City attorney considers conflict of interest

Turns out, it probably isn't the best idea to appoint a hotelier to San Diego's Convention Center board of directors. Considering that many hotels depend on revenue from large conventions but also due to the fact that hoteliers voted to tack on a 3 precent surcharge on the rooms in order to pay to expand the center.

City attorney Jan Goldsmith cautioned against the potential conflict-of-issues arising from such an appointment in a January 29 memo to councilmembers and interim mayor Todd Gloria.

"There is no legal prohibition per se to the City’s appointment of a hotelier to the Convention Center Corporation Board, but such an appointment would raise serious issues under various conflict of interest laws," reads Goldsmith's memo. "The question is whether a specific nominee has financial interests that will prevent him or her from acting with undivided loyalty to the corporation, and in the best interests of the corporation, as required by California law.

As set forth above, a director of a corporation must be able to act in the best interests of the corporation, and not with a divided loyalty between the corporation and other interests. This concept is especially critical if the City is being asked to appoint individuals who are economically interested in hotels, given the economic relationship between the Convention Center and the hotel industry. If the City seeks to appoint such individuals to the board, the City and individuals need to assess whether they could serve without divided loyalties, and whether they could, consistent with the laws cited above, act in the best interests of the corporation."

What is not clear, however, is who the potential appointees might be and the reason behind issuing the memo. According to Goldsmith, however, the desire to appoint a hotelier to the board is not a new idea.

"The issue has been raised on several occasions as to whether a hotelier may legally be appointed to the San Diego Convention Center Corporation Board of Directors (Convention Center Corporation Board). This Office has analyzed the question in the past with respect to specific individuals and provided advice on a confidential basis. However, in light of upcoming vacancies and recent questions on the subject, this general opinion may be useful and is published without reference to any particular nominee."

Even opponents who challenge the legality of the convention-center tax are cheering on Goldsmith for giving the proper advice.

"Every now and then Mr. Goldsmith's office manages to give the city good legal advice," says attorney Cory Briggs, one of two lawyers who have sued the city over the convention-center tax. He argues that a tax must be approved by the electorate, not just a handful of the largest hoteliers in town, as is the case with the convention center. "This is one of those examples when the city attorney has it right."