Copyright San Diego Union-Tribune
For five years a citywide ballot measure to finance a long-sought convention center expansion, homeless services and road repairs has been in limbo, but no more. Litigation over Measure C formally came to an end Wednesday when no one lodged an appeal with the state Supreme Court challenging a court ruling last month confirming that voters had legally passed the hotel tax hike measure by a simple majority. The 2020 ballot initiative had garnered 65.24% support, just short of a supermajority. It has since been tied up in litigation for years over the question of whether it could legally pass with a simple majority of voters, as opposed to a two-thirds threshold that voters were told was the requirement for special tax initiatives. While multiple court decisions have concluded a simple majority approval is adequate when a tax hike is placed on the ballot by citizens, the city and backers of Measure C sought a separate ruling validating the initiative’s passage. That validation came early last month when California’s Fourth District Court of Appeal upheld a San Diego Superior Court judge’s August 2024 decision confirming the success of the measure. Attorney Cory Briggs, who represented plaintiff California Taxpayers Action Network, had fought the validation ruling, arguing that the lower court had erred in determining the measure was a citizens initiative. Briggs had not disclosed whether he would seek an appeal of the October ruling, but he recently reached an agreement with the attorneys representing Measure C to not petition the California Supreme Court to take the case in exchange for his client being relieved of an obligation to pay more than $2,000 in court costs. Meanwhile, the city has already started collecting the higher hotel tax rate, anticipating that it would likely prevail in court. Measure C raises the citywide transient occupancy tax of 10.5% to as much as 13.75% for guests staying in downtown properties. For hotels in mid-range locations, the rate is 12.75%, while those farthest away from downtown charge guests a rate of 11.75%. Since May, when the collections began, nearly $35.3 million has been raised from the tax hike, according to the city treasurer’s office. Over the first 10 years, it expects the increase will generate $1.04 billion in additional revenue. Under Measure C, the tax increase revenue is to be spent exclusively on three civic initiatives — a long-sought convention center expansion, homeless services and road repairs. What remains unknown now is whether an expansion is still even possible, considering soaring construction costs. The convention center project, which was conceived more than a decade ago, was expected to cost, at most, $850 million at the time Measure C went before voters five years ago. Experts agree that a project of the same magnitude would in today’s dollars cost far more. Complicating matters is the city’s lack of control over a key waterfront parcel that would be needed to expand the center. Fifth Avenue Landing (FAL) currently holds a lease for that parcel, which expires in mid-2027. The city and San Diego Convention Center Corp. wrangled with FAL off and on for years to work out an agreement to regain control of the leasehold, and ultimately, a settlement agreement was reached in 2018, although it was conditioned on what was expected to be a November 2019 public vote. That didn’t happen until March of the following year, and it was believed at the time that Measure C had failed. That agreement, however, remains in place, and it is preventing city officials from talking openly about the expansion project or taking steps to move forward with some kind of plan. “Our hands are tied at this time as to what we can do through Dec. 31, 2026, because of the settlement agreement,” said Steve Cushman, special assistant to Mayor Todd Gloria for the convention center expansion. “We are, however, starting to look at modernization of the existing facility within the parameters of Measure C.” Although the text of Measure C states that the first priority for the convention center revenue allotment is an expansion, there is some latitude that allows for “modernization” and center improvements. The Convention Center Corp., which runs the bayfront facility, has already identified $400 million in needed capital investment over the next 20 years, including replacement of the roof and central plant, which houses the heating and cooling systems that serve the entire facility; elevator modernization; and fire and life safety improvements. Measure C backers, which included a coalition of business, tourism and labor leaders, would not speak specifically about next steps on Wednesday, but provided a statement. “We are gratified that the litigation has come to an end, and we can spend Measure C’s proceeds as voters intended: to improve the Convention Center, address (the) homeless, and improve our streets,” said Jessica Anderson, of the San Diego Regional Chamber of Commerce speaking on behalf of the Yes for A Better San Diego Campaign. “We look forward to collaboration with the city to make the most of this opportunity for our regional economy.” Money from the tax increase already is available for homeless services and programs, and mayor spokesperson David Rolland said Wednesday that “any revenue that would help address homelessness is already part of the budget to fund existing programs.”
