San Diego's city attorney's office is sticking by an April 11 memo that questioned the legality of a proposed ballot initiative brought forth by local attorney Cory Briggs that would reconfigure the Tourism Marketing District.
If approved by voters, the initiative would amend the current hotel tax by redirecting the money to the city's general fund and simultaneously pave the way for a new downtown Chargers stadium and non-contiguous convention-center expansion — a “convadium.”
In addition, the initiative proposes turning the current Qualcomm Stadium site into a public park and possible San Diego State extension campus.
City attorney Jan Goldsmith's office released the 25-page memo on the same day that Briggs announced he would be holding a press conference the following day to announce a potential settlement in the Tourism Marketing District lawsuit he filed on behalf of San Diegans for Open Government.
The trial for the lawsuit was expected to occur in the coming months and so far has cost the Tourism Marketing District over two million dollars in legal fees, according to reports by the Reader.
But Goldsmith's memo appeared to have derailed that announcement. The memo questioned the legality of the proposal (also known as "the citizens' initiative") while providing city-council members legal reasons to deny placing the item on the ballot.
One of the issues cited in the memo concluded that the initiative's "direct diversion of tax revenue is not consistent with local and state law for the safe handling of tax payments."
According to the memo, there are requirements that forbid outside agencies to collect and possess taxes generated from the hotel tax without first depositing them in the city's treasury.
"As taxes, the moneys collected by the hotel operator are public funds, and the city is responsible for ensuring that they are accounted for and properly spent. The city's laws regulating collection and use of the [transient occupancy tax] require payment of the tax to the city."
But what about the other agencies that collect and disburse public funds, such as Civic San Diego?
"Civic San Diego is a really good example of why the city attorney’s just cherry-picking issues to call out," says Briggs. "Namely, anything he says might be okay because, well, he says so."
Civic San Diego, a private, nonprofit agency oversees the former redevelopment agency and over the coming decades will be responsible for disbursing more than one billion dollars in former redevelopment tax payments needed to dissolve San Diego's redevelopment agency, as required by a 2012 state law.
How is it that the city council was allowed to delegate the legislative authority needed to allow Civic San Diego to make planning and permitting decisions for downtown and surrounding communities but is not able to in the case of the Tourism Marketing District?
In a previously issued 2015 city attorney memo, the city's attorneys described Civic San Diego as an independent contractor as well as a city-owned nonprofit. Among Civic San Diego's duties, the memo listed "processing payments due on enforceable obligations, monitoring bond requirements, disposing of property..." and "collecting money due."
Gerry Braun, spokesperson for Jan Goldsmith, says the answer is simple. "...[T]he Transient Occupancy Tax revenue is collected by the hotelier from the guest/transient (taxpayer) and it is supposed to be turned over to the City’s treasury. Instead, the Briggs/Frye Initiative allows the hotelier to keep part of the tax revenue and not turn it over to the City’s treasury. That is illegal."
Despite the 2015 memo that allows Civic San Diego to collect redevelopment tax dollars, Braun says that no entities are allowed to collect and keep the funds, "thereby bypassing the City’s treasury….
"This is one of the problems with the Briggs initiative that could cause the entire initiative, including the tax, to be invalidated by a court….
“Although not the situation [with Civic San Diego], we have also begun a review to see whether there are any fees or other funds collected anywhere in the city that do not get deposited in the City’s treasury. They must follow the same rules.
"For example, our office receives fees and penalties in a number of criminal cases. Those funds are deposited with the Treasurer even though the spending of those is restricted to only our office. They are in a restricted account that is part of the City treasury. Upon finding any situation that does not comply, we will enforce the requirement."
Goldsmith's longtime nemesis Briggs says it's more an attempt by the city attorney to throw a wrench in the plan than it is a valid legal opinion.
"I think they believe anyone who collects city money must pay it to the city every day, but then they act as though no such situation exists....
"The city attorney is not only misreading the laws he's looking at, but as he often does, he is looking at the wrong laws altogether. He should put down the city charter and pick up the state constitution; the latter's tax and initiative rules trump local rules. He gave himself 25 pages and 153 footnotes to identify the controlling constitutional authorities but missed them by a mile. In fact, I read the constitutional provisions to him last October when I briefed him on the initiative. Apparently he forgot.”