Tourism Marketing District Sues City of San Diego For Withholding Funding

The governing board of San Diego's Tourism Marketing District has voted to sue the city to compel Mayor Bob Filner to release funds necessary for administering the agency.

The TMD has been the subject of dispute since it was revealed that Filner has refused to turn the money over. The inaction has put programs advertising San Diego as a vacation destination on hold.

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 Chairman Terry Brown announced the board's intention to go to court in a memorandum -- posted online this afternoon by voiceofsandiego.com -- to City Council President Todd Gloria.

"We do so reluctantly and in the interest of protecting and preserving a partnership with the city that has served our industry, tourism employees, the many small businesses who work with the tourism and hospitality industry, as well as the city of San Diego and the regional economy," Brown wrote.

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 a report issued today by the city's independent budget analyst said there is no way to account for the TMD's impact on 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.