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It's official, expanding the convention center through the use of a special tax on hotel guests is not going to happen. Yesterday, August 27, city councilmembers decided against appealing a court ruling that deemed the so-called transient occupancy tax unconstitutional.

That ruling was handed down on August 2. Judges on the appellate court cited state and local laws prohibiting local governments from levying any special tax without a public vote.

"We further conclude that the election was invalid under the San Diego City Charter because City Charter section 76.1 requires the approval of two-thirds of the 'qualified electors'...those persons who are registered to vote in general state elections under state law."

The decision could have widespread effects for a number of other special assessments, namely property-based improvement districts.

One day before the judges issued their ruling, Cory Briggs — one of the attorneys in the convention-center case and a big legal thorn in the city's side — filed a complaint against the city over the Downtown Property and Business Improvement District and the city's nearly 60 maintenance assessment districts.

"This lawsuit challenges Defendants' authorization of a variety of tax, levies and collections — euphemistically labeled 'assessments' by [city officials] in order to avoid public scrutiny — without first obtaining the requisite approval of the voters of the City of San Diego."

The complaint uses many of the same arguments from judges in the convention-center case.

"Fundamentally, this is a lawsuit about voters' rights. Propositions 13, 218, and 26 are voter-approved initiatives that amend the California Constitution and aimed at the right to vote on measures designed to increase government revenues. Proposition 218, which is central to this dispute, is officially known as the 'Right to Vote on Taxes Act.' The statement of purpose for Proposition 218 included the following language: 'Proposition 13 was intended to provide effective tax relief and to require voter approval of tax increases.'

"Registered voters have interests in government revenue-generating schemes even if they are not the ones directly paying the tax, assessment, charge or fee. For example, the City of San Diego electorate has defeated attempts to increase the local transient occupancy tax even though the tax is imposed only on hotel guests and not on voters. The concern of those voting against the increase included but was not limited to issues such as all taxes being passed on to consumers, other tourism-related businesses being affected by an increased cost for tourist accommodations, and how the money would be used."

Over the years, city officials have relied on property-based assessments on property owners as a convenient way to pay for neighborhood services — convenient because only property owners in the designated area are allowed to vote and their votes are weighted according to the size of the property. That means a small number of large property owners can tilt the election in their favor.

The city has had a difficult time defending the districts in court.

In 2012, a superior court judge sided with a group of residents in Golden Hill and South Park who challenged the legality of their assessment district. Residents questioned not only the voting process but the attempt by the city to get around state and city laws requiring a distinction be made between general and special benefits.

City officials and attorneys have yet to find a way around those questions. They will soon be forced to do so again or be forced to invalidate the 55 maintenance assessment districts and reimburse property owners for this year's assessment.

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Comments

Visduh Aug. 28, 2014 @ 9:50 a.m.

Cory Briggs is kicking down a whole house of cards in the city of SD. He'll soon be the most reviled person since . . . since . . . Bob Filner. Of course, he'll also soon be recognized as a true reformer in a city that has had few or none of those. But, he'd better watch his step, and get a bodyguard (or two or three.) This is messing with a lot of big-time interests and folks who aren't used to being told "No." They could play rough.

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monaghan Aug. 28, 2014 @ 12:26 p.m.

Advantage to crusading attorney Cory Briggs over former Mayor Bob Filner because Briggs has last year's town-criers Donna Frye and Marco Gonzalez on his side. (The three of them played rough; we ended up with Mayor Kevin Faulconer; and Briggs wins fees from Faulconer & Friends' legal missteps.)

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HonestGovernment Aug. 28, 2014 @ 10:40 a.m.

For the eight "commercial" MADs (which was how the Golden Hill MAD was structured, meaning that a private business group, rather than Park & Rec, gets to run the MAD and gets paid for it out of the property assessments), your statement that "a small number of large property owners can tilt the election in their favor" is significant in the poorest assessment districts. In those districts many of the absentee owners are wealthy land investors living out of state or out of town, or in rich enclaves of North County or Coronado. More importantly, how much land does the City (not counting the County) own in the poor districts?

The Council approved the 2014 commercial MADs on July 29. The document supplied to the Council for the approval hearing shows the weight the City had in Barrio Logan and City Heights in tilting the vote in favor of passage. The weight of the City's vote was similar in effecting passage of the illegal MAD in Golden Hill.

It should also be noted that the City's Economic Development Department takes back a 4% fee for the burden of co-administering, with the business group, the commercial MAD.

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Dennis Aug. 28, 2014 @ 12:52 p.m.

I think the TOT increase was voted down mainly due to where the money was going. It was initially touted as being for police/fire but was mostly going to the hotel industry. Hotel owners can increase their profits anytime they like by just increasing their rates but they prefer to be able to blame the city for the increase.

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laplayaheritage Aug. 28, 2014 @ 2:46 p.m.

Proposition 26 broadened the definition of taxes to include MANY payments considered to be fees or charges. MANY, but not ALL fees turned into taxes. Some fees still remain through Exemptions to the new law such as Parking Districts, Special Benefit Assessments Districts, Maintenance Assessments, and limited Business Improvement Districts (BID). Proposition 26 in 2010 passed with only 52.4% of the vote, not 67%. Section 1, Article XIII C "Voter Approval for Local Tax Levies" of the California Constitution was amended to read:

http://vig.cdn.sos.ca.gov/2010/general/pdf/english/text-proposed-laws.pdf#prop26

http://leginfo.legislature.ca.gov/faces/codesTOCSelected.xhtml

"(e) As used in this article, “tax” means any levy, charge, or exaction of any kind imposed by a local government, EXCEPT the following: (1) 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. (2) A charge imposed for a specific government service or product provided 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 providing the service or product. (3) A charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof. (4) A charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property. (5) A fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law. (6) A charge imposed as a condition of property development. (7) Assessments and property-related fees imposed in accordance with the provisions of Article XIII D.

The local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity. (Sec. 1 amended Nov. 2, 2010, by Prop. 26. Initiative measure.)"

California Constitution Article XIID Assessment and Property-Related Fee Reform states: Section 2 (b) “Assessment” means any levy or charge upon real property by an agency for a special benefit conferred upon the real property. “Assessment” includes, but is not limited to, “special assessment,” “benefit assessment,” “maintenance assessment” and “special assessment tax.”

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nostalgic Sept. 1, 2014 @ 10:26 a.m.

When I first became acquainted with these districts, I was shocked. You don't have to be a citizen or live in the country to vote. So, people from other countries can impose taxes on American Citizens. All they have to do is own property here. "One person, one vote" doesn't apply. One person with multiple properties can possibly vote multiple times. Only a very small number of people will understand how it works (the ones who are trying to tax other people to pay for their own special projects). Ford Greene, an attorney in Northern California, challenged this concept in court. He lost at Superior Court, won at Appeal Court, and lost again at the Supreme Court, who were unwilling to take on the large number of cities who filed in opposition. So, State of California laws do still apply; city of San Diego never considers this possibility.

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