A panel of judges ruled on Aug. 1 that the hotel tax to finance the $520 million San Diego Convention Center expansion project is unconstitutional, concluding that they must uphold the provisions of the California Constitution and the City Charter that require that the city’s registered voters approve the tax.
At issue was the legality of a hotel room surcharge OK’d by the city’s hotel owners in 2012 to generate much of the revenues to pay for a larger convention center.
A Superior Court judge ruled last year that the tax is legal, but opponents said that the levy should have been put to a public vote. The tax would have added 1 to 3 percent on to room rates, depending on how close the hotels were to the convention center. Guests already pay a 10.5 percent room tax and a 2 percent promotion surcharge.
Tourism officials say the center needs to expand in order to attract larger, more financially lucrative conventions. The center is the main venue for Comic-Con International, which every summer attracts 130,000 attendees and fuels a $170 million boost to the local economy. The convention has relied on nearby hotels and other venues to complement the space in the center.
The center, originally completed in 1989, was last expanded in 2001. In 2008, it acquired rights to land for the additional expansion. The project calls for the center to grow by an additional 220,150 square feet in exhibit hall space, 101,500 square feet of meeting rooms and nearly 80,000 square feet of ballroom space.
“The convention center expansion is critically important for our regional economy,” Mayor Kevin Faulconer said in a statement Friday. “It would create thousands of good jobs and ensure that we continue to attract large conventions like Comic-Con. We will be working with the City Attorney’s Office to review all options in moving forward.”
City Attorney Jan Goldsmith said the ruling was not necessarily unexpected but that it will be up to the mayor and City Council to decide whether they want to appeal.
“It is not surprising given that the city was testing the boundaries of the law,” he said in a statement. “As we stated (in 2012), the most reliable way to impose this tax is to place it on the general ballot. Two and a half years later, it still is. But, if the council and mayor want to take the test to the highest level, the city can appeal to the Supreme Court.”