San Diego Business Journal

Council Approves Tourism Marketing District Renewal Agreement

Wednesday, April 17, 2013

San Diego City Council has approved the latest revised agreement related to renewal of a Tourism Marketing District, clearing the way for approximately $30 million to be distributed annually for local tourism promotion.

The approval followed a weekend round of negotiations between Mayor Bob Filner and representatives of the marketing district. The approved agreement calls for hotels to indemnify the city against refunds in the event that the TMD’s funding mechanism is invalidated by any of three pending private lawsuits.

The agreement reaffirms the marketing district’s duty to defend the city against litigation, and the district will set aside up to $2.3 million in marketing funds for legal expenses.

In prior renegotiation s, TMD officials also agreed to have up to $3 million annually in collections go toward costs for the city’s 2015 Balboa Park centennial celebration.

City hotels in January began collecting a 2 percent surcharge on room bills to support the TMD, after hoteliers and City Council approved renewal of the district in late 2012. Distribution of funding was put on hold after Filner refused to sign the renewal agreement, citing issues including indemnification.

The TMD provides 80 percent of the budget of the San Diego Tourism Authority, which has already canceled more than $5 million in regional advertising programs. Approval of the agreement is expected to avert layoffs of about 85 personnel at the Tourism Authority that had previously been announced and scheduled to take effect in May if the dispute was not resolved.

Three private lawsuits contend the TMD funding mechanism should have been placed up for a public vote. A San Diego County Superior Court judge recently issued a preliminary ruling dismissing one of those lawsuits, filed by local activist Mel Shapiro.

— SDBJ Staff Report