourly wage does not rise higher than $10 an hour. And it will not hurt companies to do right by their employees. And what if every company that created jobs in San Diego wanted public funding for marketing. That would be ridiculous. ALISON ST. JOHN: Thank you for that perspective, Kristi, just in a minute or so we have left Katie, Joe Turzi he said that the problems we have with Congress that changed his name to the tourism authority is only relation to the convention center but you think it still relates to the questions today? KATIE ORR: I should say it is 2004 they switched over to marketing the bottom line is that it's public money. They were handling public money and the city felt they were not doing it effectively so they switch regardless if it was tourism 30 or just the convention center and I think it speaks to the concern that a lot of people like CPI and organizations like CPI have is your giving control of a lot of public money to essentially a private organization and this is really interesting because this is a conflict of ideologies. We had Republicans in power, more business friendly perhaps for decades in San Diego and now we have a more worker labor friendly man in power with Bob Filner and he's really clashing with the industries and you know I would doubt this will be the last time we see these kinds of conflicts arise here in San Diego. ALISON ST. JOHN: With the new mayor, thank you so much that is Katie Orr the Metro reporter and Katie will be monitoring the meeting this afternoon so listen for her reports the rest of today and tomorrow. And Christie Hill, thank you so much for joining us. CHRISTIE HILL: Thank you ALISON ST. JOHN: Christy Hill at the center for policy initiatives that advocates for working families.

San Diego Tourism Authority Makes Case For Marketing Money
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.

San Diego Tourism Presentation
A report on the benefits of tourism marketing.
To view PDF files, download Acrobat Reader.

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.

Corrected: April 22, 2024 at 3:15 PM PDT
KPBS' Alison St John, Patty Lane and Peggy Pico contributed to this report.