More Analysis of the San Diego TMD Hotel Tax

This is a follow up to yesterday's post.  Over on the sdrostra.com blog, the City Attorney responded to my criticism of Judge Denton's ruling.  He made some cogent points.  First, he affirms the ruling, stating that because the Tourism Management District (TMD) tax is a business-based assessment, only the hotels themselves have standing to sue. The business based assessment district is an exception in Proposition 26 to the definition of a tax.  One of the exceptions is:

A charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.

As such, the hotel occupant is not directly assessed the tax. The fact that hotels charge it as a "pass through" seems misleading, but a guest would have to sue the hotel itself for false advertising or on some other legal theory, according to Goldsmith.  I haven't seen a San Diego hotel bill since the passage of the tax, so I don't know if the hotels are calling this out as a separate tax.

However, he doesn't appear to be a fan of the tax itself.  In a legal opinion prepared for the city council in June, 2012, he makes the following suggestion:

Due to the Risks Associated with Assessment Districts to the City, this Office
Suggests that Interested Property Owners and Businesses Consider Forming
Private Associations to Implement the Improvements Activities Desired

He explains that "The current legal landscape with respect to both business-based and property-based assessment districts is treacherous. The passage of Prop 26 has left the legality of business-based assessments in limbo until it is clarified by legislation or litigation. . . A potential solution to this dilemma is for the businesses or property owners to form their own private association and “assess” each of the members for the benefit conferred. The association could also consider recording instruments that would act as a lien on their businesses or property to ensure payment and participation."

I appreciate his willingness to patiently argue his position with me.  Closing question: Why haven't the hoteliers themselves used this option to reduce the risk to the business operations of the TMD?  Perhaps some students with connections in the hospitality industry could ferret out the answer.

Will Filner Finish His Term?

Bob Filner appears a little unhinged, and frankly unprofessional in this video from local news station NBC 7.  He hijacks a news conference by City Attorney Jan Goldsmith to make accusations of unprofessional conduct.  His view of the role of the City Attorney appears entirely unbalanced.  The City Attorney can't be fired by the mayor, because he is elected directly by the public.  Filner's tactics are those of a bully or a Congressman, not used to the necessity of working with other members of the team.  It seems irrational for the mayor to waste political capital on a personal and public fight with another official with whom he must work in the future.  His ego is writing a check he may lack the political capital to afford.

It is clear that Filner is dealing from a weak hand; so he throws a tantrum.  But his tantrum is exactly the response of a someone who feels powerless; this makes him look weak.  His strategy on the hotel tax is also incoherent.  He claims that it is illegal, but then makes a demand for a bigger cut before he will sign off on a contract to use the proceeds to fund a tourism campaign.  If the tax is illegal, then the city is not going to get its cut for public safety.  And if the tax is legal, then using the money for public safety will make it illegal.  I don't see Filner's play in this, unless he is just grandstanding.  Ultimately, the public judges the mayor on results.  Starting vendettas is not typically the way to achieve positive results.

Maybe he just has anger management issues.  I'm thinking its only 50/50 that he finishes out his term.

Here is the video, click here if the embed doesn't work.